Inequality III - a natural state of affairs

reprinted from July 23, 2004

Over the past two days, I granted that it can feel uncomfortable to live in a society with great economic disparity. Those of us with money may feel guilty, and those without may feel envy and resentment. There's a lot of relativity in those feelings; I've had poorer young people visit the modest house I once owned, and, to my surprise, describe it as a "mansion". When you're used to sharing a bedroom, separate bedrooms seem luxurious. When you're used to cramped rooms, a big open room seems castle-like. Other visitors would have pitied me for not having air conditioning, a second bathroom, fireplace, or some other amenities common in southwest Minneapolis.

All of that still leaves the question of whether there IS some solution to inequality, which is perceived by many as a serious social problem. Although I'm short on traditional "credentials", I do have considerable life experience at a wide range of economic levels. Over my lifetime, I've watched as U.S. economic "classes" have become more "stabilized". By stabilized, I mean less movement from one "class" to another. I see poor people who are more likely to remain poor, middle-class people more likely to remain so, and a stable affluent class. There are some who fall from one class to a lower one, but there are clearly fewer people climbing from one class into the next higher.

That "stability", or confinement, depending on what you want, is certainly an effect of graduated taxation that discourages us from increasing our income, omnipresent regulation that discourages innovation and entrepreneurism, and welfare programs that force income from class to class.

What characterized our nation's period of dynamic growth was precisely the unencumbered movement upward from lower to higher classes. America became known as a place where the poor had an opportunity to achieve wealth. Rags to riches stories abound in our history. It was spectacular, and that opportunity for upward mobility attracted immigrants by the millions. They didn't come here for security, welfare, or charity. Most came from more controlled, stagnant nations where there was little opportunity to improve their lot. Most voluntarily took a step DOWN, just for the POTENTIAL to move up.

In a free, uncontrolled economy, there will always be extremes of wealth. That is not only perfectly natural, but it is the optimum scenario for everyone, not just for the wealthy. In an uncontrolled economy, the poor look to the wealthy as someone to emulate, and believe that they can achieve the same. The disparity, combined with the freedom to achieve, attracts and drives the poor into the struggle upward. The U.S. was such a great example of that. Successive waves of immigrants arrived, each beginning in serious poverty, and working their way upward, replaced by a new wave of immigrants at the bottom.

There is no better environment in which to live than a free economy, regardless of where you start on the economic ladder.

Most of us have been taught that it was just that uncontrolled economy that led us into the Great Depression, massive unemployment. We've also been taught that it was only the implementation of welfare programs by FDR that brought our nation out of that depression. That argument is beyond the scope of this article, except to say that we've been taught wrong, and that it shouldn't surprise us. We were taught in government schools which have every incentive to teach us that government is the solution, not the problem. It is no coincidence that FDR was a bald-faced admirer of the controlled, dictatorial economies of the Soviet Union, Germany, and Italy, and implemented many of their policies during his presidency. We watched where those policies led those other nations, and we're watching the same effects here.

Common sense should be enough to tell us that opportunity and security are virtual opposites. No risk, no reward. A government that seeks to stabilize an economy through redistribution and centralized planning does just that... stabilizes most of us where we financially begin... the wealthy stay wealthy, those in the middle class remain there, and the poor get stuck at the bottom.

If we truly have sympathy for the poor, or want all of us to have more opportunity, we have to be courageous enough to stop trying to manipulate our economy and let ourselves run free. That means eliminating welfare programs, cutting taxes dramatically, and eliminating most regulations... all of which have combined to bring us to the dull, stagnant economy we're now stuck with.