Economic Inequality and the Hypocrisy of Power

That a French socialist economist is trashing the American economy for fomenting inequality should hardly be news. But Thomas Piketty is enjoying some moments in the popular press, before returning to the usual comfortable sinecure for the left—academia. Why? Well, we are told, economic inequality is on the march again, and must be stopped. Stopped how? By massive governmental programs aimed at taking from one person to give to, well, the government actually. But the government will then give some of it to people in the form of various subsidies and transfer payments, so it will all be good, right?

The usual domesticated “conservatives” (e.g. The New York Times’ David Brooks) are making the usual noises about how this is all the usual hypocrisy from wealthy and prestigious liberals envious of the even wealthier hedge fund managers on their political right. The left, meanwhile, diverts attention from its own well-established and long running bad faith through a series of snide comments about oligarchy and the chutzpah of rich people actually objecting to being trashed in the media.

It’s all rather appalling, really. Our nation continues its descent into cultural anarchy to the delight of the left and the indifference of establishment Republicans. Real people are struggling to support their families, squeezed by a largely fictitious recovery, in which many can’t find decent jobs and most find their standard of living sinking under increased education and healthcare costs, along with the uncalculated burden created by governments, utilities, and insurers dumping clerical duties (and burdens of proof) onto their “customers.” And snarky journalists and academics trade barbs about who is the bigger hypocrite, who has the higher status, and, presumably, the importance of the distinction between a BMW and a Maserati.

The true, dirty secret about our economy is how much it has empowered preening, self-satisfied “geniuses” at the expense of real workers and real entrepreneurs who create value for themselves, their workers, and our society. Our ruling class in the United States has become one of the more venal in the Western world, convinced that it “earned” its place by scoring higher than most people on their SATs and “making it” up the ladder by putting in lots of hours massaging spreadsheets and egos.

Both sides have prospered in large measure through governmental interference. Recent fights over the Export-Import Bank—the source of more corporate socialism than almost any other institution on the planet—belies the claims of corporate welfare mothers and fathers to have “earned” their money. The smug “entrepreneurs” on our left coast have been gouging employees and the public through outsourcing and manipulation of investment capital for decades. And the press/academy “critics?” The battle to get that “top” appointment at the right institution, the “right” mentions in the press and the “right” new toy, have motivated those small minds since the New Deal gave them the delusion that they should run the country.

The fact is, inequality is inevitable. There will be inequality of income so long as there is income. All societies “choose” for some skills and set up some rules benefitting some people and penalizing others. And, surprise, surprise, bad people get rich and good people get or stay poor. Just because a jerk gets rich is no reason to pretend he isn’t a jerk. But it’s also no reason to destroy economic freedom along with the material well-being it makes possible for all of us. Freedom will be used for good or ill, according to the characters of the persons involved, but government cannot, never has, and never will be able to make us virtuous. Welcome to the fallen, sinful world in which mankind has lived since its inception.

There are, of course, differences between today’s societies, which generally support or at least tolerate market activities, and previous regimes. Most importantly, where our society rewards certain sins perpetrated by individual persons and groups, most previous economies rested on the power of rulers to hand out favors. Socialism, of course, reverts to this older calculus, though it allows power brokers to hide behind claims to represent “the people.”

The issue is not how we shall make everyone equal. We can’t do that, though we can hand tyrannical power over to those who promise to do it for us. The question is how we can establish and maintain a decent social structure that ties, however loosely, the garnering of great wealth to the promotion of the general welfare while limiting evil conduct in the pursuit and use of that wealth.

From the royal monopolies of the Elizabethan Age to the corrupt subsidies handed over to rail barons in the nineteenth century to the Obama Administration’s gravy train for “green” corporations, governments have used other people’s money to create unjust and unwise concentrations of wealth. But, while the government can create monetary monsters, it rarely succeeds in slaying them. Harsh policies (like those in France) simply chase away the rich—or at least their money and the jobs it once supported. More stealthy tax policies merely enrich tax accountants and lawyers while making the middle classes and entrepreneurs lose hope.

Economic equality matters in only one very limited sense. As Aristotle recognized more than 2,000 years ago, a successful polity must have a strong middle class. People who have a substantial stake in the economy while still having to work within it are necessary for that economy’s stability. Such folk also are necessary for political and social stability because they thrive, not on “creative destruction” (which is, after all, destructive) but rather on hard work aimed at steady, intergenerational improvements. And what kills a middle class? Big government. Not just socialism (though Mr. Piketty’s policies, aimed at “equalizing” wealth, certainly would do the trick) but big government. Whether it is the Obama Administration’s social democracy or the simple incompetence and lack of discipline of the George W. Bush Administration, profligate government programs stifle competition, undermine the work ethic, and reward hucksterism. The results may, in fact, be rather profitable for those in business willing and able to manipulate the rules to their own advantage. Wall Street has always known how to deal with regulations—they are just more shells in the game. But Main Street, where most Americans live and work, needs fewer, clearer, cleaner rules that allow us to get on with the business of making a living so that we may do the more important work of raising our families.

Editor’s note: This column first appeared May 7, 2014 in Imaginative Conservative and is reprinted with permission.

Bruce Frohnen

By

Bruce Frohnen is Professor of Law at the Ohio Northern University College of Law. He is also a senior fellow at the Russell Kirk Center and author of many books including The New Communitarians and the Crisis of Modern Liberalism, and the editor of Rethinking Rights (with Ken Grasso), and The American Republic: Primary Source. His most recent book (with the late George Carey) is Constitutional Morality and the Rise of Quasi-Law (Harvard, 2016).

  • Arriero

    Piketty’s «Le Capital au XXIe siècle» has 970 pages in the French edition. Yet, it only has 696 pages in the english edition. The author was gathering and analyzing data for more than fifteen years. This book is not an improvisation. Nor it is the typical superficial anglo-saxon academic book coming from an Ivy League economist. This is certainly a very interesting and thoughtful book. A very well written book, actually. With lots of well-analyzed data backing the core thesis, which of course can be discussed anyway (Robert Solow, the American Nobel Prize, explains the most important aspects: http://www.newrepublic.com/article/117429/capital-twenty-first-century-thomas-piketty-reviewed ). In Europe people also think, and think deep.

    The core thesis – and what should be really discussed – is: in the long term (historically), wealth-Capital income is higher than economic growth. This is the fact. After, Piketty builds his conclusion: this fact leads to higher INCOME inequality; income inequality is, indeed, a law within the system. The solution he regards to fix this destructive dynamic of capitalism is a higher and better redistribution of income. Now, we must remember that the State is a pumper of income, it does not retain or absorb any income per se (check how the national accounts are calculated to understand this fact). In fact, one of the main functions of income redistribution is avoid class-warfare, in marxian terms that everybody understands.

    A new comprehensive policy on income distribution is absolutely needed. ABSOLUTELY (Olivier Blanchard from the IMF recently released a paper pointing out to the importance of it). There are too many parasites (a big majority of them are private parasites) in our modern economies, who receive too much income that otherwise would go to the real creator of wealth, to the real productive economy through capital and labor (recall that for classical economists, including Marx, value only comes from Labor). Those who attack the State per-se are allies of all those parasites (many actually pay people to attack the State, that’s very well known). Why should we allow a Wal Mart directive being paid 900 times more than a worker? Why should we allow Lloyd Blankfein’s salary? Why should we allow subsides to great corporations? Do you think it is normal than the President of the USA has a salary which is a joke compared with the salaries of private corporations? Do you think we can allow public servants to have derisive salaries? (and those in the military are also public servants, I’ve always wondered why anti-State-per-se populists don’t go to a Vietnam’s veterans parade and yell and insult them, as they do with other, for being public servants?).

    As a matter of fact, neither I nor Piketty care about the salaries of Lloyd Blankfein or Bill Gates. What we should care is about how this people don’t allow income from going to the REAL PRODUCTIVE ECONOMY. What should annoys us is how badly distributed is income. We should not care about income inequality per se, but about UNFAIR income inequality which drags the economy into a hole. We must enforce REPRESSIVE policies to attack parasites. Ultimately, Piketty is saying us that will rent much more a inheritance than a whole life full of hard work and sacrifice. Is it fair? Is it rational? Is it Catholic? That’s the matter. That’s the fact.

    • TheAbaum

      How about you try to post something less than 1000 words some time and without the typical meaningless vacuities such as “REAL PRODUCTIVE ECONOMY”?

      • Arriero

        Real Productive economy = (Traditional) Capital & Labor.

        Real Non-productive economy = (Marxian) Capital = money used to buy something only in order to sell it again to realize a financial profit.

        We are against unproductive PRIVATE TAXATION, the real economic devil of our century.

        We are for a system where INCOME goes to INCOME PRODUCERS, to VALUE-ADDED producers.

        There are too many MARXIST CAPITALISTS, although they don’t even know it.

        On the contrary, we are true Liberal, Catholic Capitalists in the spirit of the old School of Salamanca and the Second Scholastic.

        • TheAbaum

          Real Non-productive economy = (Marxian) Capital = money used to buy something only in order to sell it again to realize a financial profit.

          Oh you mean like merchandise inventory?

          • AMDGJMJ

            If you add value by storing inventory then arranging some items on shelves in a convenient place for the public to shop and purchase then yes, realize a profit. But if you merely shuffle papers around on your own desk, buying then selling later, you add no value and therefore sin by realizing a profit. I don’t see how the latter case essentially differs from usury.

            • TheAbaum

              But if you merely shuffle papers around on your own desk, buying then selling later, you add no value and therefore sin by realizing a profit.

              Where does this happen besides in your head?

              • AMDGJMJ

                Sorry, don’t understand your point.

                The “inventory” example is buying wholesale which the public is unable to do, then selling retail for the benefit of the public. Translating a bulk container into main street shops is work.

                However… you buy something. You don’t touch it, don’t even look at it, don’t move it, nothing. Later you sell it at a profit. Nothing whatsoever has changed except the date. I still don’t unerstand how you have thereby deserved to earn a living by that profit, for you have done no productive work. How is this not like usury?

                Please answer sensibly if you can and leave the mockery aside – thank you.

                • TheAbaum

                  Every purchaser of something for resale is attempting to transport that item to a customer, some through space, some through time. Every one takes risk that customers will not exist at the point of delivery, whether that’s space or time.

                  You seem to think that providing something how and where somebody else wants it, is somehow honorable, that physical transport and manipulation is work. You don’t seem to understand that when you want it is important too.

                  Nor is there a clear line of demarcation, between the arbitrage of time and space. When you wander into a grocery store looking for bread and milk when the weatherman calls for snow, you not only want it there, in a size that you need, THERE but you want it THEN. You won’t come back in 24 hours after the great Noreasterer turns into flurries.

                  When somebody writes “But if you merely shuffle papers around on your own desk”, they clearly don’t know what they are talking about. Nobody does that, except politicians and their friends. The rest of the world buys something hoping their a customer. Even the purest time arbitrageur, the day trader, keeps prices stable as their activities control the variability of prices.

                  I really fail to understand how people who write insulting things, with an obvious deficiency of understanding, expect to be treated with kid gloves. Because you don’t understand something, or because you make a specious comparison, doesn’t make it evil or give you a write to sit in judgment.

          • Arriero

            No, this «we» is the «pluralis majestatis» («plural mayestático» in Spanish), which does not exist in english. It was widely used in the Ancient Rome, and its influence later extended through the use that Popes and Kings made of the terminology (from this aspect developed the english «Royal we»: http://en.wikipedia.org/wiki/Royal_we ).

            In english there is no proper equivalent, though we could referred to it as «nosism»: http://en.wikipedia.org/wiki/Nosism .

            This «We» also includes all those who believe and defend the ideas I expose, which are not an improvisation or a personal delirium.

            Your last comment on the «merchandise inventory» sounds somewhat an appendix (or a re-definition) to the old Say’s Law. There are lots of people who «shuffle papers around on their desk»… and not only papers. Besides, I’m worried by your disdain and bad opinion of politicians. Maybe we should ask Bakunin to enlighten us on why to solve this problem with government.

            • TheAbaum

              Besides, I’m worried by your disdain and bad opinion of politicians.

              Too bad. People who don’t lack disdain of, and hold politicians in high esteem are what’s worrisome.

              I will not worship your golden calf, statist.

    • Paul

      The only parasites I see are the ones are the politicians with all their bloated salaries and perks , tax exemptions etc … The biggest fat cats of all are the ones calling themselves the government who are all on the take from the corporations.

      • TheAbaum

        When you can distinguish between the rent-seeking corporate elite and the imperial federal government.

        There’s a revolving door between Wall Street and K Street, hence people like Rubin, Paulson, etc.

        Corzine of course was the ne plus ultra, a hard-left tool of Goldilocks Sacks, who “lost” a billiion dollars, but seems immune to prosecution.

  • tamsin

    A middle class based on hard work aimed at steady, intergenerational improvements by families,

    just can’t compete with the federal government’s promise to make each individual “whole” by providing him or her with food, clothing, housing, schooling, medicine, recreation, respect, protection from hurt feelings, artificial reproduction for those not inclined to consort with members of the opposite sex… The list of things the government is telling you you are entitled to get from government, now! in your lifetime! regardless of your parents, grows ever longer and reduces the family to an amusement, a personal hobby, the people you take selfies with.

  • montanajack1948

    Kudos to Professor Frohnen for getting right to the ad hominem in his opening phrase! He then launches quite the spirited attack on those hypocritical leftists with their sinecures in academia, an attack especially impressive coming as it does from the “Charles Evans Hughes Professor of Jurisprudence at Colgate University and Professor of Law at the Ohio Northern University College of Law”: academic sinecures, indeed. In any case, Professor Frohnen makes some good points (as he usually does). However, when he claims that Big Government kills the middle class, he’s ignoring the historical evidence–in America, at least, the rise of the middle class coincided with the rise of Big Government (and Big Labor, too) in the postwar decades. Of course, Big Government, done badly, can kill the middle class (and the entire economy with it); but done right, it can empower, support, and sustain it. The argument shouldn’t be (for the most part) Big vs. Small; it should be Smart vs. Dumb, Effective vs. Ineffective, and Constructive vs. Destructive. [I acknowledge that sheer size, as in “human scale,” can correlate at times with those other measures; but the correlation isn’t invariable–there are, as we know, such things as “economies of size”.]

    • TheAbaum

      “Of course, Big Government, done badly, can kill the middle class (and the entire economy with it); but done right, it can empower, support, and sustain it.”

      No, big government is government done badly, and the golden calf of the last few centuries. All we need is Edward G. Robinson telling people “here is your god”.

  • Marc

    what’s wrong with creative destruction?

    • Augustus

      It usually means destroying beautiful historic buildings to put in their place ugly modern strip malls. In other words, it means destruction without the creativity, imagination or craft. With few exceptions, developers don’t care what crap they build, as long as they make money. Politicians do increase the cost of construction with regulations, but eliminating them will not miraculously cause developers (or for that matter architects) to cultivate a sense of taste.

      • Marc

        Creative destruction is just the elimination of one product by another product. The steamship eliminated the sailing vessel, and the airplane eliminated the ocean liner.

        • Augustus

          That is the positive characterization; but it’s not all there is. We often sacrifice quality for cheaper goods. Planned obsolescence is an example of this: Intentionally producing inferior products to encourage renewed purchases. (It almost put the auto industry out of business.)

  • GUNNER

    The day we started taking from the doers and giving to the do nothings was the beginning of the end for this country and the lefties want to add another 11 or 12 million uneducated culturally backward people who just want hand outs and not to become Americans thanks to the Democrats were sinking in a morass of liberal stupidity and ignorance.

    • Arriero

      Maybe you’re not a do-nothing, but you certainly are a know-nothing.

      You, of course, don’t understand why a comprehensive income distribution – through taxation – is completely needed for the good health and wealth of a capitalist economy.

      You of course don’t seem to be aware about the thousands of parasites from the private sector with their inmoral salaries that we all have to pay through private taxation or their undeserved subsides we all to pay with our already very bad distributed taxes.

      You don’t either seem to understand why regulation and laws are needed to establish a contractual stable order. And to avoid the consequences derived from the freely chosen bad behaviour of men and women (cfr. Father Juan de Mariana).

      The handouts to your«culturally uneducated backward people» is simply a needed premise to sustain such a crap of economic system we live on. «Panem et circenses». Apart, I can say that is probably better live a life of honest poverty than being employed in the current XXIst neo-slave camps that are many of our post-modern corporations. They corrupt even the most honest souls.

      That goes well beyond the democrats and the republics. We’re discussing a global problem. Do you think there are many differences between the behaviour of the American elite and the Chinese Communist Party elite? The world does not end in the US. The world does not really care about what happens in America no more (for instance, everybody with a little of common sense knows that in the Ukranian crisis we all SHOULD be with Putin and not with the neo-fascists puppetry guided by the protestant-mercantilist Germany).

      This economic system stinks. And instead of going to real Catholic sources, you feed yourself with pseudo-theories which are nothing but cheap metaphysics heirs of the Reformation.

      • TheAbaum

        He does know how to write something in less than a 1000 words and uncontaminated by nasal mucous.

        • Arriero

          These are too important topics to treat them superficially or to allow misunderstandings. There is no room for a conceptual/axiomatic approach when so many things are misunderstood.

          I could take the conceptual bazooka*, but nobody would understand anything. The better approach is called pedagogy, isn’t it?

          * For example, our concept for the one of the implied thesis of Piketty that only a war could destroy enough capital to allow for a thriving economy coming from its same ashes is «Apocatastasis» (a concept taken from Origen).

          • TheAbaum

            “These are too important topics to treat them superficially or to allow misunderstandings. There is no room for a conceptual/axiomatic approach when so many things are misunderstood.”

            You have a demonstrated inability to further this cause. Your posts are pedantic, tedious exercises in incoherency and irrelancy.

            Piketty is jush the latest court astrologer for the left. he’s a boor, which no doubt why you think he’s something other than a trash recycler.

            • Arriero

              No, Piketty’s thesis is not the typical pseudo-thesis you would expect to come from the «anuses&fetuses» American progressives, who have nothing of leftists (from a traditional viewpoint), by the way. They’re absolutely anti-intellectual, because they’re sheer illiterates. Lenin, for instance, despised the distinction between right and left. No traditional leftist has ever taken into account that artificial differentiation coming from the anti-intellectual soft-American social democracy* (the late industralisation what the foremost example of «socialization of capital», for example through Sociétés Anonymes); which Lenin already dubbed «”Left-Wing” Communism: An Infantile Disorder» in his famous pamphlet.

              * It is well known and studied that nazional-socialism (Hitler) in Germany and fascism in Italy (Mussolini) were very influenced by Roosevelt’s (soft social-democratic) Great Depression’s policies. In fact, Stalin always considered the nazy system «fascist socialism».

              The distribution of income in the XXIst century is absolutely crucial. Nowadays, income goes mostly (or in a way we can no longer sustain) to anti-economic agents which are dragging the economy into a hole of unbearable stagnation. Piketty is not focusing in the crappy discourse from Krugman and others, he is just saying that with Wealth-Capital income being higher than economic growth we can no longer sustain the levels of income from Capital & Labor necessary to thrive. Crucial point.

              The thing is not inequality per se, it’s ANTI-ECONOMIC inequality. More income MUST go to Capital & Labor, the unique creators of REAL wealth.

              • TheAbaum

                “Nowadays, income goes mostly (or in a way we can no longer sustain) to anti-economic agents which are dragging the economy into a hole of unbearable stagnation. ”

                Ir’s called government, statist.

      • GUNNER

        You are an absolute dim wit nowhere did I state that real needy people were to be ignored but obviously you are a touchy feely idiot liberal that has a much intelligence as lint you clown don’t spew your garbage to me you no nothing fool.

        • Crisiseditor

          Let’s keep the conversation civil. You can disagree without name-calling.

      • NE Radical

        I haven’t read such utter and complete balderdash since Rules for Radicals. Grow up. Learn to think for yourself. And, stop being such a pathetic whiner.

  • Tim

    Anybody hear about Pope Francis’s speech to the UN Secretary-General this morning?
    http://www.nydailynews.com/news/world/pope-francis-urges-legitimate-redistribution-wealth-article-1.1785861

    • Arriero

      Pope Francis is absolutely right. ABSOLUTELY RIGHT.

      He has more intuition about the economy and our times than all this bunch of academic economists paid by who knows who.

      How needed was this Pope for this historical period of time.

      It’s funny seeing how many Pseudo-calvinist Catholics feel confused with the absolutely needed affirmation of this Pope, a heir of the old Latin Church in the spirit of the traditional Scholastic.

      And one more thing: the Pope defends wealth distribution purely from a moral-Catholic viewpoint, but it could be defended purely from an economic and pragmatic viewpoint. The economy is doomed without a proper Wealth/Income distribution.

      • Deoacveritatimyfaithsustainsm

        You are exactly right when you say “Pseudo-calvinist Catholics feel confused with the absolutely needed
        affirmation of this Pope, a heir of the old Latin Church in the spirit
        of the traditional Scholastic”

        That is exactly how many Catholics are especially in North America.

        I agree with you with your comment 100% and I support Pope Francis on this as well. The Pope is standing up for what is fair from a moral -Catholic viewpoint there is no doubt no doubt about that.

        I also want to take away this opportunity to tell Catholics to stay away from Father John Zuhlsdorf or Father Z’s blog.

        This priest is an ex-Lutheran who converted to Catholicism in the 90’s and now supposedly wears the Traditional hat but his Catholicism is describes exacty what you correctly identify as “Pseudo-calvinist Catholics”

        I love the Faith and I love Tradition in the Church but this priest in my books is a hypocrite I have tried too many times to like what he says and I can’t. I just don’t like him and I don’t trust him.

        This is Father Z’s blog reaction to Pope Francis the UN Secretary-General:

        “I wonder how many people are still listening to him seriously on this issue.Also, I would like to know if anyone around him is telling him that there are alternative ways of dealing with poverty apart from merely redistributing the wealth that other people create? Is Pope Francis talking to anyone about ideas that actually work?”

        This priest is a jerk in my books sorry for saying that but I can’t stand anything this man says.

  • FJ Rocca

    These comments are excerpts from an article I wrote last year, published in DC Clothesline and Freedom Outpost. It gives additional dimension to the argument in this article. FJ Rocca

    INCOME INEQUALITY IS A FALSE
    ARGUMENT

    Politicians like to harp on the issue of income inequality, by which they mean that one group of people is richer than another group of people and that the difference in these levels must be addressed by redistributing income. But, income inequality is a false argument for several reasons. First among these is that it presumes that wealth is static, i.e., that there is only so much wealth to go around, that it does not grow, that if one person has a larger “share” of this fixed amount of
    wealth, then someone else must have a smaller “share” and that the difference between the two amounts is the important consideration. If there were only a fixed amount of wealth in the world and it had to be divided among a fixed number people, there might be a more legitimate argument that if one person has a lot, another must have less. But this is a fictitious argument, because the difference itself means nothing. Moreover, the reasons your neighbor is richer than you are may be so complex that the difference cannot be explained with any accuracy.

    Wealth not static, it is fluid. Wealth is created by human beings every day by working, thinking, inventing, and doing. They create wealth by exercising their minds and exerting their efforts, thus fulfilling their potential through industry and enterprise. Because it is constantly created, wealth is also limitless. It is impossible to determine how much wealth there is in the world, because that amount of wealth changes and moves among people. It is exchanged and given away and sometimes lost by one person and gained by another, in the great flux of trade.

    But there is always more wealth to be had, because people create wealth for themselves, by working at jobs and by going into business, by winning the lottery or by competent investment, by inventing something or by painting pictures that sell. There is always more wealth to be had by someone who has vision, energy and will-power. And when jobs are not made readily available, there are usually ways to create work of one’s own, by offering to perform services independently. During the depression, out of work people sold apples on the street. Admittedly this was not a good replacement for a regular job, but it was, nonetheless, a
    demonstration that people can create work for themselves. This is the core of free trade, of capitalism.

    Furthermore, their argument presumes that people are not individuals, but collectives, that they live, breathe and operate as parts of a mass. This is an absolutely false assumption. It is nothing more than an attempt by politicians, especially Leftist, Liberal Democrats, to distract from the reality that collectives do not exist in society, because the human society
    is made up not of masses, but of people. People may belong to groups, but groups are not masses. They consist of individuals who come together for a specific person, and even within that group, each person functions as an individual. People are never statistics and cannot be collectivized by a politician’s dictates.

    Income inequality does exist, but it is not inequality among groups. It is income inequality among individual people. Some people inherit wealth. Some people are gifted with talent or genius and can create for themselves greater wealth than others can who do not possess special talent or genius.

    Like wealth itself, opportunities to create it are also fluid and limitless. But, also like wealth, opportunities to create or gather wealth are unequal, because opportunities, like wealth itself, are created. Opportunities result from work. Wherever there is work, there are opportunities. During the American Gold Rush of the nineteenth century, prospectors panned and dug for gold. They worked. And as these prospectors worked, other people, who were not prospectors, gathered around them in order to sell them food and other goods, to create places for them to live, to weigh and bank their gold and to transport people and their goods from place to place. Work begets work. It tends to expand geometrically. The more work there is to be done the more people will be enriched by doing it. When one person works to create or develop products or services, other people find that the demand for those products or services increases incalculably. Thus opportunities also expand geometrically, and the harder, more intelligently one works, the greater are his opportunities for gaining wealth.

    Why, then, is there such a focus on the argument of inequality of income? This argument is used by politicians, mostly by Liberal Democrats, to incite people to jealous anger by which they hope to pit one faction of society against another. In this way, they can pose as champions of the underdog, even though the grievance, against which they offer their protection, is an invention of their own. By inciting envy and its concomitant anger, they incite class warfare and reap the benefits of confusion and distraction, in order to seize and consolidate more power for themselves.

    A particularly insidious form of this argument is to cite inequality of income between two equally fictitious racial groups, black against white, using the statistic that black citizens suffer from income inequality as a collective and that white citizens as a collective are somehow guilty. There is no way to justify this argument, because it implies that black
    people are incapable of attaining higher levels of wealth, therefore, wealth must be taken from white people and redistributed to them in order to equalize it.

    It must be admitted that during the many decades since slavery was abolished, many people with dark skin had a more difficult time finding opportunities to advance economically and socially than many people with lighter colored skin. However, this situation has ameliorated in recent decades and economic measures were put in place to give an economic and professional leg up to those who qualify.

    But this fact notwithstanding, arguments that favor redistribution of wealth are nonetheless false, because they are based on statistical assumptions and not on human nature. In fact, although skin color affected the social status of black people, it has never impacted their
    intelligence, talent or capacity for hard work. Any performer, regardless of color, can tell you how difficult it is to become successful in show business. Any athlete, regardless of color, can tell you how hard a person must work to gain the skills necessary to play a professional sport. Any classical musician, regardless of skin color, will gladly tell you how many hours a day it is necessary to practice to become a piano or violin virtuoso. Talent and initiative are not the province of skin color.

    Opportunities among people of all skin color vary, but opportunities can be created, and often they must be. Just read the articles by Thomas Sowell to see what personal individual industry and effort can achieve.
    Read Frederick Douglass’s writings and learn what an individual can do, even in the face of an extreme level of racism that simply does not exist today.

    There is no way to control or predict how successful someone can become, because each person lives a different life from each other person, thus, everybody in the world experiences some level of income inequality. In fact, in some countries, entire populations suffer lower standards of living that other entire populations, and when they do it is almost always a sign of corrupt government and an ineffective economic or political system at work. Where free enterprise does not exist or where it is stunted, inequality is actually created among citizens under the guise that wealth is being “equalized.”

    The argument against income inequality is only legitimate and valid when that inequity is a result of seizure of one person’s wealth by another person. A thief who robs you at gun point, or who picks your pocket,
    commits a crime and is punishable by law. But politicians also steal wealth. They do so by passing laws that enrich themselves under the guise of equalizing the supposedly unfair and unequal natural distribution of wealth, and replacing it with their artificial system. To do this, they cite statistics, which can be manipulated into lies, and claim the support of The People. Politicians pay themselves high salaries. They give themselves undeserved and unearned retirement benefits and many percs of office that set their own wealth well above that of those who pay them. This is the only form of income inequality that ought to incite the rage of Americans against politicians, who feed at the extraordinary trough of taxpayer dollars taken from their fellow citizens.

    FJ Rocca

    • Michael Paterson-Seymour

      Rousseau pointed out that ” If the object is to give the State consistency, bring the two extremes as near to each other as possible; allow neither rich men nor beggars. These two estates, which are naturally inseparable, are equally fatal to the common good; from the one come the friends of tyranny, and from the other tyrants. It is always between them that public liberty is put up to auction; the one buys, and the other sells.”

  • Gads

    Beware of the left, or “progressives” roads to infinity. That is, convincing the masses that they can achieve the unachievable. What follows are infinite opportunities to keep growing the already monstrous government leviathan. It will never end, because there is no realistic, positive end game. Inequality is the natural state of mankind. The only thing that actually ‘progresses’ is the wealth of those in power making empty promises and expanding their power. And the working people pay for it and suffer.
    There are already existing income equality laws in this country. If one thinks he or she is being discriminated against, I suggest taking it to court.

    • Arriero

      The problem is not inequality per se. The problem is inequality that drags the economy into the hole of dangerous stagnation.

      Why should we allow income to go to the hands of abusive and parasitical rent-seekers who neither add any value to the economy nor produce something worth, instead of this income being put in the hands of productive enterprises, value-adding businesses and producers of goods and services?

      THAT IS THE QUESTION.

      Besides, income is not only bad distributed; it’s also wrongly extracted from the same hands of the productive agents (Capital & Labor) through, mostly, PRIVATE TAXATION, in order to give it later to the very harmful un-productive agents (Marxian Capital).

      We need a new comprehensive incomes policy.

      I still wonder why all this ABSOLUTELY NEEDED policy – that even our HOLY CATHOLIC POPE supports and understands – is considered something «leftists» (of course without previously defining what does it mean to be a leftist, and even less understanding the same concept).

      Less ideology and more facts. Piketty’s book is full of annoying facts, backed by a lot of data.

      • Gads

        .Do you agree with all of the Pope’s words, or are you cherry-picking?
        Why should we allow income to be controlled by the hands of abusive and parasitical government officials and bureaucrats? Are you a government employee? One of the main themes of our Constitution is that man is far from perfect, and establishes the need for checks and balances.
        I defer to John Paul II who had personal experience with communism and fought hard to end it. With all due respect to Pope Francis, I believe his statement to be in grave error, offering to trust the State and not God. The Bible is filled with lessons in financial, economic and cultural responsibility. I also believe his view myopic and created by his Argentine background.
        Unfortunately, it is up to individuals to be good stewards of ourselves, our businesses and those around us. To distribute our own income responsibly. Most people do not. And, unfortunately, that makes for an enormous opportunity for our largely STATIST government to amass power to itself and its members in the name of helping the victims of the day.
        The most pernicious form of tyranny is that which disguises itself as a benefit to its victim.

        • Arriero

          Let me answer you point by point:

          – «Do you agree with all of the Pope’s words, or are you cherry-picking?»

          I agree with ALL of the Pope’s words. ALL Catholics should agree with ALL of the Pope’s words. The Pope is right. The Pope does not talk cheap metaphysics. He knows what’s the problem and he knows it must be solved. He knows that a comprehensive incomes policy is ABSOLUTELY needed. The Pope is not improvising. The path to follow is clear and evident.

          – «Why should we allow income to be controlled by the hands of abusive and parasitical government officials and bureaucrats?»

          The State is a PUMP of income; it does not absorb or retain any income; it simply DISTRIBUTES the income it receives. That’s not an opinion, that’s a fact (check how the national accounts are calculated). The State is not a metaphysical concept, WE ALL form the State, which is ABSOLUTELY NEEDED. Besides, the State is the authentic LIBERAL invention par excellence.

          You can fix the problem of «parasitical government official» without having to despise or destroy the State as a whole. Yet, the real problem nowadays is the «parasitical private rent-seekers». The anti-government-per-se rethorics are usually stupid, revolutionary and profoundly dangerous; direct heirs of Bakunin’s ideology (who, by the way, said: «a good church is only a burned church»).

          – «Are you a government employee?»

          No. But thankfully I live in a serious State where laws are met, security is ensured, there is contractual stability and bad behaviour is punished.It’s not perfect, but help us all to live in a stable and secure environment. Freedom does not come from the thin air. It needs regulation to make it thrive. I would not like – neither I would enjoy – living in the jungle, or in Somalia.

          – «One of the main themes of our Constitution is that man is far from perfect, and establishes the need for checks and balances.»

          The authentic Catholic theory of freedom is the one exposed by Father Juan de Mariana. He said that the men and women are created free by God. Hence, they, as sinners, more than often choose to behave badly, so we need REGULATION to control our freely chosen bad behaviour.

          – «I defer to John Paul II who had personal experience with communism and fought hard to end it.»

          I always wonder why communism has always to appear in almost any conversation of this kind. In Europe everybody cites the phantom of nazism, and in America the phantom of communism.

          Communism is anti-Catholic, and also a product of the Reformation. Moreover, it’s well known that the majority of protestant sects that came to America had a primitive communist attitude. So what? The Berlin Wall already fell. Communism failed. That’s not the debate now.

          – «With all due respect to Pope Francis, I believe his statement to be in grave error, offering to trust the State and not God.»

          Then you have not understand Pope Francis, because you put a certain ideology above the Word of the Catholic Pope. He does not trust the State more than you do, but in our modern economies the State is who distributes income. The State has a crucial paper on our economies and societies. Pope Francis is rational, he does not talk cheap metaphysics like some very bad ideologues.

          – «I also believe his view myopic and created by his Argentine background.»

          You can believe in a flat Earth or in what you want. We’re not discussing emotions here, but facts, concepts and ideas. Of course, your belief here is absolutely wrong. Pope Francis does not speak as an argentinian, but as the POPE OF THE CATHOLIC WORLD.

          – «Unfortunately, it is up to individuals to be good stewards of ourselves, our businesses and those around us.»

          Yes, so what? Has someone denied this very common sensical premise. We Catholics, unlike pseudo-calvinists, believe in HUMAN FREEDOM. Of course, that does not mean you can do «whatever you want with your life». This attitude would be profoundly anti-Catholic.

          – «To distribute our own income responsibly.»

          You don’t understand what does it mean our absolutely needed proposal of a comprehensive incomes policy. I’m not talking about consumption of about where you choose to spend your income. Check Mankiw’s «Macroeconomics» book and then you will understand what’s the paper and importance of Income within an economy. Unfortunately, it’s too long for being explained here.

          – «And, unfortunately, that makes for an enormous opportunity for our largely STATIST government to amass power to itself and its members in the name of helping the victims of the day.»

          That’s the problem: THAT INCOME IS VERY BADLY DISTRIBUTED; it goes in a too higher proportion (ie. in a proportion the economy cannot bear) to un-productive agents, depriving productive agents from getting it.

          – «The most pernicious form of tyranny is that which disguises itself as a benefit to its victim.»

          Yes, that’s the typical cheap metaphysics American rethoric that we all love so much to cite but which adds nothing worth to the discussion.

          • Gads

            I understand the Pope is not the pope of America, but the world. And I do speak from an American experience (which you, obviously abhor), and watch us head toward a socialist state.

            But nowhere in true Catholic doctrine does it appoint governments to distribute the income of individuals against their will. That is in direct opposition of our God given free will.

            “The State is a PUMP of income; it does not absorb or retain any income; it simply DISTRIBUTES the income it receives.”

            Where I live the state is a drain on the working class. After operation expenses, DISTRIBUTES most to government bodies and bureaucracies, many of which are outdated and unnecessary.
            I’d say it is a SIEVE of income.
            No I don’t know what your “proposal” is. I’m simply commenting on the article.

            Your idea of a utopian redistributive state does not exist and I’m afraid it never will. By the way, that IS a form of communism.

            “Yes, that’s the typical cheap metaphysics American rethoric that we all love so much to cite but which adds nothing worth to the discussion”
            Metaphysics? No, it is an accurate statement of what is currently happening to the USA, and is relevant to the topic of income redistribution by corrupt government officials.

            • Arriero

              Briefly, some points:

              1) I don’t abhor THE American experience; I abhor a CERTAIN American experience. That is the same that saying that I abhor anti-Catholic pseudo-theories. Nothing more than bad-crafted stupidities with no sense within an authentic Catholic framework. I don’t make personal judgements (I’m not judging you or America) I merely judge some (stupid) concepts and ideas (dangerous ideologies, in that case). That said, many Americans support the same thesis I – and Pope Francis – expose.

              2) Ask me something: if the States don’t have to distribute income, who is going to distribute it? The prophet Ezekiel? Who is going to collect THE NECESSARY taxes? Some animal?

              3) I want income to go to Capital & Labor and not to the (un-productive and parasitical) friends of Obama, Romney or whoever, through Private Taxation (http://www.dkosopedia.com/wiki/Private_Taxation ). Why you hate so much public servants (like heroic soldiers who fight abroad usually to protect some selfish private interests) and not the un-productive PRIVATE rent-seekers (like the NBA player who has a salary twenty times the salary of the US President)?

              4) My proposal is not utopic. Is perfectly FEASIBLE and ABSOLUTELY NEEDED. It’s not a whim I and other have, it’s something the economy needs in order to create wealth and prosperity. That’s not ideology, is pure pragmatism. Income bad distribution drags the economy into a hole of undefined stagnation, high unemployment, low (adequate) investment and low (adequate) consumption.

              5) I call that phrase cheap metaphysics because in this type of phrases there is no definition for such important concepts as «tyranny» (what is considered a tyranny? Who says what is a tyranny? Is total freedom a tyranny too?).

              6) There are corrupt government official, but government is not corrupt. There are sinners within the Church, but the Church does not comit sin. Important difference. Corrupts to the jail, but don’t undermine the «super-structure».

              Good night and have a good day.

              • Gads

                Before you go, I must set the record straight.

                I have nothing but high regard for our brave men and women
                in the military.

                I am not anti-tax or anti-government, as you seem to assume. But we have drifted far from
                reasonable governance in the U.S.

                Do not assume that folks with conservative viewpoints are all in favor of some lawless, anarchic society.

                It is the recklessness of our current governors who will lead us away
                from civil society.

                I’ll add to your list of suggested reading, any economics
                book by Thomas Sowell.

                You have a good day as well.

  • hombre111

    Ponder the wisdom of Pope Francis, whose Latin tweet could be translated, “Inequality equals iniquity.” Twenty-one hedge fund managers earned a billion dollars apiece, last year. According to Krugman, most of them did not give their investors the kind of return that reward would warrant. They did not create anything of real value. They just supervised monopoly games for the rich, and got a huge tax break, paying a smaller percentage of their earnings then the laundry lady. Many conservatives, who think with the same money uberall mindset, imagine that eventually, the wealth created by these non-job creators will come spiraling down into Linus’ pumpkin patch. Tell me when it happens.

    • M

      You know, some people are just so disobedient when it comes to Catholic teaching!:-O

    • Paul

      It is the Socialist economy that believes in the trickling down effect of wealth to the common man through , supposedly, redistribution of wealth. Of course, we all know this does not happen as the state – the hoarder of wealth (through taxation & nationalising industries) – accumulates wealth for themselves in order to retain power for themselves above all , thus the trickling down effect never happens. To redistribute wealth is to redistribute power, and the vast majority of governments (left or right) are NOT interested in sharing power with their peoples.

  • Gads

    Additionally, as I continue to hear the latest quote by the Pope taken out of context, I highly recommend reading the entire text of his address to the UN. His comprehensive view is far more benevolent than that of the masterminds of income inequality.

    http://www.news.va/en/news/pope-to-un-resist-the-economy-of-exclusion-serve-t

  • Ruth Rocker

    I know that everyone focuses in these kinds of discussion on the corporate CEOs who make indecent amounts of money while the workers scrape by. But what about the pro sports folks? Is ANYBODY really worth a multi-million dollar contract to PLAY A GAME?? Talk about bread and circuses!! What about actors?? Are they REALLY worth all that money for play acting? At least wealthy authors produce something for their money.

    Jesus told us (through Matthew) that the poor would always be with us while He would not. Keep in mind that there are many who will never object to bigger government because they get “free” stuff without any expenditure on their part. Why work if the government will pay you to sit around? Why strive when what you do/make will just be given to those who don’t do/make anything? It’s the same reason that our legislative bodies will NEVER enact anything like term limits or stop voting themselves stupid raises every year. Public service, such as in Congress, should not make a man wealthier than when he started said service. And, yes, I think there should be some sort of cap on CEO salaries/benefits. But it needs to come from within. The problem is that the board members who allow/permit/give this to one person are often the recipient of the exact same treatment when that person is on their board. You scratch my back . . .

  • John Horvat II

    I think Tocqueville said it best. He claimed that when government establishes public charity on a permanent basis, it creates an idle class living at the expense of the industrious, and corrodes character. In fact, Tocqueville affirmed, “it depraves men even more than it impoverishes them.”

    That is not to say that public aid should be abolished. There are times when aid is needed especially in times of disasters, extreme cases and catastrophes. Public assistance should then be swift, ample…and temporary. However, the best charity is that of private alms-giving which should be personal, natural…and voluntary.

    When public charity replaced individual alms-giving, it served to break a valuable tie that traditionally existed between rich and poor. In the act of individual alms-giving, the benefactor took a personal interest in those whom he endeavored to aid. Likewise, the beneficiary expressed personal gratitude for the help given. A bond of affection was thus formed. As Tocqueville noted, “A moral tie is established between those two classes whose interests and passions so often conspire to separate them from each other, and although divided by circumstances they are willingly reconciled.”

    The tie of widespread individual charity unites a people in a single bond while public welfare based on the idea of entitlement creates division and resentments. The industrious resent being relieved of their money without consent. The poor no longer express gratitude but resentment about benefits that are now deemed entitlements and which are never seen as sufficient.

    The breaking of the bond of charity between rich and poor set the stage for Marxist class struggle and its modern reincarnations. This can be seen in our entitlement society in which such bonds are discouraged
    and government empowerment is encouraged. As I note in my book, Return to Order, it can also be seen in our culture of frenetic gratification in which the individual reigns supreme, unencumbered by strong ties to tradition, family, custom, or moral law that normally serve to unite people together in society.

  • AugustineThomas

    This is all about the decline of Christian morality. We used to have a majority good Christians who put their country and the well-being of their community first.
    Now we have a bunch of scumbag secularists who all want to be the richest person in the world. I’m not sure what they think they’re going to get out of it when they die and their body rots the same as anyone else’s, but that doesn’t stop them from ruining the rest of our lives by enslaving us!

  • Phillip

    I don’t think this article is fair to Piketty or his book. It immediately dismisses Piketty as a French socialist. Ok, so he happens to be French and does lean a little socialist. Readers may have the impression of someone whose education consisted of reading Sarte and Marx at a café in Paris. Piketty actually completed a PhD in economics at London School of Economics at the young age of 22, was then hired to teach at MIT, and since has had a very distinguished career as an economist. A very rigorous, quantitative background.

    His book is primarily concerned with documenting long run trends in inequality and in understanding the economic forces that are behind these trends. As I teach my students in principles of economics, these are “positive” economic issues. They are questions about how the real world is, irrespective of one’s own personal ideology or preferences. Has inequality been increasing or decreasing over the past two centuries? If it has been increasing/decreasing what are the causes? Piketty presents some data and advances some arguments on these topics. All of it is open to criticism and will be subject to plenty of it. Piketty believes that the data he and his colleagues have collected point to a long term trend of rising inequality driven by deep factors embedded in our economic system. Piketty then moves on to “normative” issues. Should we care about rising inequality? If we do care, what if anything should be done about it? One’s own political views and morality are going to determine how these sort of questions are answered.

    In my opinion Piketty is a serious scholar whose work on inequality should be taken seriously. It is not just leftist propaganda. His book greatly increases the historical data available to researchers on inequality and that in itself is a real contribution to the science of economics. His opinion on whether rising inequality should be a concern and the appropriate policy response is just his opinion. I am personally concerned about it, but honestly I’m not sure what can or should be done.

  • “But Main Street, where most Americans live and work, needs fewer,
    clearer, cleaner rules that allow us to get on with the business of
    making a living so that we may do the more important work of raising our
    families.”

    Free market capitalist always say this, but they fail completely to appreciate that our modern economy is completely based on one such “rule”, that being that a group of people can come together and form a business organization, incorporate it, and have it legally treated as person before the law. In that fashion, their own assets, unlike those of a partner in a partnership, are never exposed to execution in the event of liability on the party of the business.

    This is hugely important because if this legal fiction was abolished, and free market capitalist always pretend that it doesn’t really exist, the economy would actually necessarily devolve towards subsidarity, with small economic entities have much more say in the economy. That is, if Walmart was not a corporation, and every single shareholder exposed to judgment in case of its misdeeds, do we think it would exist? I doubt it, and in turn, many more local stores would. Would Microsoft be what it is? Probably not.

    Clearly, not every corporation can be eliminated, but the economy would be much more local, and family oriented, if capitalist achieved what they declare that they wanted, and the state support of the “corporation” ceased wherever possible.

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