The injustice of income inequality has long been a passion of the left and the centerpiece of its condemnation of economic freedom.
The raw data in this area can be more inflammatory than enlightening. To exaggerate the “inequities,” leftist demagogues torture the statistics, comparing the pre-tax income of the rich with understated incomes of the poor, ignoring trillions of dollars in transfer payments, social programs and subsidies.
Income inequality is the inevitable consequence of the unequal distribution of skill, intelligence, ambition, dedication, parental involvement, market valuation, risk taking and just plain luck, to name only a few variables. Government intrusion to equalize individual incomes inevitably reduces aggregate income and wealth creation in a society.
The demise of the middle class has been greatly exaggerated — as evidenced by the post-Thanksgiving shopping binge — although many have been cutting back on vacations and brand-new Harleys these days. Of course, this is small consolation to some in the middle class who have lost their jobs and can’t find new ones of equal value.
The middle class is an eclectic mixture. Unskilled workers in some heavily unionized industries, like automobile manufacturing, traditionally enjoyed premium compensation packages well in excess of the value they added to their employers’ product. This was largely thanks to the power of their labor union cartel and the compliance of shortsighted management. The same shift to a highly competitive international economy that brought down compensation to unionized workers also brought down the cost of automobiles to consumers, especially when considering the improvement in their quality and features. Premiums paid for productivity, education and refined skills in some middle-class job categories today have been offset by reductions in other categories lacking those attributes.
In recent decades, government workers have leveraged the political power of their unions to add jobs, pay and benefits for their rank and file at the expense of private-sector middle class workers.
Further muddling the middle class metrics is immigration. Millions of lower-paid Latino immigrants, both legal and illegal, have brought down the U.S. national wage average while ironically elevating the living standard of those immigrants well above what they could have earned in their native countries.
Yes, this surely is a sluggish economy, job creation is seriously lagging, and the housing market has a long way to come back — but it’s nothing like the Great Depression. The current 8.6 percent unemployment rate is hardly the same as 1933’s 25 percent. And trillions of dollars in social programs that didn’t exist during the 1930s are most certainly there today to cushion the blow.
Piggybacking on the emotionally charged but misleading statistics on income inequality, left-wing opportunists like New York Times columnist Paul Krugman are taking it to the next level, claiming the economic power of the wealthy is undermining our democratic institutions. “Can anyone deny that our political system is being warped by the influence of big money?” he asks.
Krugman’s irrational premise seems to be that the “warping influence” of the wealthy has driven income inequality. This is absurd. Does he imagine the wealthy speak or spend with one voice?
The biggest spender among the super rich is George Soros, the capitalist billionaire who funds every anti-capitalist cause from Occupy Wall Street to electing Democrats. And the so-called Gang of Four, Colorado’s cabal of liberal fat cats, has lavishly funded an expansive network of left-wing activism, dwarfing any efforts by well-heeled conservatives.
Other major centers of influence include private and public labor unions, think tanks, foundations, the K-12 education establishment, higher education, the media, Hollywood, TV and the pop culture. Their influence on public policy extends far beyond the money they spend, and their ranks are overwhelmingly dominated by “progressives,” to use the fashionable label of the day.
This is what’s “warping” our political system — and they’re philosophically in bed with Krugman! So what’s his beef?
Freelance columnist Mike Rosen’s radio show airs weekdays from 9 a.m. to noon on 850-KOA.
