On Inequality Denial

Here is how Paul Krugman concludes his op-ed column in the NYT June 2, 2014.

So here’s what you need to know: Yes, the concentration of both income and wealth in the hands of a few people has increased greatly over the past few decades. No, the people receiving that income and owning that wealth aren’t an ever-shifting group: People move fairly often from the bottom of the 1 percent to the top of the next percentile and vice versa, but both rags to riches and riches to rags stories are rare — inequality in average incomes over multiple years isn’t much less than inequality in a given year. No, taxes and benefits don’t greatly change the picture — in fact, since the 1970s big tax cuts at the top have caused after-tax inequality to rise faster than inequality before taxes.

This picture makes some people uncomfortable, because it plays into populist demands for higher taxes on the rich. But good ideas don’t need to be sold on false pretenses. If the argument against populism rests on bogus claims about inequality, you should consider the possibility that the populists are right.

Does inequality exist? If you mean do some people have a lot of money and others a little money, of course it exists; it has always existed and if those with a lot of money have benefited from rising stock prices, technological innovations, etc., of course their rate of growth will be greater than the average Joe working for a wage.

But is inequality itself bad? Show me how. What’s bad is when the middle class can’t provide itself a good standard of living and lacks a fair opportunity at advancement. What is bad is when the poor are intentionally held back and opportunity withheld. What is bad is not providing the social and other assistance to those truly in need.  Is that occurring now?

If wages are stagnated, job opportunity limited, economic growth slow, there must be reasons. Perhaps the changing global economy, the type of jobs needed  in the 21st century, our educational system, the very essence of individual attitudes, work ethics and lifestyles, etc.  Most likely it is all the above and more. What I can’t see on this cause list is the words “inequality” or “wealthy.”

According to Krugman, a “good idea” is higher taxes on the rich. To what end? So we can say the new net worth of the rich is slightly less unequal to the rest of us? What will government do with the added tax revenue that is not being done now in one way or the other? Will higher tax on some be used to increase welfare benefits, is that progress? How will taxing a relative few people at confiscatory levels add to the income or opportunities of hundreds of millions of average Americans?

Inequality is a word on a banner, a rallying cry of the left.  Where is the substance in how inequality will be corrected if it needs correcting?  Better we focus our rallies on generating whatever we need to do to raise up the poor and middle class as opposed to tearing down the upper class.