Is income inequality 'morally wrong'?

BrntOrngStmpeDe

BrntOrngStmpeDe

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www.cnn.com/2013/07/25/opinion/sutter-income-inequality-moral-obama/index.html?hpt=hp_t4

There are a couple of arguements included in the piece. I tend to come down in favor of three in particular.

1. Inequality isn't a moral problem; opportunity is
2. Extreme inequality ruins democracy
3. The size of the rich-poor gap matters

I'm not sure I would use the term 'moral' but I certainly believe that this trend is a problem for our country.

So there are two questions here IMO.
1. Is it even a problem?
2. Is there an effective solution that won't destroy the motivation to succeed that drives the economy?

I believe there has to be some disparity of income to motivate most people to work hard and to do better. I also believe that the required disparity is not $30K vs $30M.
 
Inequality in and of itself isn't necessarily bad. Even growing inequality can be a good thing as long as the quality of life is improving everywhere on the curve. In other words, if the poor are holding steady, or increasing wealth slowly while the rich are becoming wealthier at a faster rate, everyone is still better off.

But that's not what we are seeing in America today. The rich are growing wealthier at an exponential rate, but the middle are becoming poorer as wages stagnate or fall, debt increases, and savings fail to earn enough interest to keep pace with inflation.

Much of America's wealth generation no longer comes from production of goods which benefit society, but instead from financialization, which results in skimming income from the masses toward the few. The Federal Reserve policies (zero interest rate, and QE) have cost savers billions of dollars while generating billions more for the largest finanacial institutions. As more wealth flows toward the top, the big players gain more political leverage which is used to change and enforce laws which benefit the powerful and eliminate competition.

Also, one can argue that America's values have changed over the decades. While it has always been desirable to become wealthy, there was a time where people tended to measure people's worth by their integrity, work ethic, kindness, generosity, etc. Now, it is more the norm to evalute people based on how financially successful they are. The largest buildings in cities aren't churches (once upon a time that was true), but usually banks or insurance buildings.

As attaining wealth and power becomes the driving force in society and inequality increases, eventually the law begins to break down and government becomes corrupted. This is a continual process, not unique to one particular political party.

If there is a solution, it probably is related to cleaning house and starting over. I don't think it's something that can happen with an elections at this point because the entire system is compromised. The economy has changed, the mindset of the public has changed, and the institutions established to govern the people are now used against them. The governing process is less transparent than it ever has been and answers to fewer and fewer people. The general public has very little say.
 
I think there is a huge illusion being played on the American people. The comparison of the average person's income is typically to the business leaders income and that's not a proper comparison. The illusion is that these people of wealth were somehow given their money when in reality it comes from executing their careers at a completely different level than the average person. When people get over feeling cheated because the business leader is a million/billion/trillionaire and look at the hierarchy of the business itself (their peers, supervisors, their supervisors, etc) they'll see there is a path to solid money. If they want to be a million/billion/trillionaire then they should come up with a great business model, start a business, fail a few times and make it big. Even in today's economic situation there is plenty of equal opportunity in the market as long as the business model is a good one.

In the average business if you want to grow your salary it takes self honesty, personal development and sacrifices. If you just want to clock in, clock out and work hard it's doubtful you'll ever seriously advance your salary because at this point you're just a worker bee and there are billions of those.
 
Today's Wall Street Journal editorial looked at the difference between equality and opportunity(growth).
(these are subscription items... so may or may not work for you -- The Link The Inequality President, Editorial -- 7/25/13, paper edition A12

Here are some talking points...
In reply to:
Click to expand...
 
I don't have a problem with a large gap between the rich and poor as long as a middle class lifestyle is obtainable for the average person. In the overwhelming majority of cases, people that go to school and work hard will make enough money to live in a safe neighborhood and not worry about basic necessities.
 
No, I do not believe in income equality. However, I do have a problem with a ruling class. The D.C. metro area is home to eight of the eleven U.S. counties with the highest median income, including the top three: Loudon, Fairfax, and Arlington where median incomes exceed $100,000 per year. Greed, resentment and worry about what others earn through hard work and sacrifice only feeds the government beast.
 
A good chunk of the lucrative living in DC is due to the number of government employees under just one branch: the Executive. That includes the Pentagon of course.

The sum total of government employees in the other two branches is 64,000, while that of the Executive (to include nation-wide Federal offices) is two and three-quarter million.

I've an idea. Let me set up a non-profit organization to distribute money. Give me $4 trillion a year to spend and distribute, and I only ask for five ten-thousandths of that for operating expense. Or, two billion.

I'm sure all my staff and I can live damn well on that, and it's free money and we don't even have to do that good of a job.
 
"Capitalism is the unequal distribution of wealth. Socialism is the equal distribution of poverty." (Winston Churchill)

That sums it up pretty well.

HHD
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texas_ex2000,
While I agree their is 'opportunity' for a few people to climb the economic ladder through a combination of skill, intellect, drive, etc. I would argue that this is different from EQUAL opportunity (or anything approaching equal opportunity). If life can be represented by a climb to the top floor of the empire state building, the financial elite start out on the 30th floor while most of us start out on the ground floor, not exactly an equal shot.

Romney is great example. While there is no doubt the guy is smart and hard working and earned most of is money via above board measures, he certainly had a huge head start on the rest of us by virtue of the schools he could attend and connections his family had. So is he to be commended/rewarded more (because he took all that personal capitol and leveraged it to become a multi-millionaire), than the guy that started in a mobile home in south texas and only managed to get to a regular income.

There is no perfect system so we can't gaurantee perfect equality but we can certainly aspire to much better than we have now and we can certainly implement measures that will bring us much closer.
 
And would also stipulate that the mere existance of equal opportunity will not in itself ensure equal outcomes, but I'm not supporting a push toward EQUAL outcomes. I support a drive towards a very flat curve w/ respect to opportunity and MORE flat curve with respect to wages/compensation.

for example, my kids have all roughly the same opportunity (as represented by genetics, access to ed., and parental suppoort) but I certainly don't think they are all going to achieve equally in financial terms or even in other measures and I would never support a system that required the outcomes to be equal. First, it would undermine the requirement to work and be responsible for your own actions, second the system that attempts to achieve perfect equality is doomed to fail, IMO. There are too many variables to make it work.
 
I think some don't understand what 'equal opportunity" means.
I think it gets confused with " equal outcome".
 
I wish more American's would travel to some Socialist or formerly Socialist countries to see what real income equality looks like. American's do not understand what real poverty is.
 
BOSD,

I don't know if I can argue that there is PERFECT EQUAL opportunity. But thanks to technology, there is certainly more equality for someone today and my kids than there was for my parents...so much so that whether it's perfectly equal is moot.

Take your example of Romney. The guy had some advantages growing up in an upper class family. He went to BYU and Harvard for business school, then made his money in private equity. Today, making it and being successful in private equity has very little to do with who your parents are. All that matters, as you pointed out with Romney, is that you're smart and work hard. Now, 30 years ago, getting the education that opened the door for the interview was the hard part. Not so much anymore.

To quote Vol4Life, "It can't be done" is the biggest obstacle for most.

Let's take your kid in South Texas growing up in the mobile home. If he had a certain level of intelligence, not education, but intelligence, ambition, and work ethic he has just as much opportunity to land a job at Bain Capital as any prep school Andover kid.

1) He has access to the internet. Don't pull the BS that maybe he can't afford a computer, or his schools don't have computers...that's bull. He may not have the fastest connection in the world and a MacBook Air, but every kid has a freakin' Facebook account now. I don't care if he lives in a mobile home, if he has the capability to get a Facebook page, he has the ability to research colleges and admission message boards to gauge what's expected and what he needs to do. That sort of information wasn't available to kids 20 years ago.

2) If he's super ambitious, he might research Yale's admission and financial aid statistics. He'll see ~60% of freshman came from public high schools and that ~60% of all student get financial aid, and that if he got in and is that poor, he probably wouldn't have to pay a single cent. For kids from middle-class families, Yale's financial aid program would effectively make the costs equal to going to UT. Essentially, thanks to the evolution in technology, Yale's endowment has enabled prospective student to remove the cost of the school from the decision making process. You get a degree from Yale, you're set for life. This is pretty much the story with every Ivy League school.

3) Oh, but kids from Andover have all these advantages...my kid can't possibly compete with those kids who have tutors and SAT classes, etc. I'm not arguing that's not true. Remember 60% of their admits came from public schools and they don't use the same SAT standards for a kid that obviously couldn't afford a SAT tutor. Yale wants kids who are exceptional and can become a leader. That means one thing for a kid at Andover than it does for a kid in the Valley. Hell, 16% of non-international students are Asian. Statistically, it's likely that the vast majority of those Asian kids are 1st generation. 30, 20 years ago...how many Asians were at Yale? Not a lot. These are kids who's parents came to the US with little in either money or English skills.

4) So how does this South Texas kid get in? He has to commit himself to doing everything he possibly can to make himself a great candidate. The level of effort and hard work is no different for this smart South Texas kid than it is from that Andover preppie. Thanks to the internet, he has all the same access to information that a private school kid does. He has to bust his but at the library like any other kid that gets to Yale. He has to develop his intellect, which means getting off of Facebook, playing sports, writing, painting, and volunteering. Again, thanks to the internet...those are easier to get into than ever. If this kid really wanted to go to Yale, he'd probably contact Jennifer Alyn Munzel BA '81 at the Yale South Texas Alumni chapter for resources and advice. Thank god for the internet.

5) Let's say you think Yale's too ambitious, which is THE problem...but I digress, well this South Texas kid still gets to UT, one of the best schools in the county, if he's in the top 10% of his South Texas public school.

6) He gets into Yale, he woks hard. He gets a job working as an investment banker on Wall Street helping companies raise capital to grow their business. If he's good, works hard, and wants to, he can get a job at a private equity firm like Bain Capital managing investments for public pension funds and university endowments after 2 years. Let's say he went to UT instead, that's a not a problem. He has to work hard at UT get an interesting job, not even a well paying one, in Texas. Could be in energy, tech, media, not-for-profit, you name it. The more eclectic the better. In fact, join the military...business schools love military officers. After 2 - 4 years, apply to Harvard Business School and get your MBA. If you went the military route, it's free thanks to the GI Bill. After Harvard, go to Wall Street. To be honest, the public university => military service => Ivy League MBA or law school is probably the easiest way for economic hyper-mobility. I think this is the route HorinHongKong took. I think his parent were immigrants, he's a Texas Ex, was a naval officer, then I think he got his MBA from Harvard, and is now making it rain.

7) If he's good at that, he can start his own PE firm.


Most importantly, this South Texas kid can now send his kids to Andover...or not thanks to technology.
 
Larry T made an excellent point; that anyone with a small amount of desire and the willingness to use whatever help and advantages are available can achieve a comfortable life. This opportunity is there largely due to gov't
What we , the gov't, can't do is give anyone burning ambition and that hard core drive
which separates people.

I am pretty satisfied that we, gov't do offer enough opportunity . What each does with that is up to them.
What more does anyone think we can give anyone ?
 
The greater the gap between the haves and have-nots the worse off our republic is, IMHO.
The problem as I see it is that we have cultural issues that have created systemic problems.

Essentially, statistics show the middle class is shrinking and that it's MUCH easier to fall back to the "poor" class than the "wealthy" class.

We have a perpetual welfare class that aren't taking advantage of the opportunities in front of them. Either they are ignorant of the opportunities or unwilling to take them on. Worst case, some feel hopeless to crawl out of their situation.

The inverse of that is that the "wealthy" class have codified a floor to dropping back into the middle. This was never more on display than the Wall Street bailouts that catapulted the financial industry to record profits in just a few years. Even with gigantically disastrous decisions by leaders there was no financial accountability. Sure, some bankers were fired then simply hired into other executive positions elsewhere. Lobbyists continue to codify the ruling elite power via legislation.

Socialism doesn't work. Perceptions of extreme income disparities combined with lower class hopelessness lead to revolutions though. For the sake of our republic, we need to acknowledge this disparity and legislate to constrain it. It's actually in the best interest of the "wealthy" to ensure income disparity isn't too great, IMHO. I can't define "too great" but it certain seems like we are quickly approaching that level.
 
www.wired.co.uk/magazine/archive/2013/04/ideas-bank/the-online-utopia-doesnt-exist

I would suggest that the digital age is not quite as egalitarian as many would suggest.

" If he had a certain level of intelligence, not education, but intelligence, ambition, and work ethic he has just as much opportunity to land a job at Bain Capital as any prep school Andover kid. "

I would suggest that this is false. Even today interviews are more often granted on a personal referral basis and the kid from Andover is much more likely to know-a-guy than the S.Texas kid. So the probability (opportunity) for that S.Texas kid to get a job at Bain is very low relative to that kid from Andover.

"The level of effort and hard work is no different for this smart South Texas kid than it is from that Andover preppie"

Really...? It requires no more effort for a S.Texas kid that has community college graduates for mentors and teachers? Or whose parents have a 500 word vocabulary? Or has to wait two hours to use the single computer vs. the andover kid that is given a tablet for personal use?

I'm not saying that we can solve each one of these issues but to assert that the opportunity is equal or that the effort required is any where near equal is simply not true.

It is true that there is a path to the top for the masses but that path is not as wide or as plain or as equal and many here suggest.
 
So I haven't seen anybody argue that inequality is 'right'. I personally think that some wealth inequality is 'right' not necessarily from a moral correctness but rather from a practical perspective. I think we need SOME disparity to generate motivation for most people, but I do think the disparity is (and has been for a while) too large, and it certainly seems to be trending the wrong way.

what i've seen argued is 1) that equal opportunity already exist. I dispute that.
or
2) That we are better than everyone else. I dispute that.
or
3) That there is no way to get to fair/equal opportunity.
... Perhaps absolute equal opportunity is impossible but we can get a damn site closer than we are now.
 
Equal Opportunity exists, and I can agrue that all you want.....coming from a very demographically diverse HS, everyone had the same chance to get an education and or scholarships in many ways shapes and forms, those who participated and excelled at their education, for the most part are successful, looking at those that screwed around or thought they knew everything are jack wagons. Both of these results were from multiple different backgrounds and economic classes. We all had the same opportunities in the late 1980's and going forward.

At Texas and Arizona State I met many people from many different backgrounds, you know these people did, they worked their *** off to get where they were then.

In work all different backgrounds, countires, states, economic status growing up, they all had one thing in common, they worked their *** off and kept pushing no matter the situation.

I will take direct examples of people I have known on every edge of every ecnomic class and demographic and when you born in the United States, everyone has an equal opportunity, regardless of how or where you were raised, everyone has a same basic level of opportunity. Do some people have more opportunity, sure, but no one is denied the basic opportunity in life that easily put someone in the upper middle class, or top 5% of income earners in this country.
 
NJ,

I've just posted what I've seen. You can take it or leave it. And my post have been analyzing an extreme scenario, a trailer park kid in South Texas going to Yale then on to Bain Capital. I'm just arguing that isn't as difficult as many think it is and that despite the challenges, the most difficult one is simply the attitude that it's near impossible to make it happen.

This is an extreme scenario as a conversation point to the thread. To be less extreme, a poor kid can become wildly wealthy without having to make it to Bain Capital. You talk about enrollment % of public school nation wide versus what's at Yale as a negative. It's an elite school...I'm surprised the public school numbers at Yale are as high as they are. And that kid could also apply to Cornell or any other Ivy League school, or any top school and still be wildly successful.

Instead of that poor kid immediately going to Bain...maybe he chooses something a little more reachable and then his kids go to Yale. Maybe the children of the poorest illegal immigrants who speak no English may have an unrealistic goal of becoming a partner at Bain Capital in one generation, but for 1st generation Texans...sons and daughters of hard working English speaking naturalized American citizens, it might take hard work, but there's no reason for them why it can't happen. That's why folks want to immigrate here, because the opportunities are so much better from where they came from.

My mom was a teenager when she immigrated here, my father had no college education when he got here. They came from one of the poorest countries on the planet. One day, police actually questioned my father thinking he was an illegal immigrant when he was trying to get back into our house after locking himself out doing some home improvement projects. The cops didn't believe him, and our neighbors had to come out. My mom eventually started a very successful dialysis service business, my father became an administrator at UT, all three kids graduated from UT, I became a naval officer, and my sister and I both have Ivy League graduate degrees.

It worked because my parents smartly/diligently played what little cards they had into a stack of chips. And I was never ever told that a goal or aspiration wasn't realistic. Excuses were absolutely unacceptable. There are plenty of posters here on WM that think I'm one of the biggest morons on Hornfans...that's fine. If a moron of my level could make it, then certainly anyone can.
 
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I grew up/live on the west side of austin/RR and teach on the east side of austin. To think that there is the same level of opportunity on both sides of town is laughable. Where I grew up, there are usually two parents at home, with possibly the mom staying home. Both parents are usually college educated and pushed academics on their children before they could walk/talk. The kids go to schools with other kids that come from great backgrounds. If they are struggling in school they often get private tutors. If they arent struggling in school they still get private tutors. The learning at school makes sense to them because they have a lot of experiences and have been places. College is an expectation from day one and they know where the money is coming from to pay for it.

A child in poverty usually lives with a single mother and is raised by a crappy cheap day care. The average child in poverty has half the vocabulary of their upper income peers by age three. By the time the average child in poverty has had a million words spoken to him/her, the upper income peers have heard over 3 million. They start school behind and go to school with other kids that are also behind. There are very few tutoring opportunities. They are taught the test and little else. Many have never left their town or neighborhood and have few experiences to connect to their studies. They have very little experience interacting with upper income people and feel like a fish out of water. Many have more presure to drop out to make money than graduate. The ones that do make it, have almost no connections when they get out of school. It is certainly not impossible for the poor kids to overcome all of this, but it is difficult and unlikely.

Bottom line: an even playing field is a lot more than an Internet connection. It's every experience that you have had from before you were even born being the same. There is nothing the goverment can do about 99% of what I listed.
 
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