America has a problem. Income inequality.
The status quo is unstable and may be unsustainable.
A great many Americans think the system is rigged against them. They see wealth trickling up, not down. The rich get richer, the educated have their licenses and certifications that protect their jobs, while working people fall behind and struggle to afford housing and other essentials. The frustration fuels populist discontent. Populism on the right targets "takers" -- the lazy, the incompetent, the addicted, the system gamers, the "welfare queens" -- who are a drag on hard working people like themselves. Some resent affirmative-action. Some blame immigrants who bring down wages because they work too hard for too little. Some blame competition from Mexico or China. Populism on both right and left points at economic elites -- corporations, and the very wealthy, with their lobbyists, special interest PACs, and ability to pull the strings of democratic government.
Ipsos posted a poll that included these results:
This poll isn't an outlier. People who are doing OK in the current environment and are comfortable with the status quo should not assume we will muddle through this bad patch in our democracy. The final question asked above demonstrates that a great many people have lost patience with democracy. We have all seen the familiar movie tropes. A vulnerable group hears drums in the distance: "The natives," an actor warns, "are getting restless." Then all hell breaks loose.
Michael Wallace is a college classmate. He offers a solution to the problem of income inequality. After college Wallace joined the Peace Corps and then returned to obtain a Ph.D. from the JFK School of Government. He retired in 2018 and enjoys daily walks with his dog Layla.
Guest Post by Michael Wallace
One of my ongoing concerns is the persistent inequality of income and wealth in the United States (and the world). This inequality has certainly seen its ups and downs, but in the last 30 years it has increased, so that from an economic perspective, we are a more unequal society now than we were in 1990. Some people may not think this is a serious problem, but I do. I think that more egalitarian societies are happier societies.
There are a variety of ways to address this problem, from equalizing the acquisition of income in the first place to equalizing the retention of this income after it is acquired. This post addresses the redistribution of income after it is acquired.
To simplify the exercise, I consider a simple society composed of five quintiles of income. The current (2021) distribution of income by quintile in the United States is shown in the left side of the table below:
To redistribute income, I would take 10% of the income of the top quintile and give it to the bottom quintile. I would take 10% of the income of the second highest quintile and give it to the second lowest quintile. The ranking of the quintiles would not change, so individual personal positions would stay the same in the overall society. As only 10% of anyone’s income has been taken and redistributed, absolute losses would be relatively small.
However, the absolute incomes of the bottom quintile of people would increase by 181%--their incomes would nearly triple. The absolute incomes of the second lowest quintile would increase by 28%--more than a quarter. The bottom two quintiles would be much happier, and the top two quintiles would hardly be disadvantaged.
I think this would be a better and happier society.
Thank to google, it is easy to look up historical tax tables. We used to have very progressive tax rates in this country. Look at the top tax rate in the 50's and 60's verses what it is today.
Another good answer to the problem of income equality would be to outlaw abortions, stop the silly talk about critical race theory, reject any notion of affordable health care for all, ban children from reading anyone but Ayn Rand, bring back our precious coal mines, and unleash the power of unrestricted capitalism. Oh, and supplements. Lots and lots of Balance of Nature Fruits and Veggies.