Wealth Inequality and Pitchforks

July 7, 2014 – Some wealthy Americans and “conservative” economists are expressing concern for the worsening wealth disparity. Most people know that the “rich are getting richer and the poor are getting poorer.”

Political concerns, moral considerations, guilt, and economic ignorance have prompted defenders and detractors of our current system to mislabel it as free market capitalism.

The anti-free-market proponents claim the deeply flawed system we have today “proves” the dangers of an unfettered (by government) market and demand more government central economic planning. There is now a growing number of conservative economists and super-rich investors who are arguing the case for more government wealth redistribution, such as a government mandated increase in the minimum wage and more generous social benefits to pacify the ever-increasing number of poor.

The6196018438_1801c205b7_zpeople and governments around the world are expressing fear of civil unrest. It’s not a U.S. problem alone. Keynesianism and inflationism are a global phenomenon and have been going on for a long time. The debt is unmanageable and economic growth is stagnant. Central America is an example of how economic policies both there and in the U.S. create massive immigration problems that seem to have no answers. Mentioning root causes of these problems is not permitted. We hear too little about how the drug laws, the business cycle, welfarism and militarism contribute to the problems, since they are not to be discussed as contributing factors to the crisis we face.

The unrest is now a worldwide phenomenon. Since the causes are not understood, we hear only of the demands for more programs from the same governments that created the mess in the first place.

My concern is this: In the U.S., there is a growing consensus (for possibly different reasons) that the current economic system shows the defects of too much economic freedom and the answer is to be found in more government regulation. Since the 1930s that’s all we have been doing and it has brought us to where we are today. The Securities and Exchange Commission, deposit insurance, minimum wage laws, excessive debt, currency debasement, welfarism, retirement guarantees, Sarbanes-Oxley and more recently Dodd-Frank have not help. So the message stays the same and some of the super rich are worried about what may be coming when the poor are no longer content.

The middle class shrinks, the number of poor expands and the very wealthy feel pressured to do something out of desperation. The most recent expression of this comes from Nick Hanauer who describes himself as a “zillionaire” and has sent a message to his fellow “filthy rich:” “The pitchforks are coming.” He’s obviously uncomfortable with the disparity in wealth distribution in the United States and probably has a touch of guilt about it. He has issued a strong warning and some suggestions on what must be done.

A mob of angry people that don’t understand why there such wealth inequity and encouraged by a system that has taught them that needs our rights and it’s the government’s responsibility to spread the wealth around. If government funds are not forthcoming, due to a national bankruptcy, and the rich do not to spread the wealth around, the poor will take to the streets to get what they want with “pitchforks.”

Hanauer makes several points worth mentioning. He describes himself as an “unapologetic capitalist.” But my opinion is that he’s a far cry from a laissez-faire capitalist. He argues that unrestrained capitalism leads to concentration of power and collapse of the system. This may be true of “crony capitalism,” but it is not true of free markets. Hanauer wants more social spending, progressive taxation and policies that treat the right to own property as subservient to human rights. He argues for “well-managed capitalism,” which is a total oxymoron. Never once does Hanauer mentioned the wealth mal-distribution and a withering away of the middle class as a consequence of “supposed” well-managed capitalism by the Federal Reserve.

His lament: “Where is FDR when we need him. Look at how he saved us from the great depression.”

My answer is this: If one cares about our shrinking middle class and expansion of poverty, try a true free market. Get rid of the notion that well-managed capitalism with the Federal Reserve as the central economic planner is achievable. Forget the notion that progressive taxation is how you create wealth and distribute it fairly to the middle class. And please recognize that ownership of property and ourselves is the most basic human right conceivable. When we come to actually caring about the middle class, we will get rid of the FED, which is the super wealthy and structural poverty.

Photo

 

Advertisements