Is there any more inane yet toxic “fake issue” poisoning policy and economics discussion than the concept of income inequality? Is there an any more useless, deceptive and misleading measure of the strength of an economy and the welfare of a community than income inequality?
And should there be any remnant of doubt in the minds of fair minded citizens about the nefarious motives of the political progressive left, consider that addressing income inequality and climate change are the 2 principle political goals of the Australian Greens. This despite there being no real income inequality issues in Australia and any Australian effort on climate change is pretty much irrelevant. But who knew the Australian Greens were running for seats the United Nations.
Aside from Australia’s intellectual elite, consider also the following from Dr Kaushik Basu, Chief Economist of the World Bank from 2012 to 2016. In a recent contribution to Project Syndicate, under the title of The Ethics of Reducing Inequality, Dr Basu wrote:
Around the world, the effects of alarmingly high economic inequality are spilling over into politics and society. Economic insecurity is a driving force behind violent conflicts in the Middle East and the rise of fascist elements in some European countries, not least Hungary and Poland. Even in older democracies such as the United States, economic marginalization has led to a strengthening of chauvinist and supremacist identities and other social problems such as the opioid epidemic.
Did you notice the slight of hand? A slight of hand better than the average Las Vegas magician.
Start with a context-less and evidence-less statement about alarmingly high economic inequality and then seamlessly pivot to economic insecurity. How does one get from income inequality to economic insecurity unless one is pushing a barrow from point 1 to point 2?
One can quite easily have very high income yet feel economically insecure. Consider the cronies and oligarchs that may surround your run of the mill despot. They may be wealthy, but that wealth is at the caprice of the dear leader. But I somehow doubt that this is the economic insecurity Dr Basu is talking about.
Now if Dr Basu was your standard anti-free-enterprise-pro-big-government member of the Glebe Branch of the Australian Greens, writing policy papers for the Australia Institute, readers would know from what perspective Dr Basu was coming; to Venezuel-ize Australia. But as the former chief economist of the World Bank, he carries quite a bit of institutional credibility. But then again, it is rather unlikely that the World Bank would ever advocate for policies that would genuinely eliminate world poverty because otherwise where would a bunch of highly paid, no-tax paying development economists get jobs if there was no global poverty.
Income inequality and its evil twin sister (transgender brother) climate change are the policy carbuncles that actually perpetuate world poverty and ever expanding government. But let us actually consider the foundations of this nonsense.
At a basic level, given the immutable laws of mathematics, there will always be a top 1% of income earners and a bottom 50%. The thing is though, the people in the top 1% and bottom 50% constantly change.
It may come as a surprise to many Green voters, but a teacher fresh out of university does not earn as much as a teacher with 25 years of experience. Over time, as workers gain experience, and other workers retire (or die), there is a general cycling of people in the income distribution.
Then there are those one off effects, you know like realizing a capital gain. You started a small business in 1970 and have since drawn a modest wage. Then on the cusp of retirement, you sell your business and realise a large capital gain (in lieu of superannuation contributions that you had to make for your staff). Suddenly, for that 1 accounting period, you are in the 1%.
But don’t confuse people with details like that. They are inconsistent with the narrative and thus must be ignored. Is it not ironic that a bunch intellectual elites need to ignore evidence so as to maintain their intellectual elite status.
There is no doubt that the “fake issue” of income inequality is entirely about the envious nature of the progressive left and nothing to do with national welfare.
These people look around and see others they deem as being of lesser ability, intellect and morality having greater income and greater wealth and think it not fair. In their minds, it is unfair that an uneducated immigrant running a fruit shop earns more than a PhD. in gender studies. It is unfair that a smart phone app developer earns more than a social worker. It’s just not fair. It’s just not fair.
In their minds, righteousness has value and if the market does not reward it, then the government must take from those that don’t have it and give it to those that do. And because righteousness is hard to count and measure, money will do instead.
It is also important that the economic myth of constant and increasing returns to education investment be proven, even if manipulation is required. It must be that a holder of a Doctorate in indigenous basket weaving warrants a 6 figure income. If not, there must be income inequality warranting income redistribution.
Cries about income inequality are seldom about the poor. Much like other false equality targets, such as gender and race, it is about those in the middle believing it is their birthright to be at the top.
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