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How to Discuss Wealth Inequality with Your Butler
Gone 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:
- 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.
- 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
AMEN!!
A better discussion, I agree. But, then, when our people are in office because we appealed to voters who don’t understand the root problem, and did not challenge the premise that income inequality is a bad thing, we’ve intellectually disarmed ourselves and anyone who might’ve been paying attention.
This is what Mark Steyn likes to point out. The culture is what matters. Not elections.
And we all, every one of us, has a little hand in that. Every time a political issue arises we need to nudge, push, and prod in our direction.
Nordlinger mentioned in the podcast this week that the key is to teach people to think, not to get people to agree with us. (He was referring to children, but it is applicable here I think.) We can challenge assumptions, throw a wrench into their brains, offer a book or article. Slowly, it will add up.
Lecturing does squat to move the needle.
Demagogue: A political leader who seeks support by appealing to popular desires and prejudices rather than by using rational argument. (From the OED website.)
My core problem is there are no rational arguments to be had about income inequality. It’s a fabricated issue designed to appeal to prejudice and envy. Proposing alternative solutions to income inequality concedes it needs solving.
I tried the following means of illustrating why this is not an issue:
Even Rawls (A Theory of Justice) understood that what matters is whether those are the lowest rung are better off, not how far the lowest rung is from the highest.
BTW, I agree with all the comments about how the government is distorting income distribution to our collective detriment. But even here, the concern is with the adverse effect on growth, not the distribution of income.
Shocking inequality has always cursed the U.S., but the differences are always shifting. As recently as the 70’s, line-workers in the General Motors plant were earning about $20/hr. to assemble my factory Cadillac Fleetwood Brougham limousine. This was about the same wage I paid law graduates to search for tax loopholes in my office on Sunset and the plumber to install gold-plated faucets in my marble bathroom in Bel Air. In the meantime, my driver, a beneficiary of the newly liberalized immigration laws, had to get by on $1.90, and my secretary, a former housewife and recent entrant to the working world, made do with $2.50. This inequality became very real to me at the office in Century City one day. Both my driver and my secretary said that they could not live in their wages. I dropped a lit Dunhill on my Brooks Brothers and had to put it out with my Sanka.
$1 in 1975 is worth $4.40 today. The Korean gentlemen who assembled my Hyundai Equus with built-in massager make $20/hr. My desperate law graduates will make $13.25 this year, the new minimum wage in Los Angeles, so I fired them and my driver. I get my tax advice from Turbo Tax and my legal advice from LegalZoom. Only my plumber got a raise at $100/hr. My former accountant? She got the house with the gold-plated faucets, which she promptly sold for 20 times what I paid in 1975. She and my driver opened a yoga studio in Santa Barbara and joined Citizens United. Me? I had just enough funds after the divorce to buy a slightly larger home with gold-plated faucets in a leafy suburb of Dallas. Both Tatiana and I feel very lucky to have escaped the authoritarian regimes of Russia and California, respectively.
Here’s what I would do and I think it would exploit how Liberals are entrenched in the bureaucracy of wealth redistribution but don’t really want to do anything constructive. Simply cut checks to all those who take government redistribution up to a baseline salary and eliminate all the agencies who redistribute the wealth. This would be an expanded and roided up form of the earned income tax credit. If were going to redistribute wealth lets do it the most efficient way possible. The left doesn’t want to solve poverty they want to exploit it and expand their power from it. Not that I’m favor of this but I think it would make the left squirm.
I’m so glad you brought this up, PPF. I’ve been thinking the Republicans better have a way to talk about “income inequality,” because the Left is not ever giving this one up.
However, I think your talking points are a little too abstract for the average voter.
My inclination is to talk about the causes of “inequality.” There are two types: 1) the type of inequality that comes with free enterprise where hard work, risk-taking, innovation, and some significant amount of luck get the rewards (I’d call this “earned” wealth disparity, a la Arthur Brooks). And 2), the type of inequality that comes from central planners having enough power to redistribute wealth in a way that favors them and their friends (these could be either Democrat or Republican, btw). The extreme examples of this are in communist dictatorships like Cuba (party apparatchiks have their own penthouse floor in the hospitals, while their subjects have a hard time getting aspirin and have to bring their own linens when they cash in on their “free” healthcare).
But, we’ve got a version of planned inequality here with the expanding power of central government and all the rent seeking, cronyism, and bailouts that come with it.
Earned inequality versus planned inequality. If we frame it this way, then we can safely ask, “what’s fair?”
ShellGamer – I purposely and repeatedly said wealth inequality and not income inequality because this is not about marginal income tax rates. Unless we think that wealth inequality is an absolute good, I don’t understand the point on there being no rational arguments about it. If your neighbor comes over and steals your stuff he created more wealth inequality and this is not a good.
The trick is we need to make the wealth inequality discussion about equal opportunity and not equal results. Lower and middle incomes have stagnated the last ten years and just saying no to every stupid idea (minimum wage increases, capital gains tax increases, etc) of the other side is not good enough. We need plans of our own and need to position correctly. I think some people are getting a bit stuck on my use of the other side’s term “wealth inequality” we can name it something else “wealth opportunity equality” or whatever per one of the comments.
There are specific policies I think most of us could support that could be framed in a wealth opportunity equality way and get at the stagnating wage concerns of lower and middle income groups:
-Per my post, ultra loose monetary policies are pulling down lower income groups (no savings interest income) in favor of those who can borrow from the Fed at 0% (large banks). We need to explain this when talking policy
-The wealthiest zip codes in this country are around DC. We need to explain that these McMansions are made possible by those in the middle class who struggle to pay income tax
I don’t see this as being a demagogue. I see it as redirecting the concerns of those struggling away from destructive policies and towards productive ones. The way we currently frame it results in one side offering some bad idea and our side pointing out that it is a bad idea while offering no alternative rhetorically or otherwise
Western Chauvinist – you are exactly right and I like the framing. These arguments on wealth inequality being natural would work if we lived in a market free of government interventions. We don’t and we should point out this part of the problem instead of letting the other side own the argument talking about how the guy who made a fortune off a new invention somehow did something wrong
Any time Republicans are using the words “income inequality” they are losing. Not as badly as when they express their bitter resentment that the poor aren’t starving, or when Romney was lecturing us about the 47% of Americans who are parasites, but still- losing.
I have never heard anyone in blue-collar flyoverland complain that rich people are rich, except when it is believed that the wealth comes from corruption or theft. When the Republican party accepts the leftist presumptions that the public really wants to talk about “income inequality,”endlessly, they are giving the left what it wants- an admission that class warfare is justified. I don’t think this is warranted, as I don’t believe the public is as interested in grifting as the left thinks.
The GOP needs a different political angle, which should be obvious. Ronald Reagan made political hay discussing “welfare queens.” That is, people who were taking advantage of the system. He did not condemn poor people for being poor, as far as I can recall- and no one should condemn rich people for being rich, either.
When the GOP accepts “income inequality” as an issue, they are tacitly accepting that the rich have something to apologize for, and hence owe something to everyone else.
This is nonsense. Worse, it’s bad politics, as it divides the electorate is such a way that makes it difficult for the party to win. Leftist, non-rich and good. Conservative, rich and evil. Hence, Preezy Barry Obama.
I suggest the party dismiss the “income inequality” argument with all the contempt it deserves, then move on to talk about “welfare queens,” rich and poor. They should be attempting to divide the electorate into law-abiding and virtuous, Republican, and corrupt and evil, leftist.
But since I’m talking about the GOP, I expect to hear a lot of talk about income inequality, forever. Sigh.
I have a policy of never arguing with someone who says I’m exactly right. ;-)
The conversation should go something like this:
Rich Guy: ” Julio, are you pissed off about the fact that you have to clean up after me when I’ve gone on a drunken tirade and soiled myself in the middle of the night?”
Julio: ” Only if it’s on pay day and you forgot to sign my check, Sir.”
I think this is an excellent angle and one I plan to try out on a Liberal friend of mine soon. Tying the Big Gov/Central Planning message to the tail of income inequality is a bit of Jeenyus, WC.
Gotta go look up the stats for North Virginia/DC suburbs. Among the country’s wealthiest, if I remember correctly.
Correction: It’s Maryland, also adjacent to DC, that has 3 of the 5 wealthiest neighborhoods in the nation.
SL – please let us know how that conversation goes. We need to be testing new messaging and positioning.
If we are going to go with the message of “fat poor people” as if we are living in some Randian paradise and their are no central planned manipulations it is going to be a long 8 years with President Warren.
Yes, please pass on your information about Northern Virginia, too, SL.
Americans like to think of themselves as fair-minded and advocates for the underdog. Warren and her ilk take advantage of this from the progressive view of static wealth — zero-sum pie of which the “1%” have more than their “fair” share.
We have to combat this. Somehow we have to convince Americans it’s much better to have people of (near) limitless wealth than people of limitless power (to redistribute, among other things). Power is the root of all corruption,
The “inequality” canard is a very effective tactic for the left. On Facebook I found I was constantly defending extremely rich people. I eventually realized how unpersuasive that is, and realized I was letting myself be set up when I let the left frame the argument. The truth of the matter is that “the rich” are used as a distraction from how much money the government spends. Supposedly, Walmart is among the worst of the worst examples of rich exploiting poor, but the total salary of the executive board at Walmart is around $60 million per year, or about $20 per year per employee at Walmart. How much do Walmart’s millions of workers pay to the government in taxes, in inflation, etc.? Probably a lot more than $20 per year.
I think the emphasis placed on Income Inequality by the left is just the same-old Marxist “class struggle” play that has been run over and over. I know that the “low-information” crowd does not want to hear about Marxism and its failure everywhere it is attempted, but that is the truth and someone needs to explain it to them. Maybe if our “Common-Core” textbooks did a better job of explaining the pitfalls of collectivist systems like Socialism and Communism we would be better off.
Having said that, here is a simple way to illustrate how wrong the claims of Inequality are in the U.S.: inform the “proletariat” listener that anyone making more than $32,000 a year is part of the riches 1% in the world. That means the majority of Americans are part of the “evil rich” in the eyes of the rest of the world. Maybe then they will realize that they are not victims just because they don’t have millions of dollars. They are in fact better off than 99% of the world.
An earlier post mentioned envy as part of this topic and I completely agree. Class Struggle and Class Warfare is based on envy.
Let God deliver the grace that cures envy.
Pelayo – my concern is telling people who make $32k and have seen wages stagnate for ten years that they are rich is not a winning message. There are centrally planned market manipulations (via taxes, regulations, and Fed policy) that are contributing to this wage stagnation and we should point this out. If we want to have an academic discussion on Ricochet on world wealth distribution, fine, but it is not a winning message for the electorate.
To echo Casey, leave the concerns on human nature and envy to our churches, I want better policies.
When I argue with Democrat voters, my goal is not so much to get them to believe in the Republican Party, as it is to shake their faith in the Democratic Party. I’ve tried to formulate some sound bites or slogans that encapsulate the truth in snappy way. I like to say “People don’t go hungry because of inequality. People go hungry because of poverty.” I don’t know how persuasive that is to others, but it makes sense to me.
I think one of our problems is that we no longer recognize envy as a shortcoming, it’s just one of those religious rules. Conservatives need to reintroduce it as a legitimate and damaging vice.
This is very good.
Great title!
I think wealth creation tends to favor the rich over the poor, not because of the rich conspiring against the poor, but just because the rich are better able to capitalize on new wealth to create even more wealth. Wealth creation benefits both rich and poor, but the benefits to the poor are not as great. However, I think the benefits to the poor of wealth creation are still better than the (benefits) of wealth redistribution. I put benefits in parentheses because I think, with family breakdown and crime, the net benefits of wealth redistribution are less than zero. That’s a complicated idea to sell.
I believe the GOP should beat a drum shouting two simple ideas: “Poverty is bad,” and “Private enterprise defeats poverty.” Even though the rich may benefit more from economic growth, the poor suffer more from economic downturns.
Does anyone remember when we first started buying “income inequality” as a bad thing?
Wow. I
1. am a huge fan of Bastiat
2. am actually drinking out of the bottle of gin in my office to try to obliterate having read “pining for the presidency of Elizabeth Warren”.
Dammit, now I’ve typed it. Time for more gin or perhaps ball-peen hammer to the forehead.
Drinking now.
Personally,
I think we need:
An interest rate floor on government savings bonds of 4-6%. Their purchase is capped at 5K and the interest rate floor is an income security program that most benefits the poor and has a declining benefit for the middle class and wealthy. I am perfectly aware that this is the government paying cash money to remove risk from the lower and middle classes investments. It is a huge benefit to the middle class, in that it gooses returns for lower risks making investments in the stock market a less risky proposition. I would rather have that then a healthy number of other social programs; I think that this is what a social security program of the future would look like.
We should seriously consider whether or not the capital gains bias in the tax code is producing the desired results, and at all the other unintended consequences that it produces.
This is a major problem with large, public corporations. Those who run them (mostly liberal Ivy League graduates) do not have any skin in the game and they’re playing with other people’s money (the investors’ money). Their compensation packages are set up so they do great whether or not they are successful. When the company goes bankrupt, they exit with their “golden parachute.” This is bastardized capitalism.
This is not the case in most private corporations, where the principles own the majority of the company. If the company goes down the tubes, so do they. That’s capitalism as it should be.
Sorry, I missed this when posted.
Anyway, I’d just like to state for the record that I am not actually pining for the presidency of the shameless and contemptible liar named Elizabeth Warren.
I’m just tired of hearing about the sheet awesomeness of Wall Street especially after the trillions in bailouts, massive fraud, yet no prison sentences.
Even Bernie Madoff, who did manage to get himself sent to jail after a separate but related fraud, was allowed to defraud investors for years after he was reported to the SEC.
I figure Warren would such an all-encompassing disaster that she’d at least bankrupt a few of these people, even assuming any claim that she made to enforce the law would be just another lie.