Redistribution Won't Curb
Inequality
Gary Gerard,
dumbhoosier.com
Pope Francis recently called for a “legitimate”
redistribution of wealth.
I have the utmost respect and admiration for Pope Francis. I
think he is truly a humble, compassionate servant of the Lord.
I know exactly what the Pope is talking about and I don’t
generally disagree with it.
Certainly the divide between the haves and have nots around
the world – and especially in the U.S. – is becoming more
pronounced with each passing year.
So I can see where the Pope is coming from with his notion of
wealth redistribution.
It’s not as if this is some new concept. It’s been around at
least as long as Robin Hood became known for taking from the
rich and giving to the poor.
But coming up with a plan to redistribute wealth – charitable
as it may be – does nothing to repair the system that got us
into this mess in the first place.
I’m talking about economic inequality here – the ability of
the Average Joe to climb the economic ladder.
An economics professor has been studying economic inequality
for years. He is Emmanuel Saez, from the University of
California, Berkeley.
His research shows that U.S. income inequality has been on a
steady increase since the 1970s.
After World War II, the top 1 percent’s share of all income
was 11.3 percent while the bottom 90 percent got 67.5 percent.
Those levels stayed pretty much the same until the middle
1970s. Since then, the top tier’s share has been rising
dramatically and the bottom 90 percent have been falling.
Saez says in 2012, the 1 percent took nearly 22.5 percent
while the 90 percent’s share fell below 50 percent for the
fist time in history – 49.6 percent.
So sure, you could come up with a scheme to Robin Hood the
system. But I don’t really see how that is going to change
anything over the long haul.
Chances are you would deincentivize folks who might normally
invest or risk capital or create jobs.
Lots of people say that the U.S. economic system is to blame.
I suppose that’s true. It is, after all, the economic system
that places us on our various rungs of the economic ladder.
The overarching economic system in the U.S. is
capitalism, and there are plenty of people who say that
capitalism is the reason we have economic inequality in
America.
That’s where those folks and I part company in this debate.
Blaming capitalism for economic inequality is like blaming
cars for running out of gas.
It’s not so much the capitalism that’s gone awry.
The U.S. has always been a capitalist nation. Yet the economic
inequality has become more pronounced since 1970. Why?
I’ll tell you why. And it’s not because capitalism has
changed.
Capitalism in the U.S. used to work a lot better for everyone
in the past because there were lawmakers who actually cared
about their constituents.
Federal elected officials were statesmen who did the bidding
of their constituents. They crafted laws based on what was
best for the majority of the people in their districts.
At some point in history, that notion went down the drain.
Elected officials started crafting laws based on what’s best
for the guys with the biggest checkbooks.
Today, it’s to the point where if you want to be president,
it’ll cost you a cool $1 billion. And all that campaign cash
comes with strings attached.
All up and down the political spectrum, Senators and
Congressmen take money from their benefactors to ensure their
re-election. So, of course, when it comes time to craft
legislation, who do you suppose they have in mind?
You know.
And with a fully compliant U.S. Supreme Court – money is
speech and corporations are individuals – more and more cash
continues to flow into the political system.
Capitalism is not the problem. The problem is that we’ve
slipped away from capitalism. In today’s America, we have some
weird hybrid form of semi-capitalist corporate oligarchy.
Unfettered capitalism is a bad thing. There needs to be checks
and balances. There needs to be regulations.
Who makes those regulations? Who makes the rules? You want to
fix blame with regard to economic inequality? Look no further
than the U.S. Congress.
Who do you suppose thought it was a good idea to allow
corporations to outsource jobs and park profits overseas to
avoid taxation?
Who thought it was a good idea to allow banks to act like
investment firms and vice versa?
Who thought it was a good idea to allow financial firms to
spool up and “securitize” high-risk mortgage loans and then
sell them off as “bonds” backed by the federal government?
(Oh, yeah, and while we're at it, let’s allow those firms to
keep those transactions off their balance sheets so investors
can’t tell how deeply leveraged the firm is.)
Who thought it was a good idea to loan more than a house was
worth to somebody who couldn’t afford the house in the first
place?
All these things – just a few off the top of my head – tilt
the economic advantage to the 1 percent.
And over the past few decades there have been hundreds more
“rules” and “regulations” passed by Congress that did
precisely the same thing.
That’s because these days, a small group of corporate and
union oligarchs get to make the rules.
Not one of the things I just mentioned benefit the Average
Joe. In fact, if you asked Average Joes all across this great
land, they would be dead set against proposals like these. But
it doesn’t matter what the Average Joe thinks anymore because
nobody in Congress represents him.
Ask the 1 percent and they’ll tell you, “Hey, we’re just
following the rules.” That’s true. But it’s also true that
they made the rules.
It’s a classic example of the fox guarding the henhouse.
I am truly sorry, Pope Francis, but until lawmakers are
willing to abandon their benefactors and do the bidding of
their constituents, no form of wealth distribution can work.
And I don’t see that happening anytime soon.
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