Thursday, July 10, 2008

Economic Inequality - Life Isn't Fair. (The American Dream is Alive and Well.)

Our media bemoans time and time again the reported growing inequality of income among our citizens. Politicians attempt to reduce "inequality" through legislation, taxes and other artifical means.

Of course, no attempt at equality can succeed. "Equality" is sort of like heaven, used to garner power but imposible to achieve. The reason of course is that all humans are different from each other. Some have certain advantages, some have certain disadvantages at birth. Some get certain advantages, some get certain disadvantages during life. That's all there is to it, and it'll never change allowing us to become "equal".

So let's discuss equality of income. As we are all born different and raised differently we all work or not differently. And some of us will be "successful" with prosperous employment and investments. Some -- many more -- of us will be less successful. And some will live in poverty. (Well "poverty" in the United States is as defined by bureaucrats. Real poverty is virtually non-existent in the U. S. compared to most of the rest of the world.) Wouldn't we all be happier if we could just be told that life isn't fair. Period.

Unfortunately those who obtain success and otherwise work in the "poverty beaucracy" fight the truth that life isn't fair tooth and nail. Vote-mongering politicians need to make people feel unhappy. Otherwise who needs them? (Well mostly that would be Democrats, because with them achievement isn't celebrated.)

That's not to say conditions can't be improved to assist some people achieve more for themselves. That's for what our government was created. Liberty for capitalism to allow the quest for the "American Dream". But help for those un-able (or whatever label is presently acceptable.)

Now a digression. Governments do not create any wealth, and we are talking about income - which brings wealth. Only trade - the greater universe of business and commerce if you will - can create wealth. Government destroys wealth by spending it. Ideally it should spend the wealth it garners (through to work, success and taxes of indivicuals and businesses) on smoothing the way for entrepreneurs to create wealth. The only way to help people enjoy more wealth is to create more instances of successful, growing businesses. Now, never will such created wealth be distributed equally. The humans doing such creation don't do it for eleemossynary purposes -- for the benefit of others. No, it's typically in self-interest to achieve, gather or possess more of something that their peers. So these creators will end up with more than those who are not creators. These concepts are generally absent from the public education systems in the United States, which themselves are controlled by various powerful labor unions, looking out for their dues-paying teachers. Too bad because, "There is no such thing as a free lunch."

I believe Democrats disavow that truth and complain about "inequality" solely to obtain votes so they can obtain or maintain power. But ultimately they will be proven wrong as wrong as Socialism and Communism have proven to be. However before that point, the free-enterprise society which has created such spectacular wealth for us, will be destroyed by these radical vote-getting notions.

But back to some controllable things: a major reason for the disparate incomes is the difference in education. The wage differential from a college degree has expanded to 70% from only 30% in 1980. (It's over double - 100% - for graduate degree holders.) So it is valuable financially to graduate from college. However the percentage of people with such degrees has been growing relatively slowly. (This fact alone may count for the growing wage differential.) Billions of dollars have been spent trying to change these figures, but the high-school graduation rates haven't changed materially over the years.

Rather than take money from the high-achievers and giving it to the lower-achievers as, for example, Sen. Obama has announced he'll do if elected president. The reasons for lack of educational achievement should be examined. Could it be a "cultural gap" which celebrates achievement and self-discipline among some and not among others? Who is to "blame" for those who do not stay in school, break the law, produce children without commitment and other pathologies the ones that create an underclass of poverty. Unfortunately there are few independent studies on anything that don't promote one political philosophy or another, so little rational knowledge can be brought to bear.

But one study -- the National Education Longitudinal Study -- discovered that involved parents who are in the upper end -- the highest qauartile economic scale (measured by parental education, occupation and family income) 74% of their kids ultimately receive a college degree; only 47% in the next two quartiles and a measly 29% on the bottom. Is it opportunity or a difference in family values, skills and good habits from parents?

People should simply understand that "Life isn't fair" and that their standard of living as measured by possession of, for example, cell phones, flat screen TVs, computers, bigger houses, more diverse foods, and on and on, is so much greater than twenty years ago. But satisfaction doesn't provide votes. But citizens are constantly barraged by "polls" attempting to convince them that their lives are sorrowful and that they can only be improved by government fiat (well, Democrat government fiat) not personal achievement.

But has "the American Dream" been morphed into a nightmare of "the rich get richer"? Well only to those politicians seeking votes. Our society remains dynamic with some rich getting poorer, many more poor getting richer, and everything in between. That proves opportunity (in exchange for risk which can backfire downward) is still rampant here in these United States.

A late 2007 carefully compiled professional study examined nearly 100,000 tax returns over a 10-year period. 58% of those in the poorest income group in 1996 have moved into higher incomes by 2005; and nearly 25% of them achieved middle-class or more. Over 5% lept into the highest income quintile. Only one income group lost out. The richest 1% of 1996 lost a quarter of their income and half of them dropped one income level ten years later. Of course they were replaced by others who became "rich". The point is the American Dream is alive and well.

So what is "fair" according to the Democrats? Right now, after the Bush tax cuts (which caused the biggest tax hike for the "rich" in American history), a mere 1% -- one percent of American achievers paid 40% -- forty percent -- of all income taxes (in 2006, the latest figures up to July 2008). And those making over $109,000 in 2006 paid 71% -- seventy-one percent -- of all income taxes.

And half the taxpayers paid almost all (97%) the income taxes. While the lower half paid little (less than 3%). So of course cutting the income taxes on the lower half of Americans -- earning under that $109,000 is meaningless, since they pay little as it is.

Remember also that not only don't the "rich" necessarily stay rich, but the "poor" don't necessarily all stay poor: after the Bush tax cuts the number of U. S. millionaires almost doubled (from 181,000 to 354,000 from 2003 to 2006). That is 173,000 citizens that BECAME millionaires, "rich" and some of them were poor. Isn't that proof of the health of the American Dream?

Democratic Vice Presidential candidate Joe Biden in his acceptance speech last night (August 27, 2008) told of his youth, when he got in a fight and was knocked down that his mother pulled him up and told him to go "bloody his nose" and be able to walk down the street with his head held high. He, and Hillary and Bill Clinton before him, said one needed to be down to understand, and to get back up again, brush yourself off and get back in it. Self initiative, I'd call it. Then Biden said how on the train back and forth between Washington DC and Wilmington, Delaware, he'd see houses and know what the people inside were saying. They'd be talking about high gas prices, they'd be worrying about economic instability - their jobs. Then Biden castigated the Bush Administration for not doing anything to help. But Biden, aren't you just supposed to get yourself up, brush yourself off and go at it? Well apparently only for him and Barack Obama, who supposedly did the same. Well Biden has thrown off what his mother said and learned nothing. Do it yourself. But then he would not be running for Democratic Vice President now would he, if he couldn't savage Bush.

And he continues with the "Promose of America" which, of course, is to have a higher salary each year, to do better financially than your parents. Yes, of course, the guarantee. And if you can't do it yourself, vote Democrat and they'll do it for you.

On July 2, 2008, Starbucks announced it would close 600 stores and eliminate 12,000 jobs (of 172,000 up from about none 2o years ago). This proves that the American Dream is alive because 160,000 people have jobs. Did the Bush Administration cause the layoffs?

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