One of the sleaziest, most disingenuous arguments exploited by politicians is the “wealth redistribution” theme. Whenever an influential corporate sponsor of some creepy politician is confronted with proposed legislation, which might change the status quo by reducing unconscionable profiteering, we are told that the new bill is a “socialist” attempt at “wealth redistribution”. Unfortunately, there are too many sheeple who don’t realize that “wealth redistribution” already happened.
The recent uprisings in the Middle East have demonstrated how difficult it can be to maintain a plutocracy in the modern world. As the American voting public becomes more familiar with the economic circumstances which led to the Egyptian turmoil, attention gradually gets refocused on how our domestic situation compares with Mubarak’s dystopia. Blogger “George Washington” (a former law school professor) of Washington’s Blog recently wrote a piece concerning how the “Gini coefficient” demonstrates that America’s upward wealth redistribution has reduced this nation to banana republic status:
Egyptian, Tunisian and Yemeni protesters all say that inequality is one of the main reasons they’re protesting.
However, the U.S. actually has much greater inequality than in any of those countries.
Specifically, the “Gini Coefficient” – the figure economists use to measure inequality – is higher in the U.S.
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Gini Coefficients are like golf – the lower the score, the better (i.e. the more equality).
According to the CIA World Fact Book, the U.S. is ranked as the 42nd most unequal country in the world, with a Gini Coefficient of 45.
In contrast:
- Tunisia is ranked the 62nd most unequal country, with a Gini Coefficient of 40.
- Yemen is ranked 76th most unequal, with a Gini Coefficient of 37.7.
- And Egypt is ranked as the 90th most unequal country, with a Gini Coefficient of around 34.4.
And inequality in the U.S. has soared in the last couple of years, since the Gini Coefficient was last calculated, so it is undoubtedly currently much higher.
So why are Egyptians rioting, while the Americans are complacent?
Well, Americans – until recently – have been some of the wealthiest people in the world, with most having plenty of comforts (and/or entertainment) and more than enough to eat.
But another reason is that – as Dan Ariely of Duke University and Michael I. Norton of Harvard Business School demonstrate – Americans consistently underestimate the amount of inequality in our nation.
Ariely and Norton’s paper, based on their 2005 poll of 5,522 citizens about their preferences for wealth division, has been the subject of much commentary. Last fall, Bruce Watson wrote an article for Daily Finance discussing Ariely and Norton’s report. As Watson explained, the following empirical data compiled by Professor Edward Wolff, (and incorporated into the Ariely-Norton paper) portrayed the “real world” wealth distribution in America:
Currently, 85% of America’s wealth, which is defined as total assets minus total liabilities, is held by the country’s richest 20%. Meanwhile the upper middle class holds 11%, the middle class has 4%, and the lower class and poor share an anemic 0.3%.
Here’s how Watson summarized the results of the Ariely-Norton research:
In the poll, the vast majority of Americans across the political, gender and wealth spectrum displayed a markedly skewed understanding of how America’s money is divided. On average, respondents thought that the rich hold only 58% of the nation’s wealth, 32% less than their actual holdings. They thought that the middle class controls 13% of the country’s wealth, more than three times their actual holdings. As for the bottom 40% of the population, the assumption was that the lower class and poor own a measly 9% of the country’s wealth. In reality, these two groups control about one thirtieth of that amount.
Who Should Get the Money?
Although the perception that America’s wealth distribution is unfair cut across partisan lines, Republicans and Democrats disagreed about the ideal distribution. People who voted for George Bush believed that the richest 20% of the population deserved roughly 35% of the nation’s wealth. Kerry voters radically disagreed: they felt that the rich deserved only about 30%. When it came to the country’s poorest citizens, Bush voters felt that they deserved about 9% of the country’s assets; Kerry voters preferred to give them 12%.
Respondents making over $100,000 per year, the group most heavily skewed toward a top-heavy distribution of wealth, advocated a system in which the top 20% received about 40% of the country’s assets and the bottom 20% got roughly 7%. Yet even this comparatively Dickensian wealth distribution still gave America’s rich less than half of their current holdings, while giving the poorest more than twenty times their current holdings.
In October of 2008, before the full extent of the Wall Street megabank bailouts had been completely understood by most Americans (and before those multi-million-dollar bonuses had been awarded to the malefactors who caused the financial crisis) the Gallup Organization conducted a poll on the subject of wealth redistribution. This is what they observed:
A majority of Americans (58%) say money and wealth should be more evenly distributed among a larger percentage of the people, although slightly less than half (46%) go so far as to say that the government should redistribute wealth by “heavy taxes on the rich.”
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Still, in each of the four times Gallup has asked this question in recent years, between 45% and 51% of Americans have gone so far as to agree with the fairly harsh-sounding policy of “redistribut[ing] wealth by heavy taxes on the rich.”
Because the polls discussed above reveal that the current wealth distribution is unacceptable to most Americans, the “wealth redistribution” argument — as it is often used by politicians – should be a non-starter. Perhaps a program of “enhanced tax incentives for generosity” might enjoy more widespread acceptance than Gallup’s “heavy taxes on the rich” – to the point where an overwhelming majority of Americans would support it.
Unfortunately, unless that “overwhelming majority of Americans” has an army of lobbyists to advance such an initiative, the cash registers politicians portraying the effort as “socialism” will be the only voices that matter.
Crazy Like Fox
Donald Trump has enjoyed a good deal of publicity during the past few weeks, since he jumped on the “birther” bandwagon, voicing skepticism as to whether Barack Obama was really born in the United States. Many of Trump’s critics insist that The Donald is not a serious Presidential candidate and that his newfound “birther” agenda demonstrates that his Presidential campaign is nothing more than a flimflam publicity stunt.
I have a different theory. I believe that Trump is running a “decoy” campaign. Keep in mind that Trump is currently the #2 contender for the Republican nomination. Remember also that the Republican Presidential primaries for 11 states (and the District of Columbia) are conducted on a “winner-take-all” basis – meaning that when a candidate wins a state primary, that candidate wins all of the delegates who will represent that state at the Republican National Convention. If Trump can win a few of those states, he could amass an impressive amount of “pledged” delegates. I suspect that Trump’s goal is to win the support from the extreme right wing of the Republican Party and “hijack” those delegates who would have been otherwise pledged to candidates acceptable to the Tea Party. Bill O’Reilly’s intervention to defuse the “birther” controversy (at which point he insisted that Trump has not been seriously seeking the nomination) was apparently motivated by the fact that the candidates most likely to be eliminated from contention because of Trump’s presence – Michele Bachmann and Sarah Palin – are both darlings of Fox News. In fact, Palin is a Fox News contributor.
At the 2012 Republican Convention in Tampa, Trump could step aside and support Willard Romney, who is despised my many Tea Party activists for having created what is now known as “Obamacare”. Trump’s elimination of the Tea Party favorites before the convention would solve Romney’s problem with that voting bloc. Romney can be expected to have an equally difficult time winning the support of dog lovers, as a result of his decision to strap the family dog, Seamus, to the car roof for a 12-hour family vacation drive to Ontario. Despite his “Presidential” appearance, this Homer Simpson-esque episode from Romney’s life has already impaired efforts to portray him as a potentially effective Commander-In-Chief.
Meanwhile, President Obama is busy trumpeting his newly-minted, false campaign promises. Gallup reported that on April 15, Obama’s approval rating had tied its all-time low of 41%. More interestingly, his approval rating among African-American and Hispanic voters is beginning to slip from its enormously-high levels:
Despite the efforts of Republican commentators, such as Peggy Noonan, to create a narrative to the effect that Obama’s waning popularity – as well as the losses sustained by the Democrats in the 2010 elections – resulted from voter concern about government spending and the deficit, I suspect that Americans have simply become alienated by the failure of Obama and his party to deliver on their 2008 promises. Worse yet, the capitulation to the interests of Wall Street by Democrats who promised “reform” has reinforced voter apathy – the real factor in the 2010 Democratic setbacks.
Cord Jefferson of Good provided this graphic of what Congress would look like if it truly represented America. The failure of Democrats to win the support of Independent and centrist voters is readily apparent. You can blame gerrymandering all you want, but as long as the Democrats fail to provide alternatives to Republican policies, they will continue to lose. I believe it was William Black who said:
I was pleased to see my own sentiments shared and articulated quite well by Mike Kimel of the Presimetrics Blog, in his recent posting entitled, “Why I Will Not be Voting for Obama in 2012”. Although Mr. Kimel doesn’t have an alternative candidate in mind, the very reason for his disillusionment with Obama is that – with respect to the nation’s most significant problems – our current President has proposed no alternative policies to those of his predecessor:
Obama will never re-ignite the enthusiasm of 2008 by presenting himself to the voters as “the devil you know” or “the lesser of two evils”. What America’s middle class really needs is an honest, Independent candidate to make a run for The White House in 2012.