David Hines
March 6, 2013
Wealth disparody
By David Hines

Many people complain about the growing disparity between the super-rich and the rest of us. They see the problem, but their proposals for solving it sink to the level of parody.

Some want to soak the rich people whose investments create jobs for the rest of us. But if they're that filthy rich they don't need the extra income. They can take a one-year-long vacation. They can move abroad, and even renounce US citizenship to evade US taxes as several noted persons have done. They can invest the money in foreign countries, increasing the perceived problem of jobs leaving the country. They can hire the best tax attorneys to find new ways of avoiding taxes.

A number of politicians say the issue can be rectified by eliminating loopholes in the tax code. Strange...many of these same politicians call for more tax incentives to stimulate the economy. Do they not know that these are the same thing? Or do they merely count on the belief that the rest of us won't? The difference between "loophole" and "incentive" is whether one is receiving it.

Many think that government can provide money to fund new business, making the wealthy investor superfluous. But where does government money come from? There are not enough multimillionaires to pay for everything government spends already, even if the tax man took everything they have. So the government "investment" must come from the rest of us – those on the bottom end of the wealth disparity.

Unless...unless government merely creates the money. This has thus far been the strategy, euphemized as "quantitative easing." As government "invests" or otherwise spends the conjured money into circulation, every other dollar already in existence loses value. It's Economics 101: the law of marginal utility. Creating more dollars doesn't create more resources; it merely bids up the price of those resources with a plethora of dollars. Those first receiving the new money – government and its "investees" – get to spend before the inflationary effect is completely realized.

The wealthy – subsidized corporations and highly-paid government employees – gain advantage over the rest of us who hold dollars. It is clear that this strategy exacerbates rather than corrects wealth disparity. They buy at cheaper prices than will be in effect when the money trickles down to the rest of us.

It's not merely the super-rich who fund investment. Ordinary people do as well, with money in their bank accounts and pension funds. How does the common guy get ahead? Unless he's lucky enough to buy a winning lottery ticket, he saves. The interest on his savings accrues. But what interest? Conjured money is kept cheap – an effective negative percent interest – to keep down the government's and banks' borrowing cost. The saver's return on his nest egg in a savings account doesn't even keep up with inflation. Saving makes him slightly poorer by the day.

This creates, of course, a moral hazard in telling people, "Don't save for your future needs." It also makes the average guy extraneous to the investment process; his welfare no longer matters in the big politico-economic picture. All investment becomes government investment – fiscal matters decided on the basis of political conceit rather than economic feasibility.

If one wants to correct the growing wealth disparity, what is required is a sound currency, market-priced interest rates, no preferential treatment for "too big to fails," and incentive to save for one's own needs – exactly the opposite of what we're getting from both parties. If it's parody, it's black comedy.

© David Hines

 

The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)

Click to enlarge

David Hines

Born in a mill town, David Hines has seen work as a furniture mover, computer programmer/analyst, and professional musician... (more)

Subscribe

Receive future articles by David Hines: Click here

Latest articles

 

Alan Keyes
Why de facto government (tyranny) is replacing the Constitution (Apr. 2015)

Stephen Stone
Will Obama be impeached now that Republicans control both houses of Congress? (Nov. 2014)

Cliff Kincaid
Obama/Trump back Russian invasion of Syria

Madeline Crabb
A result of rejecting God – socialism

Jerry Newcombe
The irony of banning God from the public square

Tim Dunkin
What do you do when the government loses its legitimacy?

Russ J. Alan
Can Ted Cruz win with 3rd place in New Hampshire?

Robert Meyer
"Making a Murderer" documentary shows the power of advocacy journalism

Bryan Fischer
Constitution prohibits NASA from banning Jesus

Curtis Dahlgren
Presidents' Month or Black History Month? Who says so?

Michael Bresciani
Top twelve reasons not to give the GOP nomination to Donald Trump

Judie Brown
Assisted suicide: an American state of mind

Donald Hank
Security conscious Americans entrust the most vital security task of all to amateurs

Ellis Washington
Trump, Jeb and eminent domain
  More columns

Cartoons


Michael Ramirez
More cartoons

RSS feeds

News:
Columns:

Columnists

Matt C. Abbott
Chris Adamo
Russ J. Alan
Bonnie Alba
Jamie Freeze Baird
Chuck Baldwin
Kevin J. Banet
J. Matt Barber
. . .
[See more]

Sister sites