A Response to Liberal Views of Income Inequality

Posted: May 10, 2014 in Christians & Culture, Economics, Politics

IncomeAn article recently appeared in the news written by Robert Reich, professor at UC Berkeley, titled, “The 4 biggest right-wing lies about inequality.” A copy of the article can be found here. He said America is “heading toward levels of inequality not seen since the days of the 19th-century robber barons” and the conservatives are lying about the situation. The lies he cited are as follows. (1) The rich and CEOs are America’s job creators. So we dare not tax them. (2) People are paid what they’re worth in the market. So we shouldn’t tamper with pay. (3) Anyone can make it in America with enough guys, gumption and intelligence. So we don’t need to do anything for poor and lower-middle-class kids. (4) Increasing the minimum wage will result in fewer jobs. So we shouldn’t raise it. Additionally, Reich, obviously against what he perceives as a widening inequality gap, says the situation can be reversed, but it will take bold political steps, which I’m sure he endorses. Here are a few responses to his thoughts.

  • In Lie #1, Reich embellishes the conservative claim, for certainly all conservatives are in favor of some form of taxation for all, including the rich. He has erected a straw man on this point, but I will not belabor the objection, so I digress. So are the rich and CEOs America’s job creators? Well, yes, if by that you mean do they employ the majority of Americans. Certainly these business owners require consumers, but the businesses themselves are the actual employers and “creators” of the jobs. So while Reich is partially correct – consumers do impact job creation – he is incorrect in claiming the employers are not the primary job creators.
  • In Lie #2, Reich is presuming he has some idea of what each job is worth, and then making the assumption that most are not being paid according to his standard. This is typical elitist liberal mentality. “We know best how the masses should be paid.” But worth, by definition, is the value that someone places on a job, person, or thing. The consumer determines value and then the seller (in this case the employee) and the consumer (the business) agree on a value of the services rendered by the employee. Reich assumes he is in a better position to determine this than the employers and employees themselves, but he most certainly is not.
  • In Lie #3, I actually agree with Reich. Life circumstances and the providence of God combined with one’s will and abilities determine a person’s life outcome. But to think, as he does, if we could only get better schools for the poor, oversimplifies the problem. While education is certainly a factor in one’s success, there are many others.
  • In Lie #4, Reich ignores a basic economic principle – “there ain’t no free lunch.” If the minimum wage is raised, that cost is passed along to someone, which is passed along ultimately to the consumer. By artificially raising the minimum wage, you just artificially raise all economic pricing. If raising the minimum wage would fix the poverty problem, why not raise it to $50/hr? When the example is enlarged, we see the absurdity of such a proposal. Value and wealth are created and driven by the consumer, not an artificial standard to be manipulated by the government.

In closing, let me point out the problems with two underlying views Reich and other liberals hold, views that shape their political vision. First, Reich seems to believe there is a limited amount of wealth and the rich are keeping most of it from the poor. If we could only get this money out of the hands of the rich, then we could fix the poverty problem. But as mentioned previously, wealth is created by persons who add value to another; it is not simply a transfer dollars. Wealth can certainly transfer, but it can also be created. Hence, we should promote the creation of wealth (which is good) and stop the forced transfer of wealth (which is legalized theft).

Second, Reich and other liberals have their opinions about what all American should have – some standard they deem adequate. They believe it is the government’s responsibility to bring about these ends via whatever means necessary. However, the views of our country’s founders were, in the words of the Pledge of Allegiance, “liberty and justice for all.” But to carry out Reich’s view of economic equality, he would have to undermine these very principles of liberty and justice through “legal plunder” of the rich. The government’s primary role is to secure liberty through the channel of justice, not to ensure a predetermined standard of material comfort for all individuals.

Jordan

Comments
  1. Mike J. says:

    Well said Jordan

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