How to Discuss Wealth Inequality with Your Butler

 

shutterstock_117500908Gone are the days when a man could enjoy his gold plated garbage can and $6,000 shower curtain in peace. The only thing that sours my caviar faster than a discussion on wealth inequality is how badly our side responds when it is brought up.

Why are we always on the defensive when discussing these gaps? In my experience, our responses follow one of two patterns:

  1. Trying to explain that wealth distribution is not important because even the poorest in America live relatively well compared to world standards. If James Pethokoukis wants to have an academic discussion on this in the halls of Ricochet – go for it – but it is a political loser. It may have worked back in the Nineties when all income levels were rising but, with those on the lower side stagnating or falling, it does not message well.
  2. Having tactical arguments with the other side on stupid programs that focus on symptoms. They bring up raising the minimum wage or increasing capital gains taxes and we respond that it would hurt the economy. This may very well be true, but it plays into their game on their turf and makes us look like we are backing up the trust fund kids living off their portfolio dividends.

My recommendation is to end the defensiveness and attack the other side’s ultra-loose monetary policies that lead to wealth disparity. These policies have this impact for several obvious reasons.

  • Zero Interest Rates: What was your savings account earning ten years ago and what is it earning now? Warren Buffet is unlikely to hold a CD from First Omaha but the little old lady on the corner of your block might have one. This one is a double whammy for wealth inequality since the working class stiff with a savings account is losing interest income while the Wall Street tycoon can finance the leveraged buyout of the local teddy bear factory for almost no interest cost.
  • Juiced Stock Market: I’m as happy as anyone when I open my quarterly 401K statement these days, but do people really think that this multi-year rally is based on fundamentals? A lot of the easy money that is sloshing around is making its way into the market. Since high income households are more likely to have a large portfolio this is further contributing to wealth differences.
  • Inflation: Find me a non-Ivy League educated economist who believes that inflation is really under 2%. All this loose money is seeping into the economy and the guy making minimum wage is unlikely to benefit from the new iPad with more memory at the same price as the old model but is very likely to be hit by a doubling of beef prices. Since staples consume a smaller portion of higher end budgets than lower end ones, inflation is driving larger wealth disparities.

So, the next time the other side brings up wealth inequality, do not fall for the game of arguing tactics. Ask them why they endorse policies that are at the root of many of those gaps. This is not an argument for jacking up the Federal Funds Rate to 5% tomorrow; that would collapse the house of cards we have created. However, this is to say that playing defense is not effective politically and pointing out the other side’s bad policy decisions would be much more productive. They can talk about the 1% all they want but these policies most benefit the 0.1% and it is time to call this out.

You will have to excuse me as I have to leave it at that because my chauffeur is here to bring me to the club.

Published in General
Like this post? Want to comment? Join Ricochet’s community of conservatives and be part of the conversation. Join Ricochet for Free.

There are 63 comments.

Become a member to join the conversation. Or sign in if you're already a member.
  1. EThompson Inactive
    EThompson
    @EThompson

    Income inequality is highly characteristic of a free enterprise system and is hardly a new concept to this country. In the 19th and 20th centuries, it was particularly blatant because Rockefeller, Morgan, Vanderbilt, Carnegie, Ford, and Mellon et al. were such impressive innovators, risk-takers, and aggressors. But their greatest achievement was that they did provide jobs for unskilled workers and helped (Henry Ford esp.) to expand the middle class.

    Today, a good job requires an educated, tech-savvy individual and fewer members of the working classes are choosing to take advantage of govt-funded university/trade school educations or – more importantly- to emulate the working habits and personal discipline practiced by the financially successful.

    Many Americans in the working class have simply decided not to adapt to the ever changing nature of our economy but to accept the endless safety nets provided by the Feds and funded by the productive.

    • #1
  2. Ricochet Inactive
    Ricochet
    @PleatedPantsForever

    EThompson:Today, a good job requires an educated, tech-savvy individual and fewer members of the working classes are failing to take advantage of govt-funded university/trade school educations or even – more importantly- to emulate the working habits and personal discipline practiced by the financially successful.

    E.T. – sure, the economy is changing and some people are getting left behind while others choose to stay behind.

    On the other hand, I think we need to differentiate a bit on the financially successful. There are those who invent a new product or a better way of doing things and become fantastically wealthy and this is a good thing for everyone. Then there are those, for example, at too big to fail banks who can borrow infinitely at zero percent these days and make a fortune throwing that in a juiced market or even just buying treasury bills. This scenario creates wealthy people, but I’m not sure this is a win for everyone and the loose monetary policies of the other side encourage this environment.

    • #2
  3. thelonious Member
    thelonious
    @thelonious

    As a frugal guy (I only have a part time butler) of modest means I really am at a loss on how to make any kind of money on my savings.  I have money in my savings account and a time CD earning .000000000001% interest. A 401k I had with another company got rocked hard in 2009 and only earned modest interest after that.  I’ve talked to a money manager about investing in IRA’s and other invest options and he basically told me now is a bad time to invest due to the stock market being at an apex and the bond market is shakey right now  I guess.  The government doesn’t want people saving money all they want is for us to spend beyond our means and prop up the economy that’s built on overspending and over investing.  Hence the crazy low interest rates.  I might as well take out a low interest loan on my house and live it up.  I think my best investment was taking the Seahawks as a pick em and taking the under at 49 points.

    • #3
  4. Severely Ltd. Inactive
    Severely Ltd.
    @SeverelyLtd

    Not that I think your approach is wrong, but the real issue at bottom is envy, a very nasty shortcoming that should be pointed out at every opportunity. Destitution aside, when the poor are fighting obesity and are torn between buying a better cut of meat or getting the latest computer game, then agitating for equality is simply an empty exercise.

    I want a private jet too but I didn’t have the focus on school or the devotion to learning the world of high finance necessary to play in that league. I makes my choices and I lives with the results.

    • #4
  5. Devereaux Inactive
    Devereaux
    @Devereaux

    ?What exactly IS “income inequality”.

    ?Is it a poorly managed company that made a “green product” but was going under, escept a mysterious benefactor put enough money in it so the rich owner didn’t lose any of HIS money. The government did that.

    ?Is it a company that has been so wracked with bad contracts that it can no longer make a competitively priced auto, except a benefactor enters and strips all the retirees of their equity so a group of uninvested people can take over (and STILL make uncompetitive autos). The government did that.

    ?Is it that jobs were NOT created because a construction project was not allowed to proceed. The government did that.

    ?Is it that jobs weren’t created to pump oil as the process was blocked on significant parts of ground. The government did that.

    ?Is it that SO much money was spent that we can’t even repair roads anymore. The government did that.

    ?Is there a connection between the poor state of the nation/economy and the government. The democrats did THAT.

    • #5
  6. EThompson Inactive
    EThompson
    @EThompson

    Talk to Jimmy Carter who signed off on the Community Reinvestment Act and the Clintons who actually enforced it. In the 1980s, my husband and I could have qualified for a $1.5 million dollar home mortgage.
    Um … NOT.

    • #6
  7. Ricochet Inactive
    Ricochet
    @PleatedPantsForever

    Severely Ltd.:Not that I think your approach is wrong, but the real issue at bottom is envy, a very nasty shortcoming that should be pointed out at every opportunity. Destitution aside, when the poor are fighting obesity and are torn between buying a better cut of meat or getting the latest computer game, then agitating for equality is simply an empty exercise.

    I agree, envy is at the root of much of it. However, telling lower income voters they are envious or have it pretty good relative to world standards is not going to help us get their votes and is even going to cost us votes with wealthier individuals who sympathize with them.

    My point is to frame the messaging that those who claim to be helping lower income groups are actually exacerbating wealth inequality through their policies. I think this is a better discussion than just arguing tactics on capital gains taxes with the other side.

    • #7
  8. EThompson Inactive
    EThompson
    @EThompson

    Severely Ltd.:Not that I think your approach is wrong, but the real issue at bottom is envy, a very nasty shortcoming that should be pointed out at every opportunity. Destitution aside, when the poor are fighting obesity and are torn between buying a better cut of meat or getting the latest computer game, then agitating for equality is simply an empty exercise.

    I want a private jet too but I didn’t have the focus on school or the devotion to learning the world of high finance necessary to play in that league. I makes my choices and I lives with the results.

    Fighting against obesity? Is that some random Ebola virus that is infiltrating society?

    My favorite quote from Dinesh D’Souza who was born in real poverty in India: “Only in America are poor people fat.”

    • #8
  9. Ricochet Inactive
    Ricochet
    @PleatedPantsForever

    thelonious:As a frugal guy (I only have a part time butler) of modest means I really am at a loss on how to make any kind of money on my savings.

    It’s tough. These policies are trying to give us no choice but to get into this stock market. After two crashes in one decade and several years up on a lukewarm economy people are, understandably, wary of the market.

    Not that you need another podcast, but if you don’t listen to it already there is one called Financial Sense done by a money manager named Jim Puplava. They put out a free podcast every Saturday. I find he is a pretty straight shooter and decently balanced in between Wall Street hack and loony in the bunker counting my gold and canned food

    • #9
  10. Casey Inactive
    Casey
    @Casey

    Yes, these are the kinds of conversations we need to be having. I don’t care if envy is the root. I don’t care if there’s a root at all. This is simply a political reality and we need to address it.

    People who are struggling want to hear possible solutions. They don’t want econ lessons.

    • #10
  11. Ricochet Inactive
    Ricochet
    @PleatedPantsForever

    Devereaux:?What exactly IS “income inequality”.

    ?Is it a poorly managed company that made a “green product” but was going under, escept a mysterious benefactor put enough money in it so the rich owner didn’t lose any of HIS money. The government did that.

    I agree 100%. These are the types of things we should be talking about instead of just arguing against a capital gains increase.

    • #11
  12. Ricochet Inactive
    Ricochet
    @PleatedPantsForever

    Casey:Yes, these are the kinds of conversations we need to be having.I don’t care if envy is the root. I don’t care if there’s a root at all. This is simply a political reality and we need to address it.

    People who are struggling want to hear possible solutions. They don’t want econ lessons.

    You are spot on! There are conversations we can have in the halls of Ricochet and then there is how you publicly frame something in a debate – these do not need to always be the same thing. The other side gets this, I don’t know why we don’t

    • #12
  13. EThompson Inactive
    EThompson
    @EThompson

    Casey:People who are struggling want to hear possible solutions. They don’t want econ lessons.

    Can’t have one without the other.

    • #13
  14. Casey Inactive
    Casey
    @Casey

    A good salesman with a lousy car is going to have a hard time selling that car. A lousy salesman with a great car won’t eat.

    We’ve got a great car. Let’s be great salesmen.

    • #14
  15. EThompson Inactive
    EThompson
    @EThompson

    Then there are those, for example, at too big to fail banks who can borrow infinitely at zero percent these days and make a fortune throwing that in a juiced market or even just buying treasury bills.

    With all due respect, you are obviously not a player in the market. I am and there is no longer such a thing as a juiced market.

    It’s a crap shoot and you only succeed if you do the homework not only on company financials, but the socio-political influences that play upon all the annoying amateur investors.

    I wrote a post on this a couple of weeks ago.

    • #15
  16. Ricochet Inactive
    Ricochet
    @PleatedPantsForever

    EThompson:

    With all due respect, you are obviously not a player in the market. I am and there is no longer such a thing as a juiced market.

    It’s a crap shoot and you only succeed if you do the homework not only on company financials, but the socio-political influences that play upon all the annoying amateur investors.

    I wrote a post on this a couple of weeks ago.

    If you honestly hold the opinion that several trillion dollars of QE and years of zero interest rates is not having an impact on this stock market rally then you are a minority of one as a “player in the market.”

    • #16
  17. EThompson Inactive
    EThompson
    @EThompson

    Pleated Pants Forever:

    EThompson:

    With all due respect, you are obviously not a player in the market. I am and there is no longer such a thing as a juiced market.

    It’s a crap shoot and you only succeed if you do the homework not only on company financials, but the socio-political influences that play upon all the annoying amateur investors.

    I wrote a post on this a couple of weeks ago.

    If you honestly hold the opinion that several trillion dollars of QE and years of zero interest rates is not having an impact on this stock market rally then you are a minority of one as a “player in the market.”

    Zero interest rates have little to do with day to day volatility. They encourage investors to enter the game, but so many other factors come into play that completely discourage rational decisions in terms of buying/selling.

    • #17
  18. Ricochet Inactive
    Ricochet
    @PleatedPantsForever

    EThompson:

    Pleated Pants Forever:

    EThompson:

    With all due respect, you are obviously not a player in the market. I am and there is no longer such a thing as a juiced market.

    It’s a crap shoot and you only succeed if you do the homework not only on company financials, but the socio-political influences that play upon all the annoying amateur investors.

    I wrote a post on this a couple of weeks ago.

    If you honestly hold the opinion that several trillion dollars of QE and years of zero interest rates is not having an impact on this stock market rally then you are a minority of one as a “player in the market.”

    Zero interest rates have little to do with day to day volatility. They encourage investors to enter the game, but so many other factors come into play that completely discourage rational decisions in terms of buying/selling.

    This has nothing to do with day to day market volatility. This has to do with PE multiple expansion in an anemic economy partly driven by zero interest rates pushing money out of bonds and into stocks and allowing for more leveraged buying.

    I repeat that if you think that QE and zero interest rates have no positive impact on the equities market you, as a self described “market player”, are in a minority of one and are not even in sync with Federal Reserve thinking

    • #18
  19. EThompson Inactive
    EThompson
    @EThompson

    I repeat that if you think that QE and zero interest rates have no positive impact on the equities market you, as a self described “market player”, are in a minority of one and are not even in sync with Federal Reserve …

    I believe this is a fair analysis of my thinking, indeed.

    • #19
  20. Xennady Member
    Xennady
    @

    Casey:A good salesman with a lousy car is going to have a hard time selling that car. A lousy salesman with a great car won’t eat.

    We’ve got a great car. Let’s be great salesmen.

    Hmm. Somebody here doesn’t have a great car. She has a car that makes me pine for the presidency of Elizabeth Warren, who will surely manage to take down some of the bankster thieves of Wall Street if only by accident.

    I recall a famous quote by Andrew Jackson, which seems completely applicable to Wall Street of today. This is the meat of it:

    I…am convinced that you have used the funds of the bank to specualte in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank.

    This strongly reminds me of the recent behavior of Wall Street, where the management of various firms drove them into oblivion, reaping great personal wealth, then demanded and received taxpayer funds to bail them out lest tanks enter American streets as the nation collapsed.

    As a result of their own malfeasance, that is.

    Spare me the lectures about the awesomeness of Wall Street, because that reminds me of another quote, from Bastiat:

    “When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time, a legal system that authorizes it and a moral code that glorifies it.”

    I’m not generally a fan of Bastiat but in this instance I admit he seems to be on to something.

    • #20
  21. Yeah...ok. Inactive
    Yeah...ok.
    @Yeahok

    thelonious:As a frugal guy … I think my best investment was taking the Seahawks as a pick em and taking the under at 49 points.

    Did you parlay these?

    • #21
  22. Casey Inactive
    Casey
    @Casey

    My best investment was Kind of Blue by Miles Davis.

    • #22
  23. user_428379 Thatcher
    user_428379
    @AlSparks

    Pleated Pants Forever: Gone are the days when a guy could just enjoy his gold plated garbage can and $6,000 shower curtain in peace as it seems that talk of growing wealth inequality is all the rage now. The only thing that sours my caviar faster than a discussion on wealth inequality is how our side responds when it is brought up.

    Your link is a bad example.  Here’s the relevant quote:

    An SEC filing last week from Tyco alleges that Kozlowski spent company funds on unauthorized purchases including $15,000 for a dog-shaped umbrella stand, $6,300 for a sewing basket, $17,000 for a traveling toilette box, $2,200 for a gold-plated wastebasket, $2,900 on coat hangers, $1,650 for an appointment book, $5,900 for sheets, $445 for a pincushion, and $6,000 on a shower curtain.

    He didn’t buy those things with his own money.  I realize the article does go on to moralize about the purchases themselves, “Authorized or not….”

    But if he had purchased those items with his own money, the author, Annelena Lobb, would not have had anything to talk about because she wouldn’t have known, and Kozlowski could have enjoyed his gold plated garbage can in peace.

    As another commenter pointed out, criticizing the extravagance of the rich is not a recent phenomenon.  I don’t even think it’s all the rage now.  How much publicity did Kozlowski really get?  This is the first I’ve heard of it.

    • #23
  24. thelonious Member
    thelonious
    @thelonious

    Yeah…ok.:

    thelonious:As a frugal guy … I think my best investment was taking the Seahawks as a pick em and taking the under at 49 points.

    Did you parlay these?

    I bet heavily on the under and also parlayed it with the Hawks.

    • #24
  25. Yeah...ok. Inactive
    Yeah...ok.
    @Yeahok

    thelonious:

    Yeah…ok.:

    thelonious:As a frugal guy … I think my best investment was taking the Seahawks as a pick em and taking the under at 49 points.

    Did you parlay these?

    I bet heavily on the under and also parlayed it with the Hawks.

    If the straight bet odds are
    Seattle – pick em -110
    SEA-NE – under -110

    What does that 2 way pay? A 3 way pays around 6 to 1

    If under 49 is -110, would you take under 44 at +175?

    I don’t care about income inequality. I’ve decided I’m against communism/socialism. I believe when all earn the same, it encourages sloth and poorly rewards innovation. The greater the inequality (assuming no dictators, kings or whatnot) the further from communism.

    • #25
  26. user_352043 Moderator
    user_352043
    @AmySchley

    EThompson: My favorite quote from Dinesh D’Souza who was born in real poverty in India: “Only in America are poor people fat.”

    I know this makes for an excellent sound bite, but actually obesity is a world wide problem. Most of the world’s population live in countries where overweight and obesity kills more people than underweight, and India is home to about 7% of the world’s population of obese people.  The countries with the highest percentage of obese people are Tonga, Kuwait, Libya, Qatar, Kiribati, Micronesia, and Samoa — and only one of those really qualifies as rich.

    • #26
  27. Severely Ltd. Inactive
    Severely Ltd.
    @SeverelyLtd

    Amy Schley:

    EThompson: My favorite quote from Dinesh D’Souza who was born in real poverty in India: “Only in America are poor people fat.”

    I know this makes for an excellent sound bite, but actually obesity is a world wide problem. Most of the world’s population live in countries where overweight and obesity kills more people than underweight, and India is home to about 7% of the world’s population of obese people. The countries with the highest percentage of obese people are Tonga, Kuwait, Libya, Qatar, Kiribati, Micronesia, and Samoa — and only one of those really qualifies as rich.

    No one is minimizing the problem of obesity, the problem is those that maintain the poor don’t have enough to eat. I think the Leftist argument that the poor can only afford high-calorie food low in nutrients is especially specious. If our government issued food cards only good at Whole Foods, I don’t think obesity statistics would budge.

    • #27
  28. user_352043 Moderator
    user_352043
    @AmySchley

    Severely Ltd.: No one is minimizing the problem of obesity, the problem is those that maintain the poor don’t have enough to eat. I think the Leftist argument that the poor can only afford high-calorie food low in nutrients is especially specious. If our government issued food cards only good at Whole Foods, I don’t think obesity statistics would budge.

    Oh, agreed. The causes of obesity are varied, but high prices and lack of available food are small potatoes compared to things like cooking ignorance, time, and poor decisions.

    My point is that poor people being able to afford (and choosing) to eat themselves fat isn’t just an American phenomena.  Heck, more people die of obesity related problems than underweight ones every year, even in the developing world.

    • #28
  29. Severely Ltd. Inactive
    Severely Ltd.
    @SeverelyLtd

    Pleated Pants Forever:

    Severely Ltd.:Not that I think your approach is wrong, but the real issue at bottom is envy, a very nasty shortcoming that should be pointed out at every opportunity. Destitution aside, when the poor are fighting obesity and are torn between buying a better cut of meat or getting the latest computer game, then agitating for equality is simply an empty exercise.

    I agree, envy is at the root of much of it. However, telling lower income voters they are envious or have it pretty good relative to world standards is not going to help us get their votes and is even going to cost us votes with wealthier individuals who sympathize with them.

    My point is to frame the messaging that those who claim to be helping lower income groups are actually exacerbating wealth inequality through their policies. I think this is a better discussion than just arguing tactics on capital gains taxes with the other side.

    I think your framing is fine, but not sufficient. Giving everyone equal opportunity, while essential, is not going to result in income equality. Intelligence, competence, persistence, discipline, family connections and plain old luck will always interfere. There’s only so much we can do without making the problem worse (equitable misery). So the problem is not going to go away (didn’t Jesus have something to say about this?).

    You might not be comfortable advancing the truth that envy is the root of this societal sickness, but until that is widely recognized it will be easy for the Left to demonize the free market. If you dance around the real cause without addressing it, the Left’s leverage on this issue won’t disappear.

    The messaging should be focused on illustrating the corrosive and evil nature of envy in an effective way.

    • #29
  30. Metalheaddoc Member
    Metalheaddoc
    @Metalheaddoc

    Do we need to substitute another term for the debate? “Income Inequality” sounds like a bad thing. We tend to automatically dislike ideas containing “inequality” and are put in the harsh position to defend it. I think we need a more neutral term.

    • #30
Become a member to join the conversation. Or sign in if you're already a member.