Tuesday, June 03, 2014

Income and Wealth Inequality Today Not the Same as in Days of the Great Depression says Robert J. Samuelson but a Huge Problem Nevertheless

At the Washington Post, Robert J. Samuelson points out in Not your grandpa’s inequality that one should not directly compare today's wealth and income inequality with that of the Great Depression of yesteryear and he is surely right. Two different pairs of shoes.

Today, the "general welfare of all", as expressed e.g. in vitally necessary government assistance programs, plays a much greater national role than in the 1920's, and well it should.

When giant companies such as Google or Apple (mentioned here only as tips of the presumed iceberg) pay as good as no income tax because of -- legal -- offshoring of rights, they represent a corporate reality and a commercial world focused on private gain that can not be relied upon to look after the well-being of the nation.

By their very nature as incorporated legal entities, commercial enterprises look in the first place after themselves and not after others -- a fact of business life, nothing wrong with that in principle.

As a result, however -- and federal government opponents to the contrary -- a strong normative government is thus absolutely essential to balance private and public interests and necessities --  especially as regards the economic infrastructure that makes a relatively free market economy possible in the first place.

For example, our massively expensive patent system benefits primarily the same few who avail of its costly enforcement protections, but who are unwilling via a fair share of taxes to pay for that infrastructure (lawmaking, USPTO, courts, etc.). It is always "the other guy" who should pay. But average citizens seldom avail of that very "system" that protects primarily the "haves", so why should they pay for it?

Hence, in spite of clear differences to the 1920's, economic inequality remains the most pressing modern problem in a land of plenty that could easily improve the situation if the political will were present.

Politics ultimately sets the rules that govern both wealth creation and wealth distribution, so that sustainably maintaining and dividing up the pot is one of government's main responsibilities.

When the balance is as badly out of whack as it is today, it is better to rebalance it peacefully via the rule of law rather than doing nothing and thereby exacerbating the growth of a society marked by otherwise inevitable economic conflict carried out on increasingly unsafer streets.

One has a choice.

Hat tip to CaryGEE.

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