Saturday, February 1, 2014

"Income Inequality"



The issue the Democrats intend to push forward as we approach the 2014 elections in November is “Income Inequality”.  It is the old theme of their party – class warfare – rich vs poor, meant to appeal to their base. Obama in his State of the Union speech echoed this theme time and again – raise the minimum wage, extend unemployment benefits, make the rich pay their fair share etc., etc. Much of this rhetoric is also designed to take attention away from Obamacare which so far has been an unmitigated disaster that some predict will have a significant negative impact on the economy.

We believe this “class warfare” theme is getting old after five years of passing blame and I think the public is realizing it is getting old. There will always be income inequality – some people making low wages are just starting their careers, some lack education, some lack skills, some are just not as smart as others, and some just lack the ambition to work hard and try to “climb the ladder”.  The Republican Party has always had a different view of the reasons for income inequality; people need an economy that creates JOBS. The real income inequality are the long term unemployed Americans who now have no income whatsoever.  The policies under the Obama administration have created an entitlement society that will be difficult to change; almost 50 million people on food stamps and almost half of Americans receiving some type of assistance from the government. These policies are also resulting in a national debt that may be difficult to recover from. 

Our welfare system in many cases makes it more profitable to not work. I listened to a radio interview recently with an anonymous person whose was on welfare (she was white by the way). Her attitude was; "If you were me, would you work?" She lived with her husband in a $600/month apartment, they paid $50 of their rent, and the government subsidized the remaining $550. They received $497/ month in food stamps. They received a $100 credit on their utility bill. They received $800 a month in welfare. And they had a cell phone program worth $100 month provided by the government. With the rent subsidy this amounted to an income of $2047 month or $24,564/year.  She was honest during the interview and also admitted her husband did odd jobs for cash. At the end of the interview she was asked if she would work if she had to; her answer: "Yes if I had to, but would you work if you had this income for free?  I get to sleep late, visit with my friends, and do whatever I want each day"  

These Democratic "inequality arguments" are difficult to deal with, because they always include an anecdote about "Little Billy whose parents can't find work and they are starving". And this argument works, and secures a large segment of the vote each election; after all, why not vote for the party that gives you “free stuff”. But the country needs to get back to the basic philosophy of our founding fathers: equal opportunity for everyone, not equal outcomes for everyone. Most people want to work, it's in our DNA, and a thriving economy that creates jobs will do more toward solving “income inequality” than anything else.