July 23, 2024

Americans Should Celebrate as Income Inequality Increases

The Business Insider has a new series of charts describing the “bum deal” working Americans have gotten in the last few decades, including this one demonstrating the fallacious but de facto standard liberal meme, namely that Americans should earn roughly equal shares of the income pie:

If you aren't in the top 1%, then you're getting a bum deal

An objective examination of this line of thinking reveals that nothing could be further from the truth.

Consider the case of a burger-flipper at McDonalds.  Let’s set the value of his work at 10 units.  (No, it doesn’t matter what the unit is, the value is relative to other occupations, not absolute.)

Now consider the store manager.  She could easily do the flipper’s job – probably has done it in the past, in fact – as well as any other job in the store.  Indeed, her ability is probably better at each and every position in the store than the people who hold them.  Her value is clearly greater than the flipper’s.  Let’s estimate it as 25, or 2.5x the flipper’s.  Debatable, but reasonable, I think, given my personal experience as the flipper.

Now, consider a highly-trained bio-chemist whose work in generating a sustainable, cost-effective algae-based energy source fundamentally alters the western world’s relationship with the OPEC nations.  What’s his value relative to the McDonalds store manager?  Infinite, in reality.  Even if we set it at 100x, that gives the chemist an overall relative value of 2500.

In any rational system of employment and compensation, a person’s earnings should reflect their value relative to other workers.  The ground-breaking bio-chemist in the scenario above should earn at least 500 times more than the burger-flipper because the value he provides to the world is infinitely greater. 

In fact, income inequality is reflective of capability inequality.  If one believes that income inequality should be removed from society, the proper way to do so is not to levy taxes, steal from those who produce wealth, and redistribute the booty to liberals’ constituents.  The right approach would be to eliminate the capability gap.  Unfortunately, this requires the participation of those at the bottom end of the economic scale, something that’s not been forthcoming.

On one level, this lack of interest in changing economic lanes is understandable because it’s not something that can be done immediately.  Rather, improving capabilities requires sacrifices of time, money, leisure, and style.  There’s nothing fun about buckling down to get an education; however, there’s no substitute either.  Every person in America has the opportunity to get a quality education.  Unfortunately, far too many squander their own chance at economic mobility (and do fatal damage to others’ at the same time) because they simply are unable to comprehend the value of what they are giving up.

For those who do, it’s obvious that income inequality equates to opportunity.  Why would the bio-chemist spend years in school, honing his mind to levels unimaginable by the burger-flipper, in order to receive a salary identical to that of his value-inferior?  He wouldn’t, of course, because there is no reason to work hard for success if victory brings no reward. 

The fact that the United States has a wide distribution of incomes demonstrates that there is an opportunity for people who work hard to succeed far beyond the imaginations of most men and women. 

America's income spread is nearly twice the OECD average

This is as it should be, for it’s an American imperative to produce over-achievers at a higher rate than the rest of the world.  That is, after all, the only way that we can continue to lead nations such as China and India whose larger populations give them an inherent competitive advantage.

If there is a problem with income inequality, it’s that possession of wealth can lead those who have it to game the system in order to keep accruing larger and larger piles of money without actually producing anything of value in return.

It goes without saying that criminal activities such as fraud, insider trading, tax evasion, and other abuses of the system should be actively discouraged, not because they cause income inequality but because they destroy the integrity of the system of opportunity Americans have as their birthright.

It is this system that matters, not the particular result at any point in time, and it is this system that post-modern liberalism, with its excessive emphasis on removing inequalities of every sort, attacks and undermines at every opportunity.

Far from criticizing the inequality of incomes in the U.S., we should celebrate them, for the gap indicates that the system of free enterprise envisioned by the Founding Fathers as the economic engine of this country is still firing on several cylinders, despite liberal policies that have markedly reduced the efficiency at which we are allowed to operate.


Marc is a software developer, writer, and part-time political know-it-all who currently resides in Texas in the good ol' U.S.A.

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