Charles Wolf, Jr., and Charles Godges, of the RAND Corporation, state that we are debating American inequality, when we should be focusing on the source of the inequality. This is a false premise, one I reject, because we already know where our inequality comes from.
From Wolf and Godges’ article “Income Inequality”:
- According to the best U.S. government data estimating Gini coefficients around the world, the Unites States falls in the middle of the range (between 0.45 and 0.49). European countries show less inequality than the United States, as do Japan, South Korea, India, Turkey, and Israel. Several rapidly growing developing economies, including Brazil, show greater inequality.
- But whether any level or change in the Gini coefficient is “good” or “bad” cannot be inferred from the coefficient alone. The crucial question is what accounts for the inequality? For those with more income, is it due to greater work effort, higher labor productivity, innovation, entrepreneurship, better technology, more efficient management; or, instead, to favoritism, nepotism, collusion, bribery, fraud, insider trading, special privilege, other forms of corruption, or unequal opportunity? If the explanation lies in higher productivity and better management, then the income inequality warrants encouragement. If, instead, the inequality is due to nepotism and corruption, it should be combated and reversed. If the answer is a combination, which explanation predominates? And how can the positive factors be encouraged, while the latter are reduced?
The questions the authors pose are beside the point. An individual has no significant effect on the Gini coefficient, and a class of people do not suddenly have vast improvements of intelligence and ingenuity. There is no possibility that gifts to the rich could do anything other than increase inequality. What created these gifts to the rich is corruption, pure and simple, and these gifts can only increase inequality.
What tax gifts to the rich do is
increase inequality. Every time.
An article by Chye-Ching Huang, “No Evidence That High-End Tax Cuts Help the Economy“, analyzed tax cuts and capital gains taxes back to 1945. These gifts to the rich did nothing to boost GDP, private savings, investment, or growth in labor productivity. What they did do is increase inequality, every time.
Increases in inequality occur on every occasion that the tax changes embraced by conservative Republicans have become law, showing that, a priori, this alone is the source of income inequality. The supposed social benefits they tout simply do not occur. They never have, and because the quantity of wealth is finite, and redistributing it from those millions who need it most to those very few who need it least will automatically increase inequality.
In addition, I would argue that whether a Gini estimate is good or bad depends not on how it came about, as Wolf and Godges claim, but on the degree and direction of change. Increasing inequality can only be bad, and it is unimaginable that the whole class of self-proclaimed “job creators” can suddenly improve themselves or equality in any aspect.
Tax gifts to the rich
redistribute the finite quantity of wealth
from those millions who need it most
to those very few who need it least.
Our inequality, as measured by the Gini Index, is increasing, and doing so at a rate far in excess of any normal progress of economic change. The question of where our inequality comes from can only be answered in negative terms. It is due to political corruption, to tax gifts for the rich passed by Republicans, to the virtual control of Congress by moneyed interests that have no counterbalance for the rest of us, to the outrageous Citizens United decision by the Supreme Court, to the Koch boys’ manipulation of Republican state legislatures via ALEC, and to all the other corrupting influences that have been extensively documented in recent years.
This belief, that gifts to the rich can do anything other than increase inequality, has again and again been proven false. It has been disproven numerous times with logic, statistics, and historical data, all of which appear to mean nothing to conservative Republicans.