"Worldwide, there are 34 million people who have a U.S. dollar net worth of at least $1 million, or 0.7% of the global adult population, and they account for 45% of global wealth."
As I noted before in this blog, comparing yourself to others is a dead-end game. You will never win that game, as there is always someone else making more money that you, having more sex, or happier or whatever. You have to look internally and see whether you are content with your own life.
"The homeownership rate is relatively high compared to other post-industrial nations. In 2005, 69% of Americans resided in their own homes, roughly the same percentage as in the United Kingdom, Belgium, Israel and Canada. Residents of the United States also enjoy a high access to consumer goods. Americans enjoy more cars and radios per capita than any other nation. and more televisions and personal computers per capita than any other nation with more than 200 million people."
Moreover, is dollars in income really a way of measuring wealth? If you are "poor" in America, you can qualify for food stamps, subsidized housing, subsidized transit fare, free cell phones, free medical care - and a host of other "freebies" that really raise your standard of living up to a middle-class or near-middle-class standard. If you are working a low-wage job, odds are, you also qualify for a host of Federal and State subsidies. Are we counting these when we talk about income disparity?
The other side of the coin is this - is income equality some sort of desirable goal? Is a perfect world one in which everyone makes the same amount of money? Should a day-laborer make as much as a bum who sleeps under a bridge all day? Should a car salesman make as much as a Doctor? Should a CEO make as much as the man on the assembly line? Believe it or not, some people on the Left really think so.
This also begs the question: Who gets to decide who makes how much? Do we set up government agencies that dictate salaries or wealth? You laugh, but it has been tried - and failed - in every Communist country out there. While Capitalism is far from perfect, it does assign wealth largely based on the worth of the person to the economy. You and I might not think a baseball player deserves millions of dollars a year, but the team that hires him (and the fans that pay for ticket) seem to think so. Should we disrupt this market assertion of value? Perhaps. To even ask the question is deemed to be a heartless bastard, however.
Moreover, is such a scheme even possible? Imagine a world where everyone paid the same. How long would that last? The smarter and cleverer of folks would find ways to make money out of the less clever, and before long, income disparity would occur. Philip José Farmer sort of addressed this concept in his Riverworld novels - which describe a planet where the entire population of Earth (from all time) is plunked down and each given identical "incomes" in the form of food and supplies. Within a few years, of course, some end up Kings, and others end up slaves. Farmer had a keen eye for the human condition.
But by no skill sets, I don't mean "lack of a college degree" but rather no usable job skills. People who know how to wire or plumb a house or weld a beam or repair an airplane are finding plenty of good-paying jobs (and indeed, starting their own businesses) without much trouble. The people protesting "income inequality" are largely college graduates who wasted a lot of money on useless degrees. Do they deserve automatic pay raises for making bad life choices?
Moreover, does it make sense to pay unskilled laborers as much as skilled labor? As I noted in earlier postings, the workers at GM back in 1978 when I worked there were making about $15 an hour. Today, the Nissan plant in Mississippi pays about as much to part-time workers who have no benefits. Wages have not only stagnated, they have fallen behind.
On the flip side, though, in 1978, $15 an hour was $2.65 an hour, so the wages the union workers were getting were almost five times that. Today, it is only double. This doesn't mean workers today are underpaid, only that unskilled union workers in 1978 were vastly overpaid. Back then, about 1/3 of the blue collar workforce was unionized, and unions used the blackmail of strikes to demand (and get) higher wages. Were shitty UAW workers who destroyed the US auto industry worth even 50 cents? If you owned a car from that era, you might not think so.
Higher wages meant, of course, higher prices for consumer goods, which is why we had much less back then (one television, maybe two dial phones, two cars). It also lead to an era of "stag-flation" where prices kept going up, productivity kept going down, and the economy stalled. This started in the Nixon era. Nixon enacted wage and price freezes which is a radical concept for Republicans today and illustrates how bad things were. When a Republican turns to the command economy, things are bad. Of course, Nixon had his hands full the next few years, and when Jerry Ford became President, he was ridiculed for his "Whip Inflation Now" (WIN) buttons - as if inflation could be willed away. Jimmy Carter didn't have much better luck with the economy, as oil prices spiked again, and wages kept spiraling up to keep up with consumer prices, which went up with the price of labor.
Some have argued that we should just have the government raise everyone's wages and that would fix the problem. The problem is, as the experience of the 1970's shows, when you raise wages, you raise costs of retail products, so the increased wages have less purchasing power, which leads to demands for higher wages. If you make the minimum wage $15 an hour, then $15 is worth eight bucks.
The flip side is in taxation. The GOP has done a good job over the last two decades of bringing down tax rates for the wealthy and upper classes. The Bush-era tax cuts have finally expired, but we still have far less progressive tax rates than in the past. The Gifts and Estate tax ("death tax") is still in place but has an exemption of about $5M which is helpful to the upper middle class. The very rich, of course, pay themselves in Capital Gains (the "Romney Rate" of 15% or so) and avoid paying any Social Security or Medicare taxes.
Bernie Sanders says he wants to tax "Millionaires" but he isn't quite clear on what this means. Does that mean he wants to tax me or just tax people making a million dollars a year? It appears to be the latter, and Bernie is proposing we go back to the 1950's and 90% plus marginal rates. The problem with his proposal, of course is twofold. First of all, no one will pay the taxes. When you make that much money, you can afford tax shelters and tax dodges. You pay yourself in dividends. You move to a friendlier country. Even left-wing artists and rock stars will dodge taxes this way. They will do a "We are the World" promotional song for income inequality and then move to France to not pay taxes. Irony alert.
That right there is the problem - we all want to tax "the other guy" to pay for our swag, but when it comes down to us paying taxes we shy away from the deal. And that's the second part of the problem. It all sounds like fun to beat up on the "very wealthy" until you realize that the people Bernie is talking about might include you.
The sign above claims we are 93rd in "income inequality" (or equality, she doesn't seem too sure) and that this, on its face, is a bad thing. But comparing yourself to others, whether it is on an individual basis or a country basis, can be misleading and miss the point. Yes, people in Zimbabwe all make the same amount of income - one pile of cow dung per month. There is arguably less "inequality" there than in other countries. In the former Soviet Union, everyone was "equal" in pay (except a few wealthy party members) but everyone was paid shit. Do we really want to go there?
Perhaps our tax system could be tweaked a bit to be a little more progressive. But if people are resorting to tax dodges at the 39.5% marginal rate, raising that rate probably won't collect much more in taxes (particularly if the capital gains rates are not raised). And maybe the minimum wage could be raised a little bit to account for inflation and rising rent costs.
But doubling the minimum wage? 90% marginal rates? This is akin to locking on the brakes or putting the pedal to the floorboard. It is overkill for a "problem" that really is more of a meaningless statistic than any indicia of how wealthy or well-off we are as a country.
We should think about this more carefully than Bernie Sanders has.