Tuesday, March 22, 2016

Income Inequality

A lot of people genuinely fail to grasp precisely what income inequality entails. And many make the terrible mistake of merely or only looking at median income levels, when in actuality there are many many more dynamics at play.

There was an article in the Wall St. Journal recently delineating the struggles of families with incomes in the $250,000 range. To many WSJ readers the article resonated. But to many on the left it was met with outrage, given the disconnect obvious in the article from where most real families incomes fall.

I think the outrage was uncalled for. Furthermore I think it typifies a fundamental mistake made in the calculus between both of our political parties, and whom they decide to champion. And lastly it fails to acknowledge the real underlying issue of what income inequality actually is, and why we are in this untenable place.

I am a capitalist. I work in the corporate world, unashamedly and unapologetically. As far as I am concerned capitalism is, at its most functional, the greatest single (and obvious) force for peace that exists. And I believe this because it dovetails, again at its most functional, with the most basic of our human instincts, that of cooperation. Human beings are fundamentally tribal in their behaviors, and it is our collective strength as groups of people working together that gave rise to our species dominance on this planet. It is therefore very little of a stretch to realize a simple truth. If you have something I want, and I can get it from you without a risk of violence (which ends badly for the both of us), I have a basis to cooperate with you. It doesn't mean I have to like you. But it does open up an avenue of understanding, and that is how coalitions form and how people LEARN the value of cooperation in scenario's they would not otherwise wish to cooperate. This reality breaks down barriers of geography, race, gender, and culture better than any.

But, I also realize that much of the discussion about markets and how they should be "free" is a whole lot of nonsense. There is no such thing as a free market when you move beyond tribal village sized economies, and we haven't had those for many millenia.

Governments chief role, throughout human history, has been to set the rules of commerce. Rules allow a market to flourish (or to falter if the rules are bad), and rules have to change with the tide of human change. And economic systems are so inordinately complex in the modern world, that they have to be measured and analyzed almost constantly, so that desired outcomes are met.

It is along this line of thinking that we SHOULD be examining issues like income inequality, because the real issue at stake comes down to what sort of society you want to live in. At its most fundamental, the issue is really what sort of world you want.

The struggles of a professional family earning $250,000 a year are real for them, though I completely acknowledge that they are different than the struggles of a family earning $50,000. That doesn't make one less important than the other. And this is key to my discussion here, because it points out a glaring problem in how I view the current political take on this.

The American Dream. That's what this is about. And George Carlin said it best when he said "It's called a dream because you'd have to be asleep to believe it." But that's not the entire story.

A professionally educated couple making that sort of income and raising a family represents a group of people who still believe in the American Dream, primarily because they are the ones who actually have a shot at living it. And why shouldn't they? In many areas of this country that sort of income is required to even hope to live the life typified in the concept of the American Dream. Costs for housing, education, and health care have skyrocketed way beyond mere market inflation in most places in this country, and in a few skyrocket doesn't even begin to describe it.

The rest of us who make far less (my combined household income is less than a quarter of that) could easily become incensed, and deride the "hardships" of those people. But that is shortsighted nonsense.

An easy example for me to cherry-pick in my current experience would be my pharmacy staff. Both of my staff pharmacists make three times what I do, and yet on many matters I get to tell them what to do. I have expertise in operations, procedures, and managerial policy with my company that they lack, and I have the authority to enforce those things. So I have important skills, but my skills are not as specialized nor as market valuable as theirs. I'm a college dropout, and neither one of them are. They *should* make more than me, because their expertise (and how the market values that expertise) determines this.

Both of my pharmacists live objectively better lives than I do, merely from the amount of income they generate. But you have to be honest and realize "better" is also a very subjective term. I have plenty of employees who make much less than I do, so those employees could equally make the same value judgement mistake about me.

Judging ourselves against one another and using incomes as a metric to determine worth as human beings is colossally stupid. More importantly it makes it all too easy to DIVIDE US, and allow us to lose focus on what the real issue should be.

The real issue is figuring out what sort of world we want to live in. What sort of nation we wish to be proud of. What sort of society will we raise our children within.

There will always be a need for people who bake a tasty delicious pizza for you. There will always be a need for a cute and charming waitress to service your table. Do they deserve your scorn and derision because they haven't achieved what you have? Do they deserve to live in poverty despite working hard?

I'm a pretty smart guy, but I'm not Stephen Hawking smart. And I made choices in my youth that I cannot undo without the assistance of a time machine. My income potential still has growth opportunity even at my age, but I cannot kid myself into thinking I'll ever get to the level of making what my staff pharmacists do. Possible, but not likely. Nonetheless I do have skills more valuable to a company and a market than a pizza chef or a waitress, and I feel no guilt in realizing that my compensation is naturally going to be higher than theirs.

But I also acknowledge that I think it is important to live in a world where work is valued. And believe me I have worked in the service industry my whole life, and take offense when someone derides a pizza chefs job or a waitresses job as "easy". On the contrary those are HARD JOBS, and anyone telling you different is not only a fool, but telling you how terribly they view their fellow man.

If the genetic, social, and cultural crapshoot that is being alive had graced me with a substandard intelligence or some other setback, would I deserve poverty? Just remind yourself of the sobering fact that 60 years ago you could feed a family digging holes for a living. Sure, if that's all you could do well, you weren't going to do as well as an investment banker. But you could still take care of yourself.

Today that is impossible. Is that the kind of world you want to live in? Surrounded by people who could keep their dignity if it were only 1953?

Too much of the political and social commentary on this issue has had the WRONG PEOPLE angry at the WRONG PEOPLE. And I'll quote George Carlin again, because it is precisely the reason why we get this whole situation ass backwards.

"The rich pay almost none of the taxes, make almost all of the money. The middle class pays most of the taxes, makes almost none of the money. The poor? Exist to scare the shit out of the middle class, keep em' showin up at those jobs!"

Those on the left, and indeed way more so on the right, are angry at the wrong people. And this is precisely because so few people grasp what the word rich even means. To a single mother with two kids living in government housing, that $250,000 a year making family is rich....but only to her. $250,000 is not rich, not anymore.

People don't really understand the math of this. And it is precisely because the abbreviations we use to get rid of zero's when we speak about big numbers obscure our ability to innately grasp them. Billions and Trillions are very simple words to say, but they represent almost unfathomable amounts of money to the average person. They simply cannot figure out how to wrap their mind around those numbers when they are expressed in real terms.

Here is an improbable for instance. Bill Gates, who at the moment is worth $79 Billion dollars. Let's assume for the sake of argument he could instantly liquidate that worth into cash. Imagine him just deciding for shits and giggles that he was going to give away a million dollars a day every day for as long as it took for him to go broke.

He would have to live another 216 years before that happened.

And his wealth is in total only about 6% of what we spent as a nation on a plane that can't fly (The F35). The richest man in the world isn't even a dent in the decisions governments make all the time.

Our economy is staggeringly large, so large that few people who even graduated high school can easily grasp the sheer mathematics of it, despite the math itself being very simple.

A small handful of individuals in this country, Bill Gates among them, own more than 270 million Americans do. A group so elite and tiny that they represent less people than I have in my store on a slow Tuesday.

The accumulation of weath isn't necessarily a bad thing. You want more than you have, and so do I. But there comes a point when wealth becomes meaningless as an individual. For you and I it would probably not come anywhere close to Bill Gates's net worth.

At what point do we say that we'd rather live in a society where people can still be rich, but the least among us can feed themselves?

I think it is clear that we have reached the point to where we MUST be asking this question. And we must realize that it is a conversation vital to saving the world we want to live in.

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