Re: Elections 2012 -- Kull Wahad!!!
Some people don't understand logic. So let's clear one thing up right away. If I say, "I think [x] is bad," it does not automatically follow that I think ~[x] is good, okay?
There seems to be very little correlation between the degree of income inequality in a society and the absolute level of well-being of the poorest members in that society (absent extremes, please). You might have a situation in which income inequality increases while the poorest members all enjoy an increase in their absolute level of well-being at the same time. Someone writing in the Wall St. Journal earlier in the week used the Chicago Bulls as an example. If you take the highest-paid player before Jordan was signed, he made less than the lowest-paid player on the 1996 team, even though income inequality was greatly skewed by Jordan's salary.
The obsession in some quarters about income inequality in the US today seems misplaced to me, partly because it is based on bad data, and partly because it is a distraction from more serious structural problems. A cynic might suggest that a certain person is merely demagoging the issue to divert attention from his dismal record, trying to inflame passions and cloud people's thinking. Even if you think income inequality is somehow "not right," shouldn't you still have some sense of priorities? isn't the well-being of the less fortunate more important than the affluence of a few?
The statistics are badly skewed because of bad data. 30 years ago, most business owners reported their business income on a separate tax return. Since then, S-corporations, LLCs, and partnerships have all become far more prevalent as a form of business organization, and in all of these entities, the business income is reported on the owners' personal income tax returns. So the statistics that are commonly cited are performing an inaccurate comparison, omitting business income from the earlier statistics while including it in more recent ones.
The statistics are also skewed in another way as well. Capital gains are included in income measures. Various "good corporate governance" laws have made it harder to compensate top-level corporate executives through salary. For example, "only" the first $1 million of executive salary is tax-deductible to the corporation unless it is incentive-based (i.e., subject to forfeiture if certain performance targets are not met). Also, many executives prefer to be compensated in corporate stock rather than salary, and if the company's stock price rises, they tend to make more money than if they merely were compensated by salary alone. Michael Eisner takes Disney from a moribund company lacking direction after the founder's death and turns it into a media powerhouse, and suddenly the income measures are skewed because he created tens of billions in incremental additoinal shareholder value and received hundreds of millions in return (hey, agents get 10% of their clients' salaries as their fee and everyone thinks that's fair, the entire upper echelon of management combined get 10% of the incremental increase in shareholder value and everyone is howling in outrage).
The statistics are also skewed because of outliers. Here is a situation in which the median would be far more useful than the mean. A Steve Jobs or Bill Gates or George Lucas or Steven Spielberg or Oprah Winfrey, all by him/herself, skews the entire distribution for everyone.
Beyond the problems of inaccurate measurement, focusing on income inequality brings out the worst in our nature. it sends a very unhealthy message, "hey, it's a good thing to be envious." Envy has been one of the seven deadly sins for millenia for a very good reason, it is a pernicious, dangerous beast that rips societies asunder. to pander to the worst in our nature, and to allow ourselves to be pandered to, as part of a contest for election, is not a very fitting vision for a society that prides itself on equality of opportunity.
Finally, the easiest way to address income inequality is to make everyone worse off, across the entire spectrum. The fable of the goose that laid the golden eggs is one example: the family would take that day's egg to the market and buy things from all the vendors. when the townspeople broke into their barn and killed the goose, not only did the family lose all the future golden eggs, all the vendors lost all those sales as well.
there's a modern version of the same story that I'm not sure I can quite tell correctly. It seems there was a state champion high school basketball team, five starters and five substitutes, that was an exceptionally well-knit team. they enjoyed each other's company so much that after high school, they continued to get together for drinks and dinner once a month.
this went on for years. over time, one of the players was involved in a terrible accident, and couldn't work at all. two more had dead-end minimum wage jobs, three more had your average blue-collar / gray-collar jobs, two become middle-level managers, one became a professional, and one was an inventor who developed an extremely popular product that made him extremely wealthy.
They continued to get together through all this time. the one who couldn't work, never contributed any money to pay the monthly bill, but no one minded. the ones with dead-end jobs tossed in a few dollars each month, but nowhere near their costs. the "collar" guys chipped in more money, almost enough to cover their costs, the managers covered their costs, the professional covered his costs plus a few dollars more, and the inventor paid the rest, nearly half the total bill, plus the tip.
They were all happy and content with this arrangement, until....the proprietor of the restaurant decided to show how grateful he was for their business. At the end of one meal, he gave them a 10% rebate back after they paid their bill. Of course, except for the inventor, the rest of them began to squabble about how the rebate was to be divided among them. their argument became more and more heated, until finally, the proprietor stepped in to stop them. "you should all be ashamed of yourselves," he said. "I'm going to settle this for you. Since the inventor pays the most every week, and the rest of you have just demonstrated how petty you are, I'm giving the entire rebate to him."
As you can imagine, this did not go over well with the rest of them. When they left the restaurant, the nine ganged up on the inventor, and took the rebate money away from him by force.
The next month, the nine got together for their monthly dinner, but the inventor didn't join them. When the bill came, they split up the cost in their usual manner, and of course, they only had enough to pay for half the meal, excluding the tip.
No, I'm not "defending" income inequality...I'm saying that obsessing about income inequality, or even listing it as one of our top ten problems, is petty, venal, envious, stupid, and, well, sinful.
why did you get me started! now I am feeling oppressed again, 
and I had been feeling so much better today.
