“In a sane world, a decline in wealth inequality would be cause for worry, because it would signal reduced opportunity for the ambitious and a stagnating standard of living for everyone else.” - Popular Economics
We live in a wealth-obsessed world, where the rich are now blamed for every ill under the sun. Believing that every penny the wealthy gain is a loss for the poor, activists wrongly understand how wealth is acquired and circulated. But is wealth inequality really a problem? Let’s take a look at a rapid-fire question and answer:
Do the Wealthy Pay Their Fair Share? Based on 2017 data produced by the National Taxpayer Union Foundation, the top 1 percent earned 21 percent of the share of the annual income and paid 38 percent of the taxes. At the other end, the bottom 50 percent earned 11 percent of the income and paid only 3 percent of the total taxes. To look at it another way, IRS data for 2016 showed the richest 1,409 taxpayers paid more in taxes than the bottom 70 million. Looks to me like the bottom half isn’t paying their fair share. Agree?
Do Women Only Earn 80 Cents for Every Dollar A Man Earns? A Harvard study from 2018 looked at the pay gap coming from a unionized seniority-based bus and train operators’ shop. It found that women were only being paid $.89 for every dollar the men made. The results, however, did not prove discrimination, but preference. Women chose more time off, while men chose more overtime. This is also the answer to all pay gap accusations. Men work more hours, choose different fields of work, have more skills, more experience, and more uninterrupted work spans. Women are the opposite.
Are Women in Sports Paid Less Than Men? Well, no. Let’s start with soccer: in 2018, the Men’s World Cup brought in $6 billion; while in 2019, the Women’s World Cup brought in $131 million. The men made more money and were therefore paid more money. Period. Next up is the WNBA where a lack of consumer interest and low viewership nearly bankrupted several teams. If it were not for the owners of the NBA who now own and subsidize half of these teams, they would not have survived. In fact, women’s basketball is one of the biggest examples of paternalism. Women’s professional tennis lagged behind men for years before the dynamic Williams sisters went pro in the mid-1990s. Nothing does more to close the interest gap in women’s sports than to have exciting and outstanding players that resonate with the public. Other than that, can we say that women in tennis are equal to men when men play three out of five sets, and the women play only two out of three? The biggest difference between men’s sports and women’s sports is consumer preference. And preference is not discrimination. Watching men’s sports might be preferable because men are generally more athletic than women. Perhaps, when transgenders take over women’s sports, we will see that gap disappear. No?
Is Wealth Determined by How Hard an Employee Works? Imagine the best and brightest employees hired to staff a new factory that makes leisure suits. No matter how hard they work, no matter how superior they are, it will not matter if the public does not want to purchase leisure suits. The people who provide the most value to the consumer earn the most money. Hard work is usually a component, but providing value is the key.
Are The Multi-Billionaire Heirs at Walmart Taking All the Profits? Based on a 2019 Mises Wire article on billionaire wealth and the Walton family earnings; Walmart’s 2018 10-K report shows that the Walmart heirs, the Walton’s, “only see 0.2 percent of the economic activity generated by the company”. Imagine being the person who ignores the 99.8 percent benefit that Walmart provides to their employees, their customers, and their community, to envy the 0.2 percent that Walton heirs receive, for simply being born into the family.
Aren’t Wealth and Income the Same? No, and neither are poverty and inequality. When Bill Gates or Warren Buffett say they support tax increases for the rich, it doesn’t affect them personally. They both earn little to no income and instead get paid through stocks, investments, and other sources. They both also have an enormous amount of acquired wealth. But increasing taxes will affect anyone who wants to be a high-earner or one day become a person of wealth. On the other hand, poverty is a condition that many people rise out of, but inequality is always with us. Inequality is only a problem when wealth is obtained dishonestly. If so, the problem is corruption, not inequality. And while corruption should be addressed; inequality is not important. And remember, wealth obtained unjustly is wrong whether the person is rich or poor.
In John Tamny’s 2015 book, “Popular Economics”, Tamny looks at an array of economic issues including wealth inequality, and shows how economics plays a role in our everyday lives. You’ll see how taxes on your employer affect your paycheck; how regulation helps existing businesses at the expense of new players; how free trade provides you with an assortment of options to meet your specific needs; and how federal policy devalues the dollar and creates instability. Tamny also shows how economics is not about advanced equations and graphs, but the choices we make daily.
Most claims of wealth inequality are a result of economic ignorance and political convenience and are simply incorrect. Wealth is a sign that someone is meeting the needs of society better than anyone else. If you want to know why Jeff Bezos is wealthy, just count the number of Amazon boxes in your basement. We need to grow wealth to improve society. Entrepreneurs expand the economic pie; they don’t take more of the pie. In today’s economy, anyone can be an entrepreneur. You do not need a college degree or come from a wealthy family. In fact, in today’s modern economy, there has never been more opportunity to serve your fellow man and reap the benefits.
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