Income inequality is not a good thing by any measure. More people earning more money and spending that money on everything from new homes to cars to groceries and vacations is what helps our economy grow for everyone. If only a few people control all the wealth and income, then the economy will continue to weaken and no one will win.
That said, boosting income for the lower 99% artificially through transfer payments (free money giveaways) and other economic tricks and tactics will only provide an unsustainable short term partial fix with a day of reckoning on the horizon where the 99% will ultimately feel most of the pain. If the upper 1% lose 90% of their income they will still have more than enough for the essentials. Not so for the lower 99%. An economic shock like that would be devastating.
So what will Hillary Clinton or Donald Trump do to improve or amplify Income Inequality if they get to the White House?
Recently the New York Times asked their readers to choose the most important question to them from a selection of fifteen possible questions. Nearly 90,000 readers responded and the Income Inequality question scored the second most burning question right behind a question on climate change.
While the televised presidential debates can look like a mud wrestling match at times the candidates’ responses in a newspaper story show only the actual words they are using not the rest of the distracting circus show.
The New York Times asked the candidates: “What would you do to reduce extreme income inequality in this country? The actual word-for-word text of their answers is in the actual article but I will summarize what they said here:
Hilary Clinton basically said how terrible income inequality is and laid out her proposals to help reduce it. Her list included promoting profit sharing for all employees, more jobs, support small businesses, 12 weeks paid family leave, universal pre-school for every four-year old, and a fairer tax system. She finished with the statement that; “We won’t raise taxes on people making less than $250,000.”
Donald Trump used his valuable New York Times ink to blast Hilary of course. He claimed that she is an extreme globalist who helps foreign corporations and governments raid wealth from U.S. workers. His solution to reduce Income Inequality is to control our borders and get the fair-trade agreements with our trading partners to be more fair. And he also proposes to “massively” reduce taxes, regulations and energy costs so “America can be the great jobs magnet of the world.”
Both responses are scary for anyone who knows how economies really work…
Hilary Clinton’s response looks like a typical politician desperately running for office who is offering the world to her potential voters without facing the realities of costs. When you do the math, if you taxed 100% of the income of the upper 1% you would not be able to sustain this kind of spending. Not to mention how fast the 1% would relocate to a more tax friendly country so the year two tax receipts would be zero. And she better not even think about a wealth tax. This will send people for the doors. That wall on the Mexican border would be to keep wealthy Americans in the USA so their wealth could be taxed away. You think wealth tax would not get on the table? It’s already there in the form of the property tax we all pay whether we own a home or rent. Yes renters… When the property tax goes up you rent will go up.
And Hilary’s promise of not raising income taxes for people making less than $250,000 a year feels a lot like Obamas affordable care healthcare program promises like how we could keep our own doctors and our insurance premiums would go down.
Donald Trump’s response seems to show that even though he is representing himself as some kind of business person he doesn’t know much about the real mechanics of operating an economy.
So all we learned from this New York times article was that neither presidential candidate has any idea about what to do to get the US economy working again. All they care about is winning the election.
Where does that leave us?
Basically if you are counting on the fine people in Washington or your local city or state governments to magically wave their wands to solve the income inequality problem then you will probably be wrong. The Federal government consistently spends more than they take in right now and many state and governments are technically broke when you consider the huge municipal employee retirement obligations they are hiding.
The government in any of its many forms doesn’t have the money or motivation to tackle the income inequality problem.
It’s really up to us to tackle the problem ourselves…
To start, if every man, woman and child in this country made a commitment to better education for our children and not relying on strangers to do the whole job within ten years you would see a whole new income inequality formula. Without the right education a person cant even get on the first rung of the income ladder.
By commitment to education I mean little things like reading to our toddlers every night (even if it’s the sports page), making sure teachers know you are involved in your child’s education, and putting the priority on getting homework done every night.
And if there is any man, woman, or child who is not ready to make the commitment to their kid’s education then you might want to say that they have earned there spot and their child’s spot at the lower end of the income ladder.
Harsh… Yes, but that’s how economies really work. Without leaders that inspire people to commit to their goals you can’t ever tax/spend or deregulate/untax your way to a better economy.
The people need to do the hard work not the politicians.