What do people think about income inequality?

[PoliSciStudent]

Greetings, all! I'm new here and hope that I will not offend anyone by confessing at the outset that my personal political leanings are probably farther to the left than is the norm in this forum, but I promise, I'm not here to be disruptive or disrespectful of anyone.

I am a graduate student in political science and would honestly like to hear the views of conservative thinkers on a point which has been troubling me with respect to the direction our country is heading, namely the widening gap between rich people and poor people.

According to the US Treasury Department, the richest 2% of the country own 80% of the wealth in the US. That's honestly not just some liberal's opinion, that's really true, you can check the statistics yourself if you don't belive me. Flip that around and that means that the remaining 98% of us have only 20% to go around amongst all the rest of us. In the last three years, the income of the wealthiest .001% has increased by 600%, in other words, for every $10 million/year they were making before, they're now making $60 million/year.

I read in another article that 5 of the 12 wealthiest individuals on earth are from the Walton family which owns Wal-Mart. At the same time, human resources staff for Wal-Mart, when they hire a new employee, will routinely complete paperwork for new hires to receive foodstamps, as the wages they pay their workers are so low that, even as full-time employees, they are assured of falling below the poverty level and qualifying for foodstamps, without which they wouldn't even be able to afford to feed their families.

Does this sort of thing not bother conservatives? I've read studies which suggest that Americans by and large don't mind extremes of personal wealth as, this being the land of opportunity, we harbor some hope of one day rising to those lofty summits of affluence ourselves, so don't feel we should judge others for achieving that to which we ourselves aspire. Does that sound about right to you all? Anyone have any thoughts?

[Choose Ye This Day]

(gasp!)

I actually agree with Willie for a change!

[FITZ]

The very rich and very poor are okay if they are a small percentage of the people --- all countries have the rich and poor --- what is important though is having a large, employed, and fairly happy middle class.

[LowCountryJoe]

PoliSci"Graduate"Student, I know that you said you had a lot of studying to do but I do hope you come back to check on the thread from time to time.

I don't know if it's already been written by someone and I'm not going to read thoroughly read through all the responses but there is one theory as to why the income gap is widening: The theory is that since the early 70s with the women's liberation movement, more and more women fore-go starting their families in their 20s (and sometimes altogether) and now concentrate first on getting and education and well compensating career. And, these career women tend to meet and marry men of a similar socioeconomic stratus. The two combined incomes of highly educated, well compensated people will be significantly higher than that of two individuals that are less educated and compensated.

But while these iniquities may seem unfair and may lead some to conclude that this trend will lead toward a caste system, the truth is that family wealth tends to evaporate past a three generation span. For whichever reasons, whether hardship leads to increased desire to excel or the children's children of the wealthy form bad habits and piss away their wealth, things never stay static. Reversion to the mean is always a factor that is in play.

Even during one's lifetime, there are many cases where one passes through the various income levels, not staying put in a particular class.

[FITZ]

With respect to the uninsured, I managed to find a number for you.

Much of that problem is being imported --- the uninsured rate along the border --- is much higher, in this area only 33% of the population bothers with insurance, all the rest count on free health care from the taxpayers.

[Constitutional Patriot]

The very concept of "income inequality" suggests marxism. In the natural state of humanity, there will always be an "inequality" because everybody is doing something different to make a buck. The guy who fixes cars will make roughly $X ($X to the 3rd power for my car guy...) while the guy who went to medical school to be an oral surgeon will make $6X because his skills are less common and, hence, more valuable (assuming they are in demand...rare skills do not guarantee big $$$, just ask any Mime in Central Park).

Equal income can only exist in theory. The theories (ideologies) where it exists have been disproven throughout the last century (at the unfortunate cost of about 100 million lives).

[tubebender]

What do people think about income inequality?

It doesn't bother me as long as I have the opportunity to make a $100 more than the riches of them...

[Choose Ye This Day]

The rich "own" most of the wealth in this country? What does that even mean? Who created the wealth?

Here's a nifty little parable that illustrates the folly of your redistributionist tendencies:

Let's put tax cuts in terms everyone can understand. Suppose that every day 10 men go to a restaurant for dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59.

The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement - until the owner threw them a curve. "Since you are all such good customers", he said, "I'm going to reduce the cost of your daily meal by $20." Now dinner for the 10 men only costs $80.

The first four are unaffected. They still eat for free. Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share? The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth and sixth men would end up being paid to eat their meal! The restaurant owner suggested that it would be only fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so now the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of $59.

Outside the restaurant, the men began to compare their savings. "Hey, I only got a dollar out of the $20," complained the sixth man, pointing to the tenth, "and he got $7!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got seven times more than me!" "That's true," shouted the seventh man. "Why should he get $7 back when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor." So, the nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something really important. They were $52 short!

And that, boys, girls and college instructors, is how America's tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just might not show up at the table any more. There are lots of good restaurants in Switzerland and the Caribbean!

It's just about that simple. The rich guy has more because he has earned more and created more. He even pays more for the basic services that everyone else enjoys. Yet the other 9 always want to beat him to a pulp. Pretty soon, he won't want to sit at the same table.

Or, as in Atlas Shrugged, he may just withdraw from the game all together.

[FITZ]

I'm fairly bright, I've worked hard, gotten good grades, stayed away from addictive substances, never had any trouble with the law, in other words, I've played by the rules. I've also lost my job, have no health insurance, and am having to borrow $20,000/year to make my tuition payments.

$20,000 a year on tuition? I would hope you're really bright and the degree you're working on is worth that kind of tuition. There are good universities which cost far less and many students work their way through college. A bright student can manage to take 15 hours a semester and find time to work the rest of the time. There are times in your life that you can make do without health insurance --- and many health care procedures can be paid for without insurance.

[MarkL]

According to the US Treasury Department, the richest 2% of the country own 80% of the wealth in the US. That's honestly not just some liberal's opinion, that's really true, you can check the statistics yourself if you don't belive me. Flip that around and that means that the remaining 98% of us have only 20% to go around amongst all the rest of us

the problem with this method of thinking is that it assumes that all wealth is static. That today there's $X gazillion of wealth in the country, and that's all that there will ever be. That's the problem. Wealth is created by work. Although I realize that most leftists feel this way, even Karl Marx recognized that wealth is created by the labor of the prolitariat. His problem was that the wealth created was not kept by the laborer.

Here's an example... You pay $100 for raw lumber. Now, given your line of thought, the table created is worth only $100. But that's not the case. You've created wealth. Using your skills as a woodworker, you create a fine dining room table that you sell to a distributer for $300. Why? Because you realize that the table is actually worth $600, but you don't have a way to market it to greater numbers of people. So you get the $300, giving you a profit of $200. And you then work to increase your own wealth, so that you will eventually be able to do the distribution yourself, so that you will be able to keep the $500 of profit.

Here's a real world example of the fallacy of your opening statement... I've got a friend that I've known since 1984. We both quit college at about the same time. In the late '70's, he had began working at a dental lab, making minimum wage. While he was in college, he continued to work part time, and after dropping out, he worked full time. Over the years, he learned more skills, becoming more valuable to his employers. This increased his value to to his employers' competitors, and over the years he moved to new dental labs a number of times, other times, he just got hefty raises and bonuses. Well, here we are, twenty years after first having met, and the two of us were voted "least likely to succeed" by many of our peers. Well, Pat is now a partner in a dental lab, taking in nearly $85,000 a year in salary and bonuses, and he's got two houses (one at the lake), along with two boats for the lake house (a bass boat, and a skiing boat)... Oh, yeah, he's happily married with two kids. Well, given the opening premise about wealth, Pat should never have been able to get where he is today. It wasn't about luck. It was his drive to succeed. And that's how wealth is generated and accrued.

Mark

[jeremiah]

I seriously don't worry about the inequality of income. Just get the govt and the regulations of business out of the way, and there will be even more rich......It all depends on how hard one is willing to work.

[weaponeer]

My general impression of Ayn Rand's work is that it needs to be appreciated in the context within which it was written. As a victim of the Russian Revolution and subject of the subsequent totalitarian regime, she has some understandably unfavorable observations to make about the ideas which were circulating about her at the time.

True that her ideas were shaped by her experience, but it is not all related to that set of circumstances. I first read Atlas Shrugged in high school back in the early 60's, not too long after it was first published. I read it again sometime in the early 80's, and again a couple of years ago. The forces about which she writes are still there with us today. She doesn't particularly frame it to communism, but socialism in general, which is still very much about in these times. I found her book just as applicable, if not more applicable, two years ago than when it first came out.

I know it would be hard to fit in a 1200 page book on top of school studies, but you really should read it some day. I'm sure you'll disagree with many of her philosophies, but you'll certainly be in no doubt where she stands on the issues. BTW, just by mentioning Ayn Rand here on FR, I'll probably stir up a firestorm, so be prepared to duck. She is not highly regarded by many of the more religious folk here, due to her being an atheist and some of her other moral lapses. :-)

And at the risk of boring you, to give you an idea of where I'm coming from, I'm 55 yrs old, an EE that's worked for the US Army my whole adult life. Picked up a couple of MBAs in management and finance with the GI bill in the decade of greed (the 80's)but really haven't done anything with them. My politcal philosophy is pretty close to Ayn Rand's. I call myself an Anarcho-capitalist. Some call that extreme. ;-)

See what happens when I have lots of keyboard time? Hope we can carry this on again some time. Regards,

[DoctorMichael]

Eat the poor. Our Welfare payments have been fattening them up for decades.

[elisabeth]

A few thoughts for you:

1) You state that a small portion of the population controls a large portion of the wealth. But you must keep in mind that the top 5% of wage earners pay 53% of the income taxes, and the top 50% of wage earners pay 96% of income taxes. Thus, we already have a highly progressive tax system. These are IRS statistics, a summary of which can be found at http://www.rushlimbaugh.com/home/menu/top_50__of_wage_earners_pay_96_09__of_income_taxes.guest.html

2) You must ask yourself the following questions: Do we as humans have the moral obligation to help those less fortunate than ourselves? And more importantly, do we have the right to force others to help those who are less fortunate? As a free individual, I contribute both time and money to various charities. I detest it, however, when the government takes my money to do so, and I see this as a breach of personal freedom.

3) If you were living in Europe, you'd be getting a free ride and then some on your college experience. But guess what? European Universities pale in comparison to U.S. universities. Going to university is not a "right." Don't you feel a little bit wrong about the scenario of other people paying for your university tuition? I wanted a college degree and a masters, so I went and got one, and my parents and I all busted our butts so have enough money for me to do so.

So does it bother me that there are poor people? Yes. Do I want the government to take my money to try and solve this problem? No. Think about the importance of freedom, and being able to make individual decisions about what you do with your money, where you work, etc. Read some Milton Friedman and maybe Reason magazine, and keep coming back to FreeRepublic, as you have generated some good discussion!

[Constitutional Patriot]

"And here's the rub, there are many countries, all of whom are poorer than we are, in which the quality of life for the average earner, is higher. "

Please name one.

[MarkL]

Take myself for instance. I'm fairly bright, I've worked hard, gotten good grades, stayed away from addictive substances, never had any trouble with the law, in other words, I've played by the rules. I've also lost my job, have no health insurance, and am having to borrow $20,000/year to make my tuition payments. Now, if I were living in Europe, not only would I not be paying tuition, I would actually be receiving a modest stipend to cover my living costs while I was in school. In addition, I'd be covered by a public health plan, which admittedly would probably not provide quite as good a coverage as the private insurance I could opt for if I wanted to spend the extra money on it, but at least I would have something, which, compared to the nothing I have right now in our wealthy US, sounds kind of like a step up to me.

Try not to forget, that the european nations that have such high standards for those such as yourself, are also going down the toilet financially. Sort of a "we lose money on every sale, but we make it up in volume" situation. While it's nice that the government "cares" so much, it something that can't be sustained. Eventually, the working class simply won't be able to pay enough in taxes to support those who don't work. And it will all come crashing down.

Mark

[weaponeer]

My general impression of Ayn Rand's work is that it needs to be appreciated in the context within which it was written. As a victim of the Russian Revolution and subject of the subsequent totalitarian regime, she has some understandably unfavorable observations to make about the ideas which were circulating about her at the time.

True that her ideas were shaped by her experience, but it is not all related to that set of circumstances. I first read Atlas Shrugged in high school back in the early 60's, not too long after it was first published. I read it again sometime in the early 80's, and again a couple of years ago. The forces about which she writes are still there with us today. She doesn't particularly frame it to communism, but socialism in general, which is still very much about in these times. I found her book just as applicable, if not more applicable, two years ago than when it first came out.

I know it would be hard to fit in a 1200 page book on top of school studies, but you really should read it some day. I'm sure you'll disagree with many of her philosophies, but you'll certainly be in no doubt where she stands on the issues. BTW, just by mentioning Ayn Rand here on FR, I'll probably stir up a firestorm, so be prepared to duck. She is not highly regarded by many of the more religious folk here, due to her being an atheist and some of her other moral lapses. :-)

And at the risk of boring you, to give you an idea of where I'm coming from, I'm 55 yrs old, an EE that's worked for the US Army my whole adult life. Picked up a couple of MBAs in management and finance with the GI bill in the decade of greed (the 80's)but really haven't done anything with them. My politcal philosophy is pretty close to Ayn Rand's. I call myself an Anarcho-capitalist. Some call that extreme. ;-)

See what happens when I have lots of keyboard time? Hope we can carry this on again some time. Regards,

[weaponeer]

One problem of too much keyboard time is double posting! Sorry.

[FITZ]

The rich guy has more because he has earned more and created more.

Or he inherited more --- but those I don't envy at all because there can't be much real pride in doing nothing but inheriting your wealth. At least the types who got rich from working and creating can be envied and respected for their abilities but they tend to come from the middle class --- not the inherited wealth class.

[SteveAustin]

Wow...I just picked up on this thread. Poli-Sci, you definitely came on here to stir things up, but good job. There are some great responses by many on this thread.

I agree with 95% of the prior posts as it relates to hard work and free enterprise. That said, I do think that the US is potentially facing a tough time in the next few years as we now face 2 Billion people in India and China who are much more free to sell their services on the world labor market.

One reason for the political stability in the US is the fact that we have many different forms of wealth that people can work they way into(small business, public stocks, real estate, pensions, etc.) It helps support a strong middle class.

I am somewhat concerned that many US workers who the last 50 years have had a good middle class existence are going to find it hard to keep up with labor in China and India that costs $50 a week for an educated laborer.

Greenspan can talk all he wants about the buggy manufacturers finding new jobs in the auto industry, but I think this is a different issue....and one that doesn't have any easy answers. I do have some concerns about political instability in the future.

But, going with the line of many posters, I also worry about how "representative" our government will be in the future if over half the country effectively doesn't pay income tax anymore due to higher brackets and the earned income tax credit. Everyone should pay income tax in some form.

[Choose Ye This Day]

True, but the inherited wealth class is very, very small. Thomas Stanley makes that clear in all his Millionaire books. I can't remember the percentge of millionaires who inherited their riches, but I believe it was under 20%. The vast majority of the rich created their own wealth and prosperity.