It’s always wise to assume the worst when you hear politicians declaring war on a vague notion, such as “inequality.” Inequality is replacing “injustice” as the eternal socialist crusade of choice. “Injustice” had too many connotations of actual law enforcement – something the Left generally dislikes. They really hated it when their quest for cosmic, redistributive “social justice” was conflated with the mundane business of arresting thieves. Also, the public was beginning to wonder how much unjust treatment of decent, law-abiding people they would be expected to swallow in the name of achieving centrally planned “social justice.”
“Income inequality” is a far better dragon for aspiring socialist knights to slay. It’s open-ended and entirely subjective. There will always be a lot of people with low incomes, and a much smaller group of people with higher incomes… who are, in turn, easily conflated with people who are asset-rich. You’ll notice the Left’s jeremiads against the Evil Rich make no distinction between the businessman who earns a million dollars, and the trust-fund kid who inherits it. Their policies tend to be far more effective at soaking the former, but they pretend they’re really angry at the latter. And of course, special exceptions are made for the deserving rich – people who earned their millions fair and square, like entrenched incumbent Democrat politicians and entertainers.
There’s no way to carve up and redistribute the pie enough to make “income inequality” disappear. It will always be large enough for collectivists to declare it unacceptable, and demand new compulsive powers to do battle against it. It’s a problem the government can easily make worse – as Barack Obama’s Wall Street-oriented economic policies have done – while foisting all blame on whatever remains of the “private sector.” It’s the global warming of politicized economics.
The income inequality crusade also grants liberals a priceless opportunity to appropriate the language and principles of capitalism. You’ll notice that they don’t present themselves as welfare-state paladins looking to secure the resources needed by the utterly destitute, who face death and ruin without the State’s mandated charity. No, they posture as technocrats, vowing to “enhance access to opportunity for all.” They’ll tell you they want to make capitalism better and more compassionate, not only for the forgotten few who might be left to die in dark alleys, but for people that every other society on Earth – and every other era of history – would consider remarkably well off. Pure tax-and-spend welfare state ideology runs into the inconvenient fact that prosperous capitalist nations don’t generate a very large number of truly destitute people. There just aren’t a lot of votes there.
So the name of the Left’s game is to trick the middle class into thinking of itself as poor. People who see themselves as the victims of sinister, invisible, exploitative forces are not going to make a fetish of retaining their independence. They need protection, which only the compassionate State can provide. Notice that in all of this “income inequality” blather, President Obama never gets around to naming any individual perpetrators, or accusing them of any specific crimes. Were are supposed to accept that something is vaguely, indefinitely wrong, and only the President’s employment of vast compulsive force can fix it… even though it’s gotten much worse under his watch. To some extent, we’re meant to take this as testimony to the vast power of the virtuous Obama’s shadowy enemies, who managed to screw the Little Guy even worse despite Obama’s tireless efforts to thwart them.
But some of the “income inequality” strategy goes beyond old-fashioned class warfare and scapegoating. The President wants us to join him in a War on Misfortune, in which he uses government power to rescue the Little Guy from the random abuse of cruel Fate. The usual villains appear constantly in his speeches – everyone from corporate jet owners, to ATM manufacturers, to tonsil-stealing doctors and greedy insurance company executives – but there’s also a constant appeal to let him seize money and power to create a bulwark against misfortune, extending far into the middle class, until it reaches the often-pillories six-figure income level, at which point everyone is expected to weave their own safety net, unless they happen to own a “green energy” company.
One of the most commonly repeated refrains in the never-ending sales pitch for ObamaCare is that it will prevent people from suffering financial devastation just because they get sick. That seems like an odd claim to make on behalf of a system noted for selling expensive insurance policies with $10,000 deductibles, but it still has visceral appeal to people who understandably regard medical expenses as a cruel penalty imposed by random fate, not a product purchased on the open market.
Obama’s speeches often refer to the “injustice” of hard-working people who can’t afford a good life, which is very different from the danger of impoverished families starving to death. This injustice is meant to be especially galling when the nation contains so many “millionaires” (i.e. married couples making over $250,000 a year) who presumably live better than they truly deserve. What, exactly, constitutes a good life, and how is the government supposed to go about providing it? Those details are malleable, just like the definition of “income inequality,” and for that matter, “poverty.” It’s a shell game that can go on forever. While you’re listening to the language of charity, poverty, and exploitation, Obama works diligently to protect the interests of highly-compensated union workers, whose salary and benefits are never analyzed for their “inequality” with those of equivalent non-union labor. Nor do we hear anything about the fantastic concentration of unequal wealth occurring in Washington D.C., which has become one of the richest cities in the nation, frequently topping the list. Did the New Aristocracy really “earn” its wealth, fair and square?
Tim Carney at the Washington Examiner makes the point, backed up by international studies, that “income inequality” is only an absolute social and economic negative when caused by political corruption and cronyism:
For instance, Indonesian businessman Prajogo Pangestu is a political billionaire because the government-owned bank extends him loans on absurdly generous terms and the state erected tariffs to protect his business from competition.
Or here’s a Wall Street Journal account of Russian Mikhail Fridman: “[Fridman was] among a handful of businessmen who helped to finance Boris Yeltsin’s re-election campaign in 1996. The Kremlin rewarded these men by selling them state-owned oil and metals companies at bargain-basement prices.”
Contrast these men to America’s richest people. Bill Gates and Warren Buffett haven’t abstained from politics (Buffett is an Obama fundraiser), but they overwhelmingly made their money by inventing well and investing well.
When a country’s wealthiest people got their wealth as Pangestu and Fridman did, inequality places a drag on the economy. When a country’s wealthiest got wealthy through market means, the resulting inequality has no negative effect on economic growth.
This jibes with what we know about free markets. If people can get rich by providing valuable things at good prices, then society will get more valuable things at good prices—and people across the income spectrum benefit. But if people get rich by pocketing subsidies and using the state to crush competitors, then they gained their wealth at the expense of everyone else.
Perhaps it’s a case of psychological projection – statism produces a politically connected elite who use force to cut themselves a healthy slice of a limited economic pie, so that’s how they think private-sector entrepreneurship works. Maybe the statists believe their superior morality and wisdom entitle them to a better living than money-grubbing private businessmen. The irony is that they sucker lower-income people into their schemes by promising to protect them from the very misfortunes that political control of the economy causes, as ideology blinds it to opportunity, and political will drives it to double down on failure.
A great deal of the nation’s wealth has been destroyed by the bad decisions of our political elites. And they’re okay with that, because it creates more misfortune, which they can advertise themselves as the last line of defense against. The Left has stepped up its game by offering its clients protection against setbacks, rather than starvation. Once you’ve used “inequality” rhetoric to make people forget about the rising tide that lifts all boats, you can hold them underwater forever.