In today’s NYTimes Thomas Edsall writes:
There is something out of whack in America. Instead of promoting equality, public policy has left millions locked into lives of restricted opportunity while bestowing the benefits of growth on the very few.
And he cites trend “lines” such as the following to demonstrate the point he is making:
This Federal Reserve Bulletin does graphically demonstrate how wealth gains since 1989 have gone to the top 3 percent of the income distribution. The next 7 percent has stayed even, while the bottom 90 percent has experienced a steady decline in its share.
In addition Edsall makes it clear that there is plenty of new wealth. (Plenty to go around?) —the Fed reported that since 2000 household wealth in the United States has grown by $37 trillion — from $44.45 trillion to $81.49 trillion by the end of the second quarter of this year.
And yes it would seem, as Edsall implies, that there was enough to go around, enough new wealth to be redistributed to the bottom 90% of households.
How might this be done? Shawn Fremstad, a senior fellow at the Center for American Progress, suggests: “a big-picture solution involves higher marginal income tax rates for the top 1 percent and some sort of wealth tax on the top of the top, combined with stronger labor market institutions (minimum wage, unions, paid leave/sick days/vacations, etc.).”
But in the United States, with the Republicans close to controlling both Houses of Congress, Fremstad’s recommendations are not going to happen.
Will there be redistribution without government intervention? Edsall is not a believer in the benefits of a free market. He concludes that “there are growing doubts [in the] ability of the market to distribute the rewards of growth to those who make growth possible.”
“Make growth possible.” In our country who are those who make growth possible? Edsall seems to be saying that those at the bottom make growth possible. In addition he says that government policies are bestowing the benefits of growth not on “those who make growth possible,” but on those very few at the top.
If he’s correct about that, sure, take from the rich and give to the poor, have government policies that support the poor and not the rich. But is he correct? Is it true that growth comes about by government actions, as well as the productivity of those at the bottom?
Doesn’t growth, increases in productivity, always come about from the very few, those with the new ideas, those with the imagination to imagine the new, almost by definition from the entrepreneurs? And if this is true wouldn’t it be recommended that the governments of the developed nations stay out of the way, and by doing so to some extent, yes, allow the wealth of the few to grow?
And governments need not be all that concerned with redistribution. There will be redistribution by a law that even governments are subject to. This will occur of itself, and with probably much more wealth being redistributed “naturally” than from the actions of government.
But first there has to be wealth creation, and only later the distribution of a good part of that wealth, by legitimate and reasonable taxation, but also voluntarily, with government monies going into such things as investments in education, infrastructure, and social welfare services.
But to change the order, to start with redistribution, as many on the left would like to do, is to create the situation we find now in many European economies where governments would redistribute wealth that doesn’t yet exist. For these governments would distribute wealth before its creation, borrow, raise taxes, go further into debt, thereby braking, as it were, the very movement of growth on which any economy including our own depends.