On This Income Inequality Business…

Earlier tonight John Binder had a good piece challenging Republican candidates for 2016 to engage the Democrats on the “income inequality” issue the latter can’t shut up about.

Binder’s piece ought to be read in full, but here’s an excerpt…

The Huffington Post, Salon.com and the New York Times constantly report on income inequality, pitting the working and middle classes against the privileged, wealthiest one percent. It is a subject that the Left is always willing to talk about because their solution is ‘Give the government more money!’

However, conservatives and libertarians who reject the class warfare tactics of the Left should be more than willing to talk about income inequality, because the truth is, the Left has created this massive wage gap between the rich and poor.

Articles from Salon.com repeatedly discuss how the wealthy one percent control a majority of the wealth in the country. But, what the Left will never discuss is how their liberal, progressive policies have made the one percent richer and the poor even poorer.

Republican presidential-hopefuls Sen. Rand Paul (R-KY), Sen. Ted Cruz (R-TX), Sen. Marco Rubio (R-FL), former Gov. Jeb Bush (R-FL) and Gov. Scott Walker (R-WI) should all put on their best Margaret Thatcher impersonation and talk about how the Left has institutionalized income inequality through their liberal tax codes and regulations.

In blue states, run by Democrats for decades, income inequality is horrendous. New York, California, Connecticut and Massachusetts all have deplorable records when it comes to income inequality.

In Los Angeles, the top five percent are earning 12 times more than the bottom 20 percent of residents. Other states who have had Democratic governors and legislatures are along these same lines.

And yet, all we ever hear from Sen. Elizabeth Warren (D-MA) is how the rich need to be taxed more and the poor need to be lifted up via the social programs from the federal government. But, that’s what California and Massachusetts have been doing for years, and like Thatcher says, it only makes the poor more poor and the rich more rich.

Why conservatives and libertarians are not calling Warren out is beyond reason. Rand Paul and Marco Rubio should be flocking to these income inequality statistics any chance they get, making the case that less federal government, less state government and less taxes is the key to closing the gap between the poor and rich.

I’ll add a thought or two to this by way of specificity.

First, and there is a famous old quote about – I think – Henry Ford that I would offer rather than paraphrase if I could find it, but it goes something like if you took away everything he owned he would go out and make it all back in 10 years. There are people on this planet who have a talent for making money, and those people cannot be stopped from making money. They will become rich no matter what kind of society you make them live in. This includes American industrialists, Soviet black marketeers, African warlords, Chinese communist crony industrial operators, Euro central bankers, Italian mafiosi…the list goes on and on.

Often, the skills to make a fortune are passed down from one generation to the next within a family. Not always.

The point being you don’t need a great economy, or even a good one, for the people who are really good at making money to make money. You don’t even need an “economy” at all; even in some of the worst places on earth, whether Mad Max anarchies or socialist tyrannies or Islamic hellholes, some people will find a way to become wealthy.

And this is why the Left is left scratching its collective head over the performance of the American economy under Obama. They’ve raised taxes everywhere they could, they’ve imposed regulations on evil Wall Street types, they’ve staged Occupy protests, they’ve denounced capitalism and they’ve promoted the environment at the expense of evil corporations. They’ve even done what they could to prop up unions. And still, the rich get richer while everybody else lives hand to mouth.

The upshot? Obama and the Left have built a static, moribund economy. As Hillary Clinton was “surprised” to find out this week, small business formation is all but dead in America today. The regulations and taxes imposed by her party during this administration, chief among them Obamacare, make it onerous if not impossible to start a business, and people just don’t want to do it anymore. Not that they could get financing even if they did, because the banking regulations Obama put in place have eliminated the ability of a banker to look a prospective entrepreneur in the eye and make a gut decision to grant a loan.

What this means is, people who are really good at making money will continue making money even with Obama and his gang in office dragging the country to the left. And they are – they’re outpacing the rest of us at speeds which give Democrats the vapors. At least until the Democrats can identify them and start putting the arm on them for donations to the Sierra Club or ActBlue.

A static, moribund economy doesn’t mean the folks with a talent for making money can’t make it. What it means is the rest of us have to live hand to mouth, because there are no opportunities for people who aren’t particularly good at making money to make some. Or for the non-moneyed to learn how to be good at making it.

What you need is a booming economy, so that startup entrepreneurs, dumb-but-enthusiastic kids out of college, dreamers and inventors, ambitious housewives, pissed-off corporate functionaries looking for a challenge and oddballs with a crazy idea that just might work can find holes in a growing market they can fill. When you have a static economy that grows slower than the population, and worse a sclerotic economy overregulated by the government, those holes don’t exist – or even if they do, there isn’t the combination of available capital, optimism and adventurous, prosperous consumers in search of something different you need for new industries and innovation to bloom.

Overregulation doesn’t stop the evil corporations from making money at the expense of the rest of us. Quite the contrary. The evil corporations are the ones who can afford the lawyers and lobbyists who write the regulations, and they always do exactly that so as to protect or grow their market share.

At the expense of the startup entrepreneurs, dumb-but-enthusiastic kids out of college, dreamers and inventors, ambitious housewives, pissed-off corporate functionaries looking for a challenge and oddballs with a crazy idea who might otherwise approach their industry with a different way of doing things that might eat away the status quo and challenge the folks at the top of the pyramid.

It usually isn’t conservatives who try to regulate food trucks out of existence in order to protect restaurants. Most of the time, with an occasional exception, it’s liberals who do that. It’s liberals who try to stop Uber, AirBnB, VRBO and other disruptive business ideas. They scream about income inequality while fighting like hell to insure the people who are currently making all the money today are the ones making all the money tomorrow.

It’s idiotic.

The rich will get richer, that’s how it works. The fortunes built by Steve Jobs and Sam Walton dwarfed the fortunes built by Cornelius Vanderbilt and Bernard Baruch. But in a dynamic economy, who the rich are is what always changes – and that’s a good thing.

There used to be an old saying – “shirtsleeves to shirtsleeves in three generations.” What that meant was if by some great achievement or accident of fate a family were to create a fortune out of blood and sweat, by the time the grandchildren or great-grandchildren came along that fortune would be squandered and some other family would be on the rise. This isn’t particularly true anymore, both because the prosperity of the nation making it easier to hold a fortune together and the less-dynamic nature of our economy, but there are nonetheless lots of examples of rich brats scattering their patrimony. Moreover the lesson it taught about capitalism is a good one; namely, that just because you might be a member of the 1 percent now there is no guarantee you’ll stay one unless the government acts to keep things static.

And this is what the Republican candidates need to get across. What’s needed is a lot more economic activity. What’s needed is more people jumping into the entrepreneurial game – in the knowledge that lots of the resulting new businesses will fail, and perhaps spectacularly so. But even a failing business employs people, and people employed are people practicing and learning workplace skills which can be applied elsewhere. Even the failed entrepreneur learns lessons that can be applied in the next venture.

When that engine is shut down because the government sticks its nose in and destroys the risk and reward of free enterprise, those skills and lessons are not learned. Atrophy results. And the people who aren’t good at making money never make any. They don’t get ahead and they don’t advance.

But the folks who are good at making money, they’ll do just fine. All you’ve got to do if you’re a Democrat is make them feel guilty about it and they’ll pay $35,000 a plate at your fundraiser where you pretend to demonize them while letting them write the regulations of their industries.



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