Is America No Longer the Land of Opportunity for All?
“For extreme inequality is still on the rise — and it’s poisoning our society.”
–Paul Krugman, New York Times, September 12, 2013
I hope you all had a wonderful and a merry Christmas.
During this holiday season, the media and various political pundits have made an issue about income and wealth inequality. “People are really upset about stagnating wages while the wealthy are getting rich,” a TV reporter told me. “What do you think is the cause, and what’s the solution?” she asked.
First, it’s true that all the income/wealth data seems to show that the wealthier members of society are gaining faster than the average citizen during this economic recovery. One reason may be that higher-income groups have more of their wealth in the stock market, which has been roaring ahead during the past five years compared to average wages and salaries. Our tax system discourages poor and middle class people from investing by sapping their ability to save through high Social Security and Medicare taxes (over 12% of everyone’s earned income).
Second, wages and salaries may not fully reflect the benefits of new technology. For example, telecommunications (smart phones and the Internet) are getting cheaper — some companies like AT&T are giving away an iPhone if you sign up for the company’s monthly program. Almost everyone, including the poor, have smart phones these days. It’s not a rich man’s toy any more. I call it the Great Equalizer. How does one measure that access to technology in income statistics?
Or take the Internet, which is available to almost everyone, and now offers virtually a free education — free non-fictional books, classic novels and many textbooks (through Google books or PDF files). Lots of college courses now are available to anyone for free, including some from Harvard University. How does one measure that abundance of educational materials in income statistics?
Adam Smith argued in his classic work “The Wealth of Nations” (published in 1776) that free-enterprise capitalism, what he called a “system of natural liberty,” benefits the poor as well as the rich and actually reduces inequality. (Adam Smith and his “system of natural liberty” are the heroic figures in my book “The Making of Modern Economics.” To obtain a copy, call Eagle Publishing at 1-800/211-7661. A paperback is $29.95, while a hardback is $49.95, plus $5 for shipping and handling. For orders outside of the United States, add an additional $15 for postage.)
As Andrew Carnegie said, “Capitalism is about turning luxuries into necessities.”
The government may not be doing its job in providing opportunity to all, but American capitalism is doing its job — and deserves credit, not criticism, excessive taxation and regulation.
You Blew It! Time‘s Person of the Year Award Goes to the Wrong Person
“Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.”
— Pope Francis, Evangnelli Gaudium (2013)
Time magazine should have named Edward Snowden “Person of the Year” for his heroic action to expose the excesses of the U.S. government’s surveillance of Americans.
Instead they gave it to Pope Francis, the first non-European Pope in 1,200 years, for his outreach to minorities, the healing of the poor and his attacks on capitalism.
Unfortunately, the new Pope from Argentina appears to be a devout follower of the Marxist doctrine of “Liberation Theology,” which blames free-market capitalism rather than government interventionism for the ills of the world. Yet it is precisely capitalism that has liberated millions in Asia and Latin America from poverty, as the World Bank has documented.
Alberto Benegas Lynch, a highly respected economist from Argentina, responds to the Pope’s attack with the following:
“The values and principles of a free society do not kill. What annihilates is the statism that has been in force for a long time now. It is important to cite the commandment “Thou shalt not kill,” but one must also remember “Thou shalt not steal” and “Thou shalt not covet thy neighbor’s goods.” In this sense, I consider the Pope’s advice, based on a quote from St. John Chrysostom, especially dangerous when the pontiff writes, “I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: ‘Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs.’”
So now capitalists are thieves if they don’t give away their wealth to the poor? Sounds like Marxism to me. It would be better for capitalists to hire the poor. The working poor are far better off than the poor living on welfare.
In case you missed it, I encourage you to read my e-letter column about the best way you can get rich that appeared last week in Eagle Daily Investor. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.
Yours for peace, prosperity and liberty, AEIOU,
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