The Only Solution is Patience

by plermpt

Equality is the idea that everyone is treated the same under the law, despite our differences in genetics, values, paycheck, life decisions, skills, personality etc etc etc.

But even under the law, governments can only provide equal opportunity, at best. Asking for equal outcome is asking for trouble.

Data proves that income inequality in America has grown unceasingly since the 80s, and as a result of Occupy Wall Street, it has become a hot topic for middle class Americans.

On the surface, it seems unfair that some people are paid more for their services than others, but from a business perspective this is completely natural. A CEO possesses skills that most do not; therefore they are paid a salary that most are not. Fields of skilled laborers are required to produce goods, but because more of them are needed, they must be paid less than the executives in charge. Anyone can learn the work of a laborer with the proper training, but the position of executive is not a skill that can be easily taught; some of the traits required are more inherited.

Unions do the job of working with businesses to protect the wages and rights of their workers, but this does not reduce the drastic gap in income, nor should it. The corporation’s only goal is to make a profit. Due to numbers, not every employee can earn the same amount without the business going bankrupt.

One contributor to income inequality has been the corporate mergers across numerous industries between incumbent companies that wish to protect themselves from competition. Another is our complicated and outdated tax code from the turn of the century manufacturing economy which not yield to our modern services economy. And then there are legal tax havens.

“Redistributing wealth” is a commonly suggested and ill-conceived proposal for reducing income inequality. Because wealth is earned, not distributed this is a meaningless scheme. (It also sounds like theft–why should one group benefit from the loss of another group’s earnings?) Distribution denotes waiting for a designated portion from a third party, while earning denotes an exchange of time spent performing a service for an amount of wealth that both parties have agreed upon.

The wealth redistribution model of closing the gap of income inequality needs a third party to do the redistributing. Asking for help to make income equal is not fair; it is asking for a third party to meddle in the private lives of civilians.

(The government can and does do stuff, but none of it guarantees closing the widening gap of income inequality.)

Furthermore, the purpose of taxes is not to redistribute wealth. Taxes are the government’s revenue, which is budgeted for social programs, among other things.

Of course, the wealthy should pay their fair share of taxes, but only the government can decide what that is, and for no reason other than to finance their budget. The government, being the opposite of a hive mind, will always be fighting itself over what is considered fair for each party’s respective constituents, while taking too many taxes regardless.

Each presidential candidate has a tax reform plan that conforms to their politics:

Democrats target the rich (Hillary is fair about it; Sanders is not) because they have more money and can pay more income tax. Because there are less of them, Democrats can therefore rely on the votes of the middle class when it comes time for elections. Republicans want to give the wealthy tax breaks because they do not want to marginalize the job creators, who can take their profits overseas, in which case government revenue would then need to be raised from the middle class.

The rich need the middle class and the middle class need the rich because the rich create the jobs they need the middle class to work. Increasing corporate taxes seems fair because they are not people with kids and mortgages, and they have huge profits. But corporations must first pay staff before their revenue is taxed. What are they left with if they report a loss? They have to fire their workers.

What the government does with its revenue is public knowledge, and redistribution is much too vague a term. How exactly will the government redistribute earned wealth?

There is nothing that the government can do to guarantee a decrease in income inequality. Higher taxes would discourage investment because companies would still have to meet a bottom line. Forcibly higher wages would discourage hiring.

Despite all the outrage over inequality and fair taxes, the solution to what economist Thomas Piketty believes is a natural state of modern economies might be better explained by the hypothesis of the Kuznet Wave: as an economy develops, income inequality is increased by the market and then decreased by the market. Where there is a boom, there is a bust.

The Industrial Revolution brought farmers into factories, and workers became connected with jobs and unions. Now technology is catching up with workers rights, as machines built by the third world replace workers in the first world. The political power of the worker is diminishing as the wealthy gain influence.

Even though competition decreases and profits increase as corporations across industries merge, there is always the unpredictability of politics that can reduce inequality. The Great Depression, searching for foreign resources (imperialism), war…Rich economies are stagnating, and the 2008 crisis did not create a “natural” decrease in income inequality. But the market always comes knocking, and as the corporations merge to better save for the big storm, we should all start to save.

Equality may be written into law, but the looming spectre of the market is the true equalizer.

We will always have our mortality though.

Advertisements