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Income Disparity

My Favorite Liberal Talking Point...

Is a significant income disparity of any consequence? Other than stirring up envy among the “have-nots” does it affect anyone? Does the total of one man’s bank account have any impact on someone else’s lifestyle? Why can’t Americans point to a disparity in incomes and say “that is proof that success is achievable in America”? Maybe the most important question is whether or not the government needs to even out inequalities by pulling money from one man’s pocket and slipping it into the wallet of another. Most of the “class-envy” crowd, of which Karl Marx was chief, looks at the wrong aspect of various income levels. It is crucial that we look at the ability to create wealth and the actions taken to achieve it instead of the end result, a fat pile of cash. I think everyone knows how to stay poor so let’s turn our attention to those who got rich. Is a significant income disparity of any consequence? Other than stirring up envy among the “have-nots” does it affect anyone? Does the total of one man’s bank account have any impact on someone else’s lifestyle? Why can’t Americans point to a disparity in incomes and say “that is proof that success is achievable in America”? Maybe the most important question is whether or not the government needs to even out inequalities by pulling money from one man’s pocket and slipping it into the wallet of another. Most of the “class-envy” crowd, of which Karl Marx was chief, looks at the wrong aspect of various income levels. It is crucial that we look at the ability to create wealth and the actions taken to achieve it instead of the end result, a fat pile of cash. I think everyone knows how to stay poor so let’s turn our attention to those who got rich. If we provide whatever product or service that we have to offer to anyone we can reach with our own efforts we will earn a living. If we create a vehicle (a business) that allows us to deliver it to the masses we will get rich, like liberals-will-despise-us kind of rich. That is the idea anyway. I can’t imagine a more appropriate incentive to justify the tremendous risk, investment, sacrifice and intense hard work required to build a business. The function of a business is to multiply your efforts and allow you to get your product or service into the hands of more interested Americans than you would have otherwise been able to reach. Again, a massive return on our investment is the goal and the only logical reason to expend the effort and expose ourselves to such risks. Know that a business which is generating mountains of cash for the owner has a variety of operational needs that can only be met by purchasing services from others. A business represents a continuous need for the services of others and the ability to pay for them. We could interpret it another way: A business represents a low-risk venue where anyone can provide a skill or service and receive a modest return. Here is a prime example of income disparity and no victims to be found. It is also a recipe for success. The employer is in the tricky position of trying to balance a payroll that entices quality people to remain on staff and continue to be profitable in a free market. Once the balance is achieved products are sold, customers are satisfied, profits roll in, the payroll grows. The stage is set for workers to receive payment for their skills and the employer starts lining his pockets. That is an extremely difficult and challenging position to arrive at, but appropriately profitable as well. In this scenario we will find a healthy, happy middle class. They have a reasonable selection of prosperous, unfettered, growing businesses to offer their services to with very little risk in a growing free market that is expanding. Knowing that quality, long-term employees provide the most return on investment, wealthy capitalists will extend greater monetary incentives to keep them from reaching for another employer’s greener pastures. This is an environment where workers succeed and businesses thrive. Income disparities abound and no one cares. In a free market, opportunity always accompanies income disparity. Where is the problem? Why are so many people touting socialism as a cure for the “problem of income disparity”? According to history, the free market, Capitalism, has a strangely successful track record of providing prosperity for anyone who is willing to grab it. Most Americans who have encountered the middle-class crunch can not place blame on the free market, but, rather, a departure from the free market. If it is possible for a person to convince enough of the populace that “unfairness” exists, as evidenced by the income gap, and those who aren’t wealthy are actually victims of the those who are wealthy, it is almost a natural progression that the voters will happily provide this person with the power to seize assets from the wealthiest. In this instance people are first convinced that government dependence is their only hope and, secondly, they exchange the freedom of all Americans to own the fruits of their labor for this dependence on government. The government would then logically have the power to appropriate more and more wealth as long as they could keep finding new groups of victims to garner votes from. This class envy business almost seems like it might pay off big for the politicians who agressively promote it. Therein lies the departure from the free market. Remember the fine balance between payroll, profit, and price? Consider the ramifications of government “fairness” being thrown into the mix. When money is pulled from a business with no product or service offered to replace it one of those three will suffer. Again, the successful business owner put in the effort of building a business for the sole purpose of creating semi loads of cash. The logical consequence of this outside force on the market then is increasing prices (inflation), lowering wages, or cutting staff. Cutting profit is the intelligent last resort. What is actually taking place here? Is there actually wealth being redistributed? The government adopts a method that is only slightly more discreet than seizing money and cutting checks. Instead the largest portion of the tax burden is shifted up to those who benefit the economy the greatest. Don’t misunderstand, there are certainly government checks being mailed out to people who didn’t earn them, but that is another topic. This artificial market pressure on wealthy Americans puts the greatest squeeze on the middle class (again, through inflation and lower wages and unemployment). In other words this pressure rolls downhill as businesses attempt to remain profitable in spite of government-imposed “fairness”. Of course those who offer the most benefit to the average Joe end up looking like the bad guy. And once profits fall below the interest rate it only makes sense to fire the staff, sell the business and just invest the money. As government extracts the largest percentage of cash from the rich a new income disparity appears without the familiar opportunity that usually comes with it. It is the transfer of wealth from the free market to government coffers. There is no opportunity for a middle class American to earn this money from his employer by exchanging a product or service for it so their income potential decreases. It’s almost like this once accessible money has been effectively taken out of play. There is, however, now a chance to declare yourself a government-dependent victim of unfairness and vote for a larger governing body that offers greater control over the earnings of the free market in hopes of receiving a handout. If wealthy individuals were allowed to keep their earnings, opportunities for new jobs and income increases would abound and prices wouldn’t be pressured upward (inflation) in an attempt to make up for the increased tax burden. With that we’ve discovered the solution to the middle class crunch: less government. Of course people would be forced to rediscover self reliance, but there would be plenty additional opportunity to take advantage of to offset this new responsibility. Less of the free market’s capital would be tied up uselessly in the government’s control and the cost of producing wealth would decrease for ALL Americans.

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