Posted by Bob Lord
Dear Second Nine Percent (and those of you in the lower reaches of the top one percent):
I know the debate about inequality in America troubles you, but I assure you that it really isn’t about you. I have a friend who shares your feelings. He expressed to me his concern that he had worked hard to get to where he is, making substantial sacrifices when he was younger. He’s afraid he’s the target of efforts to redistribute wealth and income and he doesn’t think he should be taxed at a higher rate in order to “even things out.”
He has no need to worry, and neither do you. Quite the contrary. A more equal society will be better for you as well.
America is the wealthiest country in the history of the planet. Our national income is about $50,000 per person, or $200,000 for a family of four.
So, even though you’re doing better than 90% of Americans, your income is actually just average. And, in many important ways, you’re just like the rest of us.
Like the rest of us, you spend most of your income on living expenses. A large portion of your income is subject to employment tax, and very little of it qualifies for the preferential rate on capital gains and dividends.
Most importantly, your income and your wealth are not holding anyone else down. If $200,000 is our average income for a family of four, everyone could be earning at your level, if income and wealth were spread more evenly. If income and wealth were spread more evenly, everyone could have nice houses like you, comfortable cars like you, modest nest eggs like you, and even small luxuries like vacations, air travel, and dinners out. All of that would be possible, if things were more equal. Without taking anything away from you. And remember, if income and wealth were spread more evenly, our economy would surge from the increased demand for goods and services, and our average income would rise even higher.
Yes, in a more equal society, you folks in the second nine percent would do better.
The same cannot be said of those at the very top, those in the top one-tenth of one percent. It’s not remotely possible for everyone to live as they do. We don’t have and will never have the resources for all Americans to be flying in private jets, owning multiple mansions, taking extravagant vacations, and throwing million-dollar parties. There’s a lot to go around, but not that much. That raises a moral question: If one accumulates so much that he has more than it would be possible for everyone to have, even if they were as hard-working, talented and fortunate as he, is that just?
Here’s the hard truth: Contrary to what conservative leaders would have you believe, when the wealth and income of individuals passes a certain level, it does become a zero sum game. The wealth and income flowing to those at the very top is limiting the wealth and income that could flow to the rest of us. Moreover, when so much wealth and income flow to the top that a huge portion of it sits idle, chasing speculative investments rather than being used to purchase goods and services, we all suffer, including you.
The bottom line: You, my friends in the second nine percent, have little to do with inequality in America. If everything were equal, you’d have about the same share you do now. But the obscene amounts of income and so much wealth flowing to those at the very top have made it impossible for more than a fraction of the rest of us to enjoy the life you’ve been able to create for yourselves. If we remedy that situation, we could have a society with a middle class that is larger and more affluent than any in history. Should we allow the desire of a relative handful of Americans to hoard vast amounts of income and wealth to deny us that society? Or should we create a society where millions more can have the same quality of life as you, and make things even better for you as well?