Pictured Above: Capitalism,
The Goose ThatLays The Golden Egg
The left is correct in their concern about the increasingly ill distribution of wealth in the United States. I actually share his concern, because a highly skewed distribution of wealth does not bode well for American Democracy or society. But, on two points I strongly diverge from the left: the causes of and solutions to this problem.
The distribution of wealth is the product of complex economic and social forces, each of which could merit a dozen posts. Once we delineate these factors, we can better understand and address the issue of wealth distribution.
In determining the living standards of a nation, the creation of wealth is usually a more important factor than the distribution of wealth. For example, the income distribution of the Soviet Union was fairly equitable, but compared to the United States, living standard was appallingly low. Consumer items (such as cars, TVs, phones and even fresh fruit and vegetables) that were reserved for the Soviet elite are ready accessible to the majority of American households. Across the globe there are countless other examples of nations that lowered the living standards of most of their citizens, by limiting the creation of wealth through aggressive redistributive policies.
On the other hand the economic dynamism of capitalism has raised the living standards of hundreds of millions of people across the globe. The best example being South Korea, a nation that radically raised the living standards of its citizens through the aggressive pursuit of education, economic growth and productivity. This path was also seen in Japan, Taiwan, Singapore and to a lesser extent Vietnam and Malaysia. In cases like China, the increasingly skewed income distribution does not represent a drop in living standards for the working class, but simply the greater pace of income growth among the middle and upper classes.
This does not inherently mean that the US government should not pursue redistributive policies. But, it means that when formulating and enacting these policies we should be extremely cautious about undermining incentives for wealth creation or "killing the goose that lays the golden eggs."
Here is the problem with the most recent 'creation' of wealth. It has been reaped almost entirely at the high end. Exclusively and then some if you consider nationwide percentages. For example: Between 1983 and 2004, the richest 1% of American households increased their net worth by 78%. That is a fact. Between 1983 and 2004, the bottom 40% of American households lost 59% of their net worth. That is a fact. More than 1 in 6 American households now have a zero or negative net worth. That is a fact. More than 1 in 3, now have less than $10,000 in net worth including home equity. That is a fact. More than 5,000,000 Americans have fallen below the poverty line since the year 2000. That is a fact. The middle and lower classes are further in debt than ever before. That is a fact. Trillions in bottom line US wealth have already been transfered from poor to rich. That is a fact. The way I see it, the majority were better off 20 years ago with less wealth on the books and fewer dollars in circulation. Wealth 'creation'. Its just not what its cracked up to be.
ReplyDelete1. Before you comment on the distribution of wealth, I reccomend that you read the other posts pertaining to this topic.
ReplyDelete2. No one argues that we should not be concerned about growing economic inequality. The only questions are - what are the causes and what are the most benefitial manners to address this that doesn't kill the goose that laid the golden egg.
3. And it is not accurate to state that wealth has been transferred from the poor to the wealthy. It would be more accurate to say:
3. Economic changes brought on by changes in the global market, as well as government policies have limited the capacity of unskilled workers in the United States to generate wealth.
3. And have brought increased opportunities to the highly skilled, highly educated citizens to generate wealth.
I don't believe the term 'generate wealth' is appropriate anywhere near as often as it is thrown around. Its downright misleading most of the time. The way I see it, 'transfer wealth' applies more often. I have responded to all your major points so far on the other pages.
ReplyDeleteYou are by far, the most respectfull, most thoughtfull, 'die-hard' capitalist that I have run into so far. Not what I expected at all. If it weren't for the scale of this issue or the real world concequences endured by so many along with my very bleak outlook on our future, I would stand for a cause more like your own. However, I see greed as a form of evil. A flaw of human nature that grows more profound as the bar for 'success' is raised higher and higher and higher. Its gone too far. Like two runners neck and neck who won't slow down for the cliff just ahead. They are fully intoxicated by their desire to win. Both will die. Thats not the best analogy but its close enough. I am absolutely convinced that greed will eventually cause or accelerate the fall of modern society. There will be suffering on a scale never seen before. Call me a doom and gloomer but thats what I believe.