Income inequality and moral obligation
Income inequality is in the news every day now. It is one of the main reasons why there is the Occupy Movement. This is a problem (and yes, it is a major problem) that is not going to go away easily and it is not just a U.S. problem. Internationally, income inequality is growing and with it, more and more resistance. Occupy movements have occurred in well over 80 countries. The U.S. and Western European countries have the largest numbers protesting this inequality.
So why is income inequality so bad? Chuck Collins summarizes it well in his article about bridging the wealth gap. He uses five points:
1. The 1 Percent Can’t Build A Wall Around Global Problems.
2. Inequality is Bad For Everyone’s Health.
3. Entrenched Inequality Undermines Excellence.
4. Inequality Hurts the Economy for Everyone.
5. Extreme Inequality Breeds Fear and Destroys Communities.
I would like to, for now, focus on #4. The 2008 economic meltdown is a perfect example of how income inequality is so dangerous. Speculative markets like the derivatives markets make it even worse. Subprime loans and mortgages became very easy for Americans to attain. Speculators would then basically bet on the high probability of foreclosure on those loans and make a lot of money doing it. Well, who pays for this?? In theory, an insurance company (can you say AIG?) pays….but what if they can’t pay? That is when we, the taxpayers, pay. Big business goes to congress and asks for $750,000,000,000. How can this happen? Money, that’s how. When you concentrate so much of the money into very few pockets, you get corruption. The derivatives market was proven time and time again to be very dangerous, but those overlooking the department (Brooksley Born), including the SEC, were told to overlook it. It isn’t just the risky speculation that makes income inequality so bad, but rather, the movement of money away from goods and services (so that others can get a little piece of the pie) to a market that is intangible.
The government needs to invest more money into the true infrastructure of the country. We need more money for innovation in particular. The U.S. doesn’t build anything anymore. We import everything and export very little. How can a country ever sustain that???? We know that trickle-down economics does not work, so why should we keep sheltering the rich? I am not saying that they should return to a 90% tax, but how about a little more than the common person.
Did anybody ever get rich solely on their own? Did they need an entire society to get there? I think so. In his TED talk, Collins talks about the moral obligation of the rich to pay their share and a little bit more. If you have the time (it is just over 19m) watch this video. It is very interesting, enlightening, and entertaining.
So, that is my rant for today. Have a great weekend!