Is income inequality a valid issue?
To the Editor:
Mr. Carr, in a recent letter to the Bedford Journal, suggested that reduction of income inequality due to labor unions curbed Communism, but omitted some important perspectives.
Wealth distribution unchanged: Although the wealthiest 1 percent averaged 32 percent of total wealth (currently 34 percent) since 1922, varying in short-term fluctuations from 44 percent (1929) to 20 percent (1976) depending on temporary market conditions, long-term trend has been static. However, individuals within the top 1 percent have continuously changed over the period.
Real incomes increased: From 1979 to 2010, the pre-tax Gini index, a misleading statistical measure of income inequality, increased from 0.404 to 0.469. However, in 2010 adjusted dollars, the percentage of incomes less than $100,000 declined from 89 percent to 80 percent, while the percentage of incomes $100,000 and greater increased from 12 percent to 21 percent, with proportional changes within each integral income class. Absolute wealth or income is important, not distribution.
Inequality unrelated to free markets, but absolute wealth is: Countries that are polar opposites on the Index of Economic Freedom may have similar Gini wealth inequality indexes. Compare Venezuela (82.5 percent inequality; 34.3 percent free; $6,900 average income) and the United States (85.1 percent inequality; 76.2 percent free; $301,100 average income) or Zimbabwe (83.8 percent inequality; 37.6 percent free; $2,900 average income) and Hong Kong (83.1 inequality; 89.6 percent free; $153,300 average income).
The 99 percent made the 1 percent: The wealthy became wealthy because they produced products and jobs we desired that made us more productive and better off than we were before. Capitalists supplied and risked their capital to provide nearly every product, service, job and much philanthropy that improved the lives of their generation and succeeding generations. Are they not entitled to the compensation we voluntarily gave them when purchasing their products?
Productivity determines standard of living: The amount of income is not important, only the difference between income and cost of living and the cost of living is only reduced by increased production and productivity. Increased productivity comes from capital that provides the wherewithal to develop ideas and produce tools.
Power to redistribute kills: Countries where power was given or taken to redistribute wealth and income have predictably been repressive murderous regimes killing millions within and without their countries with war and starvation (e.g., Communist history).
Coveting other’s possessions is a character flaw that leads to theft and conflict. Equal division and distribution of an existing pie leads to starvation while everyone producing more pies provides a continual and increasing supply.