The fundamental dishonesty of income inequality arguments

While it seems to have gotten lost in all the talk of email servers, black lives mattering and terrorists slaughtering Christians, you may recall that the Elizabeth Warren wing of the Democrat Party was planning on making “income inequality” a centerpiece of the 2016 election. Bernie Sanders was very big on it before his entire campaign was dragged off onto other subjects and Hillary has still been sliding it into her stump speech on a regular basis. But what does that even mean?

Over at Town Hall, John Hawkins has a thoughtful piece on the subject which points out that the term itself is essentially meaningless.

The fundamental issue behind income inequality could be boiled down to a single question: Are poor Americans better or worse off because Bill Gates ($79 billion net worth), Oprah Winfrey ($3 billion net worth), Michael Jordan ($1 billion net worth) and Mark Zuckerberg ($40 billion net worth) are living in the United States?

Certainly, having them living in America creates more income inequality. It also hurts the poor by….oh wait, having them here doesn’t hurt the poor at all. None of these people made their money off the backs of the poor (How could they? The poor don’t have any money) and all of them pay exorbitant taxes because the United States already has the most progressive tax system in the Western world.

So we’ve established that in a capitalist society, some people have more money than others. And just to give a nod to the point that Elizabeth Warren is constantly trying to make, a few of them have a lot more money than pretty much everyone else. But it’s a sliding scale, isn’t it? There are certainly a lot of poor people, but there are also plenty of Americans who are by no means rich, but have jobs and live middle class lives above the poverty line. Still… everyone is stuck in their caste like people in India, right? As usual, the myth has far outgrown the reality.

For example, did you know that 12% of Americans end up in the top 1% of income earners at some point during their lives? And that’s just the tip of the iceberg. As Thomas Sowell said to me in an interview about his new book, Wealth, Poverty and Politics: An International Perspective:

Thomas Sowell: But if you look instead at people and you say what happened to the people who were in the bottom 20% as of 1975 and on into 1991, you find that 95% of the people who were in that bottom quintile in 1975 are no longer there.

John Hawkins: Is that literally 95%?

Thomas Sowell: Yes, literally. That is only 5% remaining – by 1991 only 5% of the people in that bottom quintile were still there. Twenty-nine percent were now in the top quintile.

So people in large part move up (and sometimes down) the income ladder. Does that really sound all that shocking? We tend to be rather poor when we first get out of school and begin trying to make our way in the world. (That’s with the exception of the tiny number of people who grow up on trust funds.) Later in life, assuming we work hard, act responsibly with our money and catch a few breaks, we tend to be better off. As always, if you’re not making the effort or seeking sound advice, well… a fool and his money, etc.

But even beyond the points John is making, Democrats act as if there is something inherently evil in the idea that some people have more than others, whether they earned it by dint of their own efforts or inherited it. Can anyone justify that in an open society founded on capitalist principles? In the end, America is supposed to be a place where everyone is assured equality of opportunity, not equality of outcome. When we find areas where people are being denied opportunity we should correct that, and the government can do much to ensure that the greatest opportunity possible is made available. Sadly, the socialist tenets of the Democrats seek to do just the opposite, robbing the rich to give to the poor with little concern for whether or not that generates disincentives regarding productivity and ambition.

If you want to fix income inequality, fix opportunity equality. And that means more jobs and a chance for people to save and invest their earnings rather than giving them all back to Uncle Sam.

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