Income Inequality and What to Do About It: Part II

As part of our ongoing Political Pen Pals series, Joe and Robert continue their conversation on income inequality. What level of income and wealth inequality is fair? What is the relationship between inequality and civic health? For perspectives on these questions and more, read this week’s Political Pen Pal debate.

If you missed Part I, you can find it here. Otherwise, enjoy your daily dose of civil discourse.

Dear Joe,

What a treat to write about a subject so central to the foundational beliefs of our nation yesterday, today, and tomorrow. We disagree almost entirely on this subject and I suspect my views are aligned with a minority of readers. Nonetheless, my counter to your rebuttal comes in four parts:

1. Income inequality will not lead to civil unrest in America

Let’s start by placing income inequality in a historical perspective. Your argument—that income inequality is not fair—was valid in a time when the circumstances of your birth determined your outcome in life. In old Europe through the French Revolution, each citizen was either a member of the land-owning aristocracy concerned with manufacturing or trade (i.e., the bourgeoisie) or a peasant. Your station in life was immutable. 

Peasants had it bad. Their lives were miserable, short, brutish, and nasty, to borrow from Thomas Hobbes. Marx’s scientific socialism predicted that these conditions (essentially income inequality) would lead to civil unrest, as you did in your argument. He predicted the inexorable march of history toward a classless Communist Utopia. He was so antithetical to income inequality that he banned all private ownership of property in his Manifesto.

Everything belonged to the state. Said another way, everything belonged to everyone. Perfect equality! No one would be wealthier than anyone else. “To each according to his needs, from each according to his abilities.” Marx seemed to have solved income inequality for all time.

But Marx was dead wrong. The evidence was all around him as the productivity gained by the Industrial Revolution improved the life of workers dramatically. Henry Ford’s assembly line put the final nail in the coffin of Marxist theory. Ford paid his workers enough for them to buy his Model T. He created a middle class that strived to own a house and a car, succeeding to do so. The middle class will not revolt because they are owners. You might even call them capitalists.

Income inequality will not lead to civil unrest and the middle class will not revolt. The socialist fad in the democratic party will fade. It emanates from scurrilous distortions of American history rammed down the throats of our impressionable youth by academia. The naïve renaissance of collectivism is even more outdated today than it was 20 or 30 years ago because we are now in the information age. World economic prosperity has been rapidly accelerating since the invention of the microprocessor in 1969.

The world is a much different place than the one in which Hobbes, Malthus, and Marx commanded our attention. Fretting about income inequality is taking us backward, like a physician prescribing bloodletting to cure disease. The Information Age is a miracle, nothing less. Arthur Clarke once said, “Any sufficiently advanced technology is indistinguishable from magic.” The idea that income inequality is not a problem but a national good is similarly magical. To deny the truth of that is to cling to dead ideas of the past.

2. Fairness is the weakest possible argument

Fairness is a lovely idea—an amiable word—offering a feel-good state of mind. But fairness has a dark, pernicious side: It leads to misery and ruin. Some of the worst atrocities in history were motivated by the idea of fairness. I like fairness in football officials and in court trials. Mothers know that to keep the peace they must treat children fairly. Fairness has its place. This is not one of them.

I would like to pose some tough questions:

Question 1: Some of us are more athletic, better looking, and blessed with better cognitive abilities. Is that fair?

Question 2: Who decides what is fair and unfair? Who dictates the remedies? I think we both know: the government. Do you really want bureaucrats making decisions based on their own amorphous definitions of fairness?

Question 3: If we are better off as a nation with high income inequality, is it just to make us less well-off to achieve fairness? Asking the government to reduce income inequality does not help the poor. It allows us to preen and feel self-righteous, but it doesn’t help anyone. 

Question 4: God gave us free will. And while some of us choose to work, provide for families, and strive to get ahead, others use free will to lay about, absorb funds from government programs, and engage in self-destructive behavior. (See Coming Apart, Charles Murray, 2012, on the life choices of those at the top and bottom 20%). When outcomes are different, as they always are, is that necessarily unfair?

Question 5: What if I don’t fall into one of the many assorted “victim” classes? Must I suffer to make things fairer to others? If Congress transfers my wealth, triple-taxing my already double-taxed interest, dividends, and capital gains, is that fair?

3. Your statistics are not dismaying—they are reasons for joy

You stated that “…10-15% of our fellow citizens (40 million in 2017) have remained in poverty.” That is a remarkably low number, not a cause for dismay. It shows the power of the American economy to elevate the conditions of everyone.

As your link to the Center for Poverty Research explains, people go into and out of poverty frequently. “Research shows that transitions into or out of poverty often happen after major life events such as marriage, divorce, or sudden changes in income.” 

Many people will be poor at some time in their lives—but they don’t remain that way. Thanks to lower corporate taxes and fewer regulations on business, our unemployment rate is the lowest in a half-century and the lowest in history for minorities. The poverty rate of 12.3% for 2017 is historically low. This is a national accomplishment.

Let’s look at the positive side. Notice how much wealth has been generated by this incredible economy. Here is part of a table of IRS data showing adjusted gross income, after losses and deductions.

The table demonstrates widespread abundance in our land, touching all classes. It bears no resemblance to the tiny number of aristocrats that owned most of the wealth in old Europe. This is a cause for celebration. The table shows one in five Americans make a six-figure household income or better. These are the people who pay most of the taxes that fund the social programs for the poor. If they are taxed more heavily and their success is diminished, does that help the poor?

4. The impulse is not from the better angels of our nature

Finally, I want to quash your last and deepest objection to income inequality: the notion that one must rail against it because that’s what good people are expected to do. I, instead, believe Albert J. Nock’s argument that the first law of human nature is survival and the second law is exploitation.

Nock’s point concerns the natural desire to reap the benefits of others’ work. That is at the heart of the clamor about income inequality—exploitation is political catnip. It’s attractive to the masses because, sadly, exploitation is part of our nature, like greed and envy. These are not the better angels of our nature. Good people don’t let it get the better of them.

Our country works because we are hard-working people. But, heaven forefend, the socialists could win. The government could make things more “equal.” If it does, we won’t see sudden changes. Instead, we’ll have the slow erosion of the habit of enterprise, a withering of the life force of our world-leading economy. It will creep in slowly and inexorably. In time the nation will turn away from it, as Thatcherite England did after its post-war dalliance with socialism. But will the damage be repairable? I fear not.

Income inequality in America is not a problem—it’s a blessing. This is the time for a twist on an old expression that expresses a theme of conservatism: Don’t just do something! Stand there!

Robert —

Thank you for your note. While I do not agree with you that income inequality is a blessing, my argument is not for total equality. It may surprise you to learn that I agree with Aristotle’s maxim: The worst form of inequality is to try to make unequal things equal. Similarly, I agree with Edmund Burke: “Those who attempt to level, never equalize.”

Having said this, as I laid out in my initial response, the art of politics and governing is about choices. We the people, and the elected officials who represent us, must think in terms of extent and degree. To what extent is economic inequality beneficial or harmful? What degree of inequality may be acceptable or unacceptable and why? In which contexts? My argument is not that economic inequality is necessarily bad or that it is harmful in every regard. Rather, I am arguing that the current degree of economic inequality in the United States is harmful economically, socially, and morally—and that there is something we can do besides “stand there.”

I will respond to your questions in turn. But, I happened to notice that you did not respond to my pressing question about the Trump tax cuts. I would like to pose it again: can we afford it? Our government has $22 trillion dollars of debt and spends $1 trillion over budget every single year. This is not sustainable. Why do conservatives only care about the debt and deficit when it comes to government spending and not when it comes to tax cuts? The logical inconsistency of Republicans pumping defense spending while slashing federal spending on entitlements, healthcare, education, and the environment is outrageous. The GOP has worshipped at the altar of tax cuts for billionaires and corporations while passing “tax reform” that increased taxes on 10 million families. This is not just inequality. It is insincerity and hypocrisy—and it has dramatic implications for the income inequality debate.

Let me now try to respond to some of your questions.

Question 1: Some of us are more athletic, better looking, and blessed with better cognitive abilities. Is that fair?

No, it is not fair. But I subscribe to the philosophy that “life isn’t fair—get over it.” There is an inevitable amount of unfairness in the human condition and we cannot change that, but that is not what we are talking about here. In this debate, we are talking about unfairness and inequity that we have the power to affect. We can modestly increase taxes on billionaires and remove tax breaks for large corporations to assist impoverished Americans and small business owners.

The top 1% of Americans and the Fortune 500 companies did not amass their fortunes on their own. They reaped the benefits of the American economy, society, and legal system. Many of these founders and their companies leverage technologies that were invented through taxpayer-funded research (including the internet, GPS, Siri, and touchscreens). These founders and their workforces were schooled in the American educational system. They have been protected by the American military. For these reasons and more, these individuals and companies have both rights in American society and responsibilities. I believe those responsibilities are especially important when it comes to those who are most vulnerable in our country.

Question 2: Who decides what is fair and unfair?

The people, of course! Through our duly elected representatives in local, state, and federal government—that is the essence of a republic. The good news is that the people have formed their opinions on this issue. See the results of these Gallup polls: “Americans’ Long-Standing Interest in Taxing the Rich.” There may be disagreements about the extent and degree to tax the wealthiest Americans, but there is consensus that something should be done.

Question 3: If we are better off as a nation with high income inequality, is it just to make us less well-off to achieve fairness?

I object to your assertion that “we are better off as a nation with high income inequality.” You cite IRS data in an attempt to show the distribution of wealth in the United States. You are right that the top 20% of Americans are doing well—but what about the rest? The median household income in America is $63,000. This is 100,000% less than the income of the top 0.001% in your IRS table. Meanwhile, 10% of our country lives on less than $15,000 per year. To put this in perspective, it means that three people—Bill Gates, Jeff Bezos, and Warren Buffet—have more wealth than half of the population of the U.S. (160 million people) combined.

And if you don’t think the income distribution in the United States is drastic, look at the wealth distribution as well, where the top 20% of the country holds close to 90% of the wealth. Are we better off with high income inequality? I am not at all convinced.

Your other questions presume that those who are wealthy worked hard and have made good choices while those who are poor are lazy and have made bad choices. As you well know, this is a gross oversimplification. Millions of low-income Americans work two jobs to make ends meet. Immigrants, like our own ancestors and relatives, have come to this country for generations with little more than the clothes on their backs. But through hard work, they built a future for themselves and their families.

True, not all low-income Americans are able to achieve this American dream. Some make bad choices—but some are held hostage by circumstance. Don’t you think we should do everything we can to give that child in inner-city Chicago or in rural West Virginia the best chance to make it in America? This is an argument for equal opportunity. Some in this country believe that cutting the taxes of billionaires and corporations is the best way to help those individuals. I do not.

I hope—I pray—that your assertion that income inequality will not lead to civil unrest in America is correct. I think Trump’s election, his subsequent takeover of the Republican party, Bernie Sander’s corresponding insurgency, and the Occupy Wall Street and Tea Party movements prove otherwise. There is a vicious cycle at play here. People with more money and power perpetuate their positions due to the gross emphasis on money in politics. The fact that two billionaires—Michael Bloomberg and Tom Steyer—attempted to buy the Democratic primary are symptoms of this sad reality. The extent to which corporate interests shape public policy is a debate for another day—but it is an important debate and one I look forward to.

I will end with a quote from President Franklin Delano Roosevelt. He stated: “Say that civilization is a tree, which as it grows, continually produces rot and dead wood. The radical says: ‘cut it down.’ The conservative says: ‘don’t touch it.’ The liberal says: “let’s prune it, so that we lose neither the old trunk nor the new branches.” I will not stand here and do nothing. Nor will I forsake the great progress that America and American capitalism have made in bettering the human condition—that must be preserved.

Join me, and watch the country we both love blossom in the springtime once again.

If you enjoyed this article, you can read more bipartisan debates, op-eds, and interviews here.

Robert Wilkes

Senior Correspondent at Divided We Fall

Robert Wilkes, Senior Correspondent at Divided We Fall, is the former president/creative director of Wilkes Creative, a national branding and marketing company. Robert flew 100 combat missions in Vietnam as a Navy attack pilot. He spent ten years in engineering and marketing at Boeing, where his writing skills were called upon for technical papers, marketing assignments, and speeches for Boeing executives. As an activist in pro-Israel politics, he lobbied with AIPAC for 15 years where he met many congressmen and senators from both parties. Robert loves history, enjoys the craft of writing, and has a passion for civil debate. He resides in Bellevue, Washington.

Joseph Schuman

Editor-in-Chief at Divided We Fall

Joe Schuman is the Founder and Editor-in-Chief of Divided We Fall. He works to set the vision of the organization and to build the team to meet that mission. Joe works as a civilian for the Department of Defense promoting innovation and emerging technology. Joe is also an Officer in the Air National Guard and a graduate of the Massachusetts Institute of Technology. In his spare time he can be found reading non-fiction, playing piano, and running triathlons.