Income and wealth inequality have always been, and always will be, a subject of intense debate. I think the roots of the debate come down to two sides of one basic idea: entitlement mentality.
I could speak to that idea in great depth. But I won’t so much today. Rather, I want to speak towards a perceived cause, as well as what I feel is the actual cause, of wealth inequality.
A friend sent me the following article from the International Herald Tribune (aka The New York Times):
WEALTH OVER WORK
What started as what I hoped would be a critique of what’s driven capital into the hands of a few holders of much capital, turned into a typical, oversimplified, finger-pointing at the rich-loving GOP. [Editor’s note: I am no fan of the GOP. But, for what it’s worth, I do believe they are more often than not the lesser of two evils. Yeah, it’s not worth much.]
The author’s explanation and argument for growing inequality, and the apparent trend towards oligarchy in the US, seemed to rest almost entirely on the GOP’s tax policy.
That approach is disingenuous at worst and misinformed at best, if you want my honest opinion!
The tax argument merely deflects attention away from the real cause of wealth inequality and back onto an age-old ideological talking point. [Heavy sigh.] Simply put: easing taxes on the wealthy and abolishing the estate tax are not the reasons we’re mired in this dilemma (except so far as the idea clouds the thinking of those involved in the debate.)
Oh … and the author attacks capitalism by tacking on the “patriarchal” prefix. Newsflash to all haters: The things you despise about “capitalism” are actually not naturally occurring in free enterprise and free markets (aka true capitalism). So drop the agenda, stop demonizing capitalism and start calling it what it really is: corporatism, fascism, whatever.
The real problem, which you’re probably hoping I address sometime today, is due to a less conspicuous invasion by government Oligarchs …
Most people call it monetary policy.
But to be more specific than to just say the Federal Reserve’s money-printing is going to bring hyperinflation [fyi, it’s not] and ruin us all [fyi, it might], let me say the dynamic is more about interest rates.
Interest rates represent the price of money — the cost/value of doing business. Interest rates are supposed to rise and fall based on the supply and demand of capital moving through the economy.
Guess what: The Federal Reserve and global central banks are manipulating both the price AND quantity of money. So what?
So … when the price of money does not accurately reflect the fair value perceived by savers and borrowers, they seek out ways to achieve what they perceive as fair or necessary.
Hence the financialization of economies.
Saving capital makes little sense when the yield is deemed to be too low.
Investing money in the real economy makes little sense when the potential ROI is deemed to be too low.
The result? Holders of capital seek returns on their wealth in the stock market, in mergers & acquisitions, in dividend income, etc. etc.
Why take on the risk of real economy investments that necessitate job creation and produce sustainable growth when the returns are more attractive in the financial economy?
Now think about that same question and add in the quantity of money central banks are pumping into the financial system. If it’s all going into the financial economy, then it’s all going to those who are already sitting on a big pile of money.
And guess what else: It’s not just the GOP who enables the Federal Reserve and the government’s monopoly on money. If you believe Democrats are not complicit in this monetary charade, then I have bad news — you’re going to need to have your head examined by a doctor on an approved Obamacare health plan.
If you want to read more about the seeds that have been sewn by policymakers and central banks focused on “financial stability,” then check out my article in Money and Markets from February 25th.]
Finally, let me bring one demonstrably embarrassing excerpt of the aforementioned article to your attention:
Why is this happening? Well, bear in mind that both Koch brothers are numbered among the 10 wealthiest Americans, and so are four Walmart heirs. Great wealth buys great political influence — and not just through campaign contributions. Many conservatives live inside an intellectual bubble of think tanks and captive media that is ultimately financed by a handful of megadonors. Not surprisingly, those inside the bubble tend to assume, instinctively, that what is good for oligarchs is good for America.
Despite the many logical fallacies littered throughout this closing paragraph, I can barely pick my jaw up off the floor upon witnessing the glaring hypocrisy of singling out the Koch brothers in order to 1) demonstrate how great wealth buys great political influence and 2) imply that conservatives are the group most subjected to such intellectually confining thought zones.
It makes me wonder: Has anyone ever heard of Warren Buffet or George Soros or Bill Gates or Mark Zuckerberg? I don’t think they are Republicans. Wealth has always bought political influence irrespective of party lines.
By the end of the International Herald Tribune article, if you think the author maintains even a shred of credibility then you might want to start walking around with a needle — we wouldn’t want your intellect getting trapped in a bubble, would we?