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Questioning the assumption

November 29, 2010

Why does income inequality matter between the super rich, the middle class and the poor – who has time to worry about whether their 3000 square feet match up to Tom Cruise’s mansions? The only time the subject comes up is when Tom Friedman (11,000 square feet) tells everyone else how selfish we are for not being willing to squeeze into 500 square feet like the urban Chinese.

LA Times: Slate’s Timothy Noah…. devoted a 10-part series to “the most significant change in American society in your lifetime”: The “Great Compression” of the post-World War II era, when the gulf separating the rich from the rest was unusually small, has given way since the 1970s to the “Great Divergence,” as the gulf has done nothing but widen. Noah’s “gut-level feeling” about this new economic reality is that “I do not wish to live in a banana republic” because societies “starkly divided into the privileged and the destitute” are “repellent.”

So, maybe he should move to Canada? Or Sweden?

One of the interesting things that came out of the article was that in the 1970’s when McGovern pushed for a 100% death tax on estates over $500,000 the majority of voters said “no”. Why?

it would wipe out the dream factor — every slob in the street thinks that if he hits the lottery big, he may be able to leave half a million to his family.”

Essentially, as long as there is a possibility of achieving similar wealth for themselves (whether through labor or luck), most people seem to see themselves as the “potentially” wealthy. Or the Yet-to-be-wealthy. This might be one difference between Europe and the USA – who stayed in Europe? Those who were content with their lot in life. Who immigrated? Those who were not & were willing to risk everything for a shot at ‘a better life.’

From American Prospect

Don’t Blame the Billionaires“:  …with our basic needs satisfied, our aspirations turn to relative desires — which by their definition cannot come true for all. The major sources of economic anxiety today relate to goods and services that often convey status distinctions 

So, is the issue with income inequality that some people can afford the extravagent, and we’re wanting to use government fiat to help the rest of us to not covet their stuff?  There are simpler remedies – just ban shows like MTV “Cribs”. Or requiring members of Congress to not draw any monetary benefits other than personal expenses as Ben Franklin states instead of getting insider stock tips because of their positions…Their net wealth increased on average by 19% in the last legislative period.

As long as rule of law is maintained, and opportunities aren’t doled out solely due to connections and birth relationships – why is income equality a BAD thing if the inequality is largely related to optional items outside basic food, clothing and shelter?

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