Being against income and/or wealth inequality has become synonymous with communism in our public discourse. This charge is commonly made against liberals and progressives like Bernie Sanders. In reality nothing could be farther from the truth. Although on the surface, I could see why the argument would be tempting (aside from the obvious political rhetoric it generates). If someone is anti-inequality then it must naturally follow that they are pro-equality. While this is technically true, it’s that word “equality” that really throws a wrench into things, because it makes it sound like if you’re against income and wealth inequality you’re then for income and wealth equality. And from there it’s just a hop, skip, and a jump to “everyone makes the same amount of money.”
Of course that’s never what Sanders or his followers have argued. And as far as I know, nobody in this country–even the most progressive liberals–is arguing that everyone should make the same amount of money. Bernie and his supports were never anti-money or anti-wealth, they never wanted to punish success and redistribute the country’s wealth until everyone was equal. That’s a nice conservative political narrative, but it isn’t factual.
What we progressives need to do in order to take back the conversation is to re-label the issue. Instead of income or wealth inequality, I would propose that the term be changed to “Income and wealth concentration.” Because really, the problem isn’t that wealth and incomes aren’t equal–the problem is that too much of the wealth is concentrated in too few hands.
Now we can debate until the cows come home what “too much wealth in too few hands” actually looks like, but I’d be willing to wager that any economist worth his or her salt and anyone with a modicum of common sense would agree that giving too much of the money to too few of the people is bad on several levels.
First there are the social and political consequences. When too much wealth and income goes to a small amount of people, everyday folks are going to stop and look around and say, “Hey, I’ve worked hard my whole life and I just can’t seem to get ahead.” And that’s how you get this man as a presidential candidate:
And they have a point to a certain degree. Most people, regardless of political affiliation, would agree that the amount of work put in should be reflected in pay: the harder you work, the more you make. Makes sense, right? Well, take a CEO who makes $20 million a year and compare him to his janitor who makes $20,000. Does the CEO really work $19,980,000 harder than the janitor? Put another way, does the CEO work 1000x harder than the janitor? Well unless he works 40,000 hours a week, no.
Now obviously, that isn’t the same thing as saying that the janitor and the CEO should make the same amount of money. Clearly, the CEO has the job that carries more responsibility, that requires more education, experience, and expertise. The CEO should indeed make more money. But there’s no magic economic formula that justifies the dramatic differences in pay between the top brass and their workers. Making 1000x more than your employees is pure greed. If someone can mathematically demonstrate to me why the enormous gaps in pay we see are good, I’m all ears. Saying that income is tied to labor and value sounds great, but when you look at the work that people do and their pay, that clearly isn’t the maxim that we follow.
Which brings me to the economic reasons why wealth and income concentration is a big deal. At any given moment, there is a finite amount of money or resources in the economy. The economy is capable of generating new wealth and new resources, but at any one time there is a discrete amount of economic capital available. Now, what happens when more and more of the existing AND new capital is given to fewer and fewer people? The short answer is that it’s taken out of the economy, i.e. consumer purchasing power and spending stagnates or falls.
You know when someone says, “That’s more money than you could spend in one lifetime!” Well, yeah, that. Rich people don’t spend their money. That’s precisely why they’re rich. Give one man a billion dollars and he’ll save or invest most of it–give a million people $1,000 and they’ll spend it, pumping it right back into the economy. That’s why wealth and income concentration is important.
Now, we can have discussions about how to prevent those bad things from happening, and that’s where we’ll fall along ideological lines. What gets me the most is that even if we can’t philosophically agree on what exactly constitutes greed, we can very much objectively look at the quantitative data related to wealth and income concentration and the economy. I like data, so I’ll let the data do the talking:
Now I know that correlation doesn’t imply causation. But a trend is worth investigating. It seems to me like it would be a truly remarkable coincidence that those lines just happen to peak right before the Great Depression and again right before the Great Recession. It also seems like it would be an improbably huge coincidence that the flat part of those lines happens to fall during the booming decades between WWII and the Reagan years.
It’s, I don’t know, almost like when too few people have too much of the money the economy tanks, and when the wealth is less concentrated at the top we have a stable if not booming economy. Imagine that. Food for thought.