The Ruse of Income Inequality

One of the most divisive issues in our nation in recent years is the debate over “income inequality.” Perhaps you’ve never given this much thought in the past, but the issue started bubbling to the surface in the national consciousness in September 2011, when the Occupy Wall Street movement launched a few months of protests in Zuccotti Park, near New York City’s Wall Street financial district. Their slogan was “We are the 99%,” and they vilified the wealthiest 1% of the American population as greedy, unfeeling, and corrupt.

Issues like income inequality are the delight of demagogues. Politicians have continued to fan the flames of class warfare with this polarizing subject, from President Obama to New York City’s mayor, Bill de Blasio. Look at these words from the President’s State of the Union address in January 2012:

We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot and everyone does their fair share.

On a surface level, much of this statement by the President seems perfectly reasonable. After all, who could oppose the grand objective that “everyone gets a fair shot and everyone does their fair share”? Can’t really argue with that, can we?

However, the President’s argument here, as on many other issues, is based on a false premise. The facts do not support his assertion that a “shrinking number of people do really well.” Nor is it true that “a growing number of Americans barely get by.” These are common misconceptions, but the data shows that MANY people are doing really well, and the poverty rate has decreased rather than increased in the past several decades.

Faulty Analysis, Faulty Solutions

Is there income inequality in America today? Of course there is! There has never been a major world power in history that enjoyed economic prosperity and freedom without some people making more than others.

Did you know that Finland has less income inequality than the United States? That may sound wonderful, but not when you find out that the per capita income is much lower for everyone  in Finland.

And a few years ago, Greece managed to substantially reduce its income inequality—because the nation was in a dire economic crisis. Instead of being a model we should envy, the citizens of Greece were faced with little money, scarcity of goods, riots in the streets, and economic opportunity limited to those partaking in corruption.

When governments throughout history have tried to redistribute wealth and create equality of outcomes, the results were catastrophic. Everyone  suffered. The only people who prospered were the corrupt politicians who ran the system. Instead of sparking widespread prosperity, the result of forced “equality” was to pull everyone down to a subsistence level.

When government inserts itself into the income inequality debate, the result is always less economic freedom and less overall prosperity. The Robin Hood philosophy may sound good on paper, but it becomes totalitarianism when taken to its logical conclusion. Stealing from the rich to give to the poor is still STEALING.

In the end, it does little good for those in poverty to be given handouts, if they never learn how to make it on their own. Of course, there are exceptions. Yes, we need a safety net for people who are truly incapable of working. But beware of political demagogues who advocate “sticking it to the rich” as if that somehow would help “the little guy” get out of poverty.

Level Opportunities, Not Outcomes

President Ronald Reagan once said, “The American dream is not that every man must be level with every other man. The American dream is that every man must be free to become whatever God intends he should become.” Government can strive to create a somewhat level playing field where everyone plays by the same set of rules. There should be economic mobility and equal opportunities to succeed. But that certainly doesn’t mean there will be “level” results and equality of outcomes.

Art Laffer, one of President Reagan’s chief economic advisors recently weighed in on the income inequality debate:

I don’t mind inequality if people are rising in incomes in all groups. I do  mind equality when everyone’s brought down to the lowest common denominator. You don’t want to make the rich poor; you want to make the poor richer. These inequality specialists all around the place aren’t proposing that. In all the quest to achieve less inequality, they are creating equality by lowering everyone. And that’s silly.

Economist Robert Samuelson points out that the wealthiest 1% are “convenient scapegoats” for America’s economic problems. However, he says, “the poor are not poor because the rich are rich.” The economic data shows that while the income of the rich has grown faster than the income of the poor, BOTH have seen gains in the past several decades.

So if the rich aren’t really to blame for the poor being poor, what are the factors that keep many people locked in the grip of poverty? I could write an entire book on that subject, for there are numerous aspects to the problem. But let me just make a rather fundamental observation, based on a study by the Brookings Institution.

According to Brookings, you can avoid poverty simply by:

 1. Graduating from high school.

2. Waiting to get married until after 21 and not having children till after being married.

3. Having a full-time job.

 If you do all three things, your chance of falling into poverty is just 2 percent. And you’ll have a 74 percent chance of being in the middle class.

Isn’t that good news? The solution to poverty and income inequality is not a matter of retribution against the “evil rich.” In most cases, the simple solution is personal responsibility.  In addition to the three-prong formula suggested by the Brookings study, I would include a few other Bible-based traits that are important for success:

  • Abstain from illegal drugs and drunkenness.
  • Avoid criminal activity.
  • Be honest and dependable.
  • Have a good work ethic.

It’s really that simple. By just a few key lifestyle decisions, a person can nearly always avoid the trap of long-term poverty.

An Important Parable

I’m astounded by how many preachers and Christians have succumbed to the class-envy arguments of the demagogues who bemoan America’s income equality. Haven’t they ever read Jesus’ Parable of the Talents in Matthew 25:14-30?

You probably know the story, but perhaps you’ve never thought of it in terms of income inequality. A wealthy man was going on a long journey, so he entrusted his belongings to three of his servants. He gave one of them five bags of silver, another two bags of silver, and the third servant just one bag of silver.

You see, these servants weren’t entrusted by their master with the same amount. The point of the story is that the first two servants were faithful to invest and increase what they had been given, but the third servant just buried his silver in the ground.

Perhaps the third servant felt the master hadn’t given him his “fair share.” Yet he failed to see his grand opportunity to invest and increase what he had. His dismal condition at the end of the story wasn’t the fault of the wealthy man—it was his own  fault, based on fear and negligence.

If you don’t like your current financial condition, you have a choice to make. You can either find some straw man to blame for your plight, or you can accept responsibility for your actions and take positive steps to better your circumstances.

It’s time to drop the excuses and trust God for a new beginning. And I’m NOT just talking about a raise in the minimum wage. You need to set your sights a lot  higher than that.