What One Thing?

Francis Menton, the Manhattan Contrarian posts angrily about income inequality:

If you want to look at the world as providing the occasion for anger, resentment, and victimhood, then by all means declare income inequality to be a crisis. Are you not one of the 400 wealthiest people in the United States? Well boo-hoo! Let’s all sit around and feel sorry for ourselves and plot our revenge!

The other way of looking at the world is that it is a cornucopia of opportunity for those willing to go out and strive a little. Capitalism has just created a few hundred new billionaires! What are they going to do with all of that money — put it in a big pile and count it over and over again? If you want to be prosperous, and maybe extremely prosperous (if not a billionaire yourself), then get out there and find something to sell to these people! Believe me, this is the entire business model of the major law firms, and the lawyers at those places are definitely in the “extremely prosperous” category. Same goes for the people who run hedge funds, or who build and sell mansions, or yachts, or private jets, or luxury goods of every sort. With all that wealth waiting to be spent, there is no reason for anyone to be poor or idle. This is an economic engine ready to be ignited!

I’ll bet you can guess which one of these two ways of looking at the world has been adopted by the Washington Post. In the Post’s Wonkblog of April 6, Jeff Stein reports on “How 12 experts would end inequality if they ran America.” First, we must all agree that income inequality in the United States is a major problem. No, make that a “staggering” problem. And all the right progressive “experts” are hard at work figuring out the solution!

Imagine you had complete control of the U.S. government: What one thing would you do to reduce the country’s staggering economic inequality?

Contrary to the Contrarian I think that the increase in income inequality in the United States is a serious problem. In 1970 most of the income and wealth in the United States were held by the middle class; incomes of Fortune 500 CEOs were, perhaps, 15 times those of the median worker in their companies (and those were high by OECD standards). Now they’re hundreds of times the income of the median worker due to changes in the tax code. That’s a major change and it isn’t one that’s consistent with the sort of country I expected to be living in or want to live in.

There are so many things that have contributed to the problem it’s hard to come with just one but I’ll rise to the challenge: stop bringing in workers from other countries who’ll earn incomes below the poverty level. Most are already illegal and that would require a change in enforcement (my preference is for strict, serious workplace enforcement). Large numbers of low wage workers tend to push incomes down for everybody but the fortunate few.