What can we conclude from all of this analysis?

Fairness, income inequalities, rich getting richer - all are often more emotional concepts and not logical ones.  Certainly for some these emotions are sufficient, as in the case of the majority of the Occupiers.  What hopefully this website has done for you is to examine what are the concepts involved, the data and what it means, and what forces have operated in the past 50 years to create our current income distribution in our country.  And that now leads us to ask what to do about all of this.

Having examined a complex issue, there can be some overriding conclusions and general concepts drawn.   In diving into the OWS and Buffet rule policies, the 2 proposed or supported programs, supported by the redistribution advocates.  These advocates are also advocating larger government, a strong element in what is driving income and its distribution in the wrong direction. 

Of course we do have a growing divide in this country, one that is most likely unhealthy for our future as a vibrant nation.  However to call this problem caused by the income distribution growing divide is like calling chocolate the cause of obesity.   It does not make sense if one is willing to consider causes and not just emotions.  And more importantly if our society chases bad policies then we can just keep creating forces that undermine any upward mobility and economic growth.  For these are the fundamental care abouts, not equality of income.

With $5.3T dollars spent on the war on poverty, has there been a dependency crisis created and not a solution for poverty?  Certainly and the notion of a meritocracy seems now farther away.


Help the poor: increase meritocracy.


With the causes of income distribution identified, a summary

In listing the 26 forces that have affected income and its distribution, an argument can be made for 15 of these tied closely to government policies.   We are a country that has swung, not with unanimity, towards a sense of dignity that involves looking out for the disadvantaged.  Helping the poor is invariably seen as more admirable in many circles to starting a company and creating a lot of jobs.  One is no less or more admirable, but can still be seen differently.


A good summary of what we have learned:


Educational lack of performance has been critical to economic performance in various ways, and especially the lack of performance of the public educational system.  Despite this the change toward a technology and skill based economy in conjunction with expanding global markets gave some great upward mobility.   The crisis of dependency however cannot be overlooked as both instability of households and families limited options to be upwardly mobile. 

Often overlooked in the pro-redistribution advocates' arguments is what the data really says:  the rich do get richer but the percentage of wealth in the top 1% has remained relatively constant over many decades.   The upward and downward mobility of individuals is very important.  To state that the rich are getting richer and the poor are getting poorer is simply untrue.  Correctly stated, many are getting richer and the poor can succeed also.  The advocates of unfairness and more redistribution have overlooked in their analysis the following:

  • Upward mobility and the prevalent causes (not mentioned by the advocates of more redistribution)
  • The growth and size of households  (often not mentioned but this is significant)
  • The effects of taxes and transfer payments to the income distribution (often ignored as well)

We examined the definitions of "poor" and "fairness," and found the common use quite lacking in substance.   Seeking to assist the poor with fair policies is not to increase their dependency on entitlements, something that is inherently unfair to other portions of the population, but rather it should be to increase their upward mobility.   The so-called currently installed fairness programs can be seen as unfair to all including the poor as it will limit or slow their growth.  It does seem so difficult for so many to reach beyond the anecdotes that are in the news, such as the NYT's article on the plight of the poor.   It is a nice attempt at making emotional connections, but does little more than fuel more entitlement fervor.   It is equally difficult for many to look at the issue of the poor holistically.  


Why are there not more attempts to ask the question:  what is holding back the poor from moving up?  In fact some are, as we detailed in the Chapter on mobility.


Clearly the Fed transfer payment process is severely broken.  The amount each year is $1T for food, etc. and another $1T for medical like Medicare and Medicaid.   With the percent poor as arrived at in this website of 3%, the annual metric for what this poor would receive would be on the order of $100K to $200K per person.  So our system of transfer payments build on the notion of helping the poor is really a middle class welfare program.   Since most working folks do not make $100K a year this is a serious question.   

The redistribution advocate policies of the Buffet Rule and Occupy Wall Street were analyzed and found deficient in most regards.  Both are more supportive of larger government and centralized power, which is a critical part of the root cause.    Clearly cronyism and mismanagement of the money supply along with a lack of prudent spending by the Federal Government are the issues that should be addressed in addition to attacking the other causes in a sensible manner.  The advocates of more redistribution never seem to do more than ask for more taxes on the rich.  Clearly that does not make sense even arithmetically to solve the deficit issue.   Those advocating redistribution are not accountable for the consequences of their suggested policies. 

What is the best way forward in promoting a healthy course of action?   One can make a very strong argument that upward mobility, stronger education, sound monetary policy, pro-growth tax codes, along with a complete and comprehensive look at dependency would be a good start.  The current proposals coming from the liberal side are however centered on spending and taxing more, with no resolve to improve performance in the critical sectors.  This would appear to the analogy of expanding the number of stop signs on the highway, rather than increasing the upward speed and mobility of those aspiring.

When asked the public would rather have economic growth than equality.   As was shown here, there are sufficient cases to show you cannot have both.

At the core of the redistribution advocates outlook is that some are taking advantage and hurting others.  This is invariably true no matter what the system.  However the basic notion of cronyism is abhorrent.   It promotes those who are ahead see less competition to challenge their position.  It comes disguised as regulations benefitting the poor.  Continuing a central authority over larger and larger portions of the economy will undoubtedly reduce upward mobility and the American dream.   This the most unfair approach that can be taken. 


Is equality the adversary of freedom?

Are we willing to give up freedom in the quest of equality?  Most citizens, when polled, want economic growth over equality of outcome. 

Are the advocates of redistribution interested in more fairness and less freedom?  It is a most pertinent question when considering the most out spoken advocates of redistribution:  Buffet Rule and the OWS.   We looked at both and found that the taxes in the USA are the most progressive in the developed world.  Since the recent analysis indicates that the amount of revenue by this tax is even less than thought, the White House indicated that it is not about raising revenue but rather redistributing income.   We also discovered that the rich are paying most of the income tax, and that increasing their taxes will lower economic growth and not solve the deficit issue.   We do have a spending problem not a revenue problem. 

The anti-enterprise advocates are also interested in redistribution and are also interested in more government and its spending, and inherently less freedom.   The alignment of the "fairness" advocates with this same group is to be comprehended as citizens wanting to understand the motives and policies that result.

What we want is a society that is fair to all, not selectively.   We want to educate and inspire youth to innovate.  We want the successful to receive just rewards not rewards as a result of lobbying in DC.   We would want compassion to grow while keeping an eye on creating value and being innovative in attempts to enable many to participate economically.   Clearly as a society we are not doing as well as we should in most all ways.   Increasing taxes and other attempts to redistribute income is not just, fair or logical in pursing any of these efforts.   

Will and Ariel Durant observed in "The Lessons of History" (1968), "freedom and equality are sworn and everlasting enemies, and when one prevails the other dies . . . to check the growth of inequality, liberty must be sacrificed."


A Personal Note

Society wants to help those in need.  I am firmly convinced of it.  Certainly however poor someone is, there should be a good soul at the local level to provide some comfort or assistance.  If the received demands it or feels entitled then that is another question to answer as to what is best for all.   This feeling of a need to help is however out of touch with the real needs of folks who need assistance to gain ground. 

The world has a competitive aspect and making it less competitive is a disservice to all.   If someone cannot succeed or is dis-incentivized to progress then that hurts all.  What is the proper means to balance the contest of ideas and enterprises, for fairness is not the essence of this activity, perhaps fairness is only present in the process, if free choice is the means to decide.   Fairness is not inherent in having a society of takers and makers working against each other in a class war.   This appears more suited to sustain the mighty take the rewards if force is the means.   Redistribution by force cannot be moral as a result, nor optimal in outcome.  For there has never been a better means to achieve fairness in human interaction than a moral compass enjoyed by both parties seeking a win-win outcome.   If Government force is used extensively to tilt favor towards select groups, then should we expect that this moral compass can develop?  If the argument for the use of this force is nothing more than the inadequacy of the participants, then how does unfairness achieve a higher moral place?  

What can be done?   Create a society where individualism is the means for individuals to achieve a higher level of achievement in all things.   If we must have government to provide adult supervision to achieve this, not just a watchdog of our rights, then who is to say that the government solutions are not even worse?    Do examine the list of forces and ask the basic question:  how much of an impact of bad policies are at the root of the cause of these forces, and can we afford to keep the same basic approach of a larger impact of government on our economic lives?  Are we not adding to the problem if we do so?

What is the key question here to solve?  Is it to suppress growth and to prevent the rich getting richer?  Or is it more a matter of determining what are the forces limiting the poor getting richer?  Do we all not want a more free and compassionate society?  How is this achieved through the policies advocated by Krugman and others: increasing the min wage and requiring more labor union participation?  Is that not the anathema of our society today, the lack of productivity?  Is this rather a claim to a society with more central control, a engineered society rather than a free one?

If excellence is at work in gaining wealth, is this not equivalent to being a great saxophone player, or a very popular rock star?  If we tax those with greater success in economic terms, should the society to be fair not tax in some way those with more talent?  To those who received their riches with unfair advantage via intervention or inside information from the government then it not be fair to remove this advantage?  To those who advocate raising taxes to be fair should they not be held accountable for how this money is used and to a higher level definition of fairness?  


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Simply put, continuing the culture of restriction and dependency will hurt everyone and the poor most of all.