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Income gap isn't a bad thing

Thursday, Oct. 4, 2012, 12:01 a.m.
 

If you're looking for reasons to hate the American way, “income inequality” is this year's hot ticket.

Never mind a cancerous national debt. Or unemployment stuck above 8 percent while good jobs go begging for qualified applicants. It's dinned into us that the “income gap” is growing.

This trumps all virtues. Even the recession picked favorites, we're told. The rich grew richer while the poor and middle class fell more and more behind.

Many statistics are summoned to prove that U.S. prosperity is an upper-crust thing. Since the 1970s, if corrected for inflation, average wages are shown to have not gone up a lot. Yet the lights in the mansions blaze away with the revels of the fortunate few.

We the People are invited to somehow “correct” this shameful skewing.

Because it's wrong — a flaw in capitalism itself — for the well-heeled to keep rolling in it while the hard-working rest of us (99 percent allegedly, but who can check?) are huffing and puffing to stand still.

And yet how does the system defend against the deadening cure of the income redistributors — more welfare statism, higher taxes on high earners in the name of “fairness?”

Put aside the fact that top bracketers already pay an outsized share of income taxes, the casts of victimized and victimizer are always changing, too. Poor families do rise out of poverty, while bad luck or habits knock people down with all the advantages. Statistically, our classes look more rigid than they are.

But here's another thought. Maybe the “income gap” isn't such an awful thing after all, a paper tiger.

How, for example, does it harm Joe, earning $35,000 a year, that Jim earns $1 million? Is Jim's good fortune a theft from Joe?

Jim might be Joe's employer. His larger share of profits might be Joe's smaller share. A competition for those dollars is just natural. As Jim's profits rise, he'll probably pay more and hire more. If Joe still feels underpaid, he can sell his skills to another boss and learn new skills to be worth more.

But how could this basic worker-boss aspect of the “income gap” be improved by outside forces?

By forcing Jim to pay Joe more? Look at the consequences. Joe will have more to spend but Jim less. And Jim is likelier to spend on plants and equipment, employing more Joes. He's also far likelier to give bigger to educational, religious and cultural institutions. What, after all, can the rich do with their money but spend, invest, donate and bequeath? Countless Joes reap the benefits.

Occupy Wall Street types will no doubt pour abuse on all this as “trickle-down prosperity.” An ugly tag on a system that works in fact pretty well.

Corporate boards of directors, of course, do the American way no favors by creating outrageous pay-and-perk packages for CEOs. That's how to sow envy and disaffection among rank-and-file workers, a very short-sighted abuse of privilege.

But what really hurts the poor — especially in so many countries less free than America — isn't the income gap but the opportunity gap. There's the true killer of prosperity, and in the USA it is fought all the time at the humblest level, right in the home. Two responsible parents can improve the outlook for their kids immeasurably. By making sure they're ready for school and that schools actually teach. The poor in America have problems without doubt. But the income gap isn't one of them.

Jack Markowitz is a columnist Thursdays for Trib Total Media. Email him at jmarkowitz@tribweb.com.

 

 
 


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