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Posts Tagged ‘inequality’

Stork Economics

Posted by Tony Listi on July 28, 2008

Liberals have a childish understanding of economics.

http://www.firstthings.com/onthesquare/?p=1078

By James Kerian

If you ask a child where babies come from, you can get a lot of interesting answers, but traditionally the most common answer is that they come by stork. Children tend to have a similar understanding of economics. If you ask them where their allowance comes from, the two most likely responses are “Daddy’s wallet” and “Mommy’s purse.” In both cases, nothing is created, just transferred. Babies are transferred by storks, and wealth is transferred by parents.

If a child is blessed with good parents, they will soon learn that God makes babies and gives them as gifts to their families. Likewise, “God has given riches and wealth . . . this is the gift of God” (Eccl. 5:19). Most of us grow up to understand that God allows us to participate in the procreation of babies, but unfortunately very few ever realize that God allows us to participate in the procreation of wealth. Rather than procreation, most people assume what is commonly referred to as a zero-sum view of economics. In this view, wealth can neither be created nor destroyed but only transferred from one person to another. This, essentially, is stork economics.

It would be very sad if someone reached adulthood still believing that babies are delivered by stork. (This is the consummate fear of the “comprehensive” sex-ed lobby.) It could make it very difficult to start a family, at least without kidnapping or adoption. In the same manner, those who still believe in stork economics often find it very difficult to acquire wealth, or at least to create it.

While the method for procreating babies is extremely popular, the methods for procreating wealth are, unfortunately, much less attractive. The first method, hard work, is particularly unappealing. The second, ingenuity (both in technological development and efficient procedures), has its appeal but is not something that people like to have expected of them. The third, risk (the investment of time and resources), has glamor but obviously often leads to great disappointment. Nevertheless, these are the three things that have raised the wealth of humanity to the present age from a time when nearly the entire population of the planet was preoccupied with daily sustenance.

Since these methods for procreating wealth are relatively unattractive, there has to be some motivation—an expectation of fair recompense—for wealth to be created. When policymakers subscribe to stork economics, they inevitably deal serious damage to their economy. In their efforts to “fairly” distribute wealth, they remove the incentives for hard work, ingenuity, and risk and thus undermine the creation of the wealth they are attempting to allocate. This has happened repeatedly in varying degrees virtually everywhere—from the Soviet Union to the American welfare state to modern-day North Korea—but it always leaves the advocates of stork economics confused about the sudden absence of wealth. As John Chancellor once said of the Soviet Union on the NBC Nightly News: “The problem isn’t communism . . . the problem is shortages.”

Wealth, like life, can also be destroyed. If hard work, ingenuity, and risk are capable of carrying mankind away from sustenance living, then sloth, ignorance, and recklessness are just as capable of taking him back to it. Wealth should not be the preeminent concern of the Christian, and it is certainly of less importance than the immortal souls of our children. But if you should chance upon someone preaching that the gospel of “social justice” demands “wealth equity,” please take him aside and gently explain. I assure you, he’s old enough.

James Kerian is a mechanical engineer and small-business owner in Grafton, North Dakota.

Posted in American Culture, Economics, Government and Politics, Liberalism, Political Philosophy, Uncategorized | Tagged: , , , , , , , , , , , , | Leave a Comment »

The Inequality Myth

Posted by Tony Listi on March 10, 2008

http://www.ncpa.org/sub/dpd/index.php?Article_ID=15682 

While figures from the U.S. Census give some substance to the fears of widening inequality and middle-class stagnation, the situation is not nearly as clear-cut, says Brad Schiller, a professor of economics at American University and the University of Nevada, Reno.

In its latest report, the Census Bureau tracked changes in incomes all the way back to 1967.  Two observations grabbed the headlines.

First:

  • The data indicate that the top-earning 20 percent of households get half of all the income generated in the country, while the lowest-earning 20 percent of households get a meager 3.4 percent.
  • That disparity has widened over time; in 1970, their respective shares were 43.3 percent and 4.1 percent.
  • These income-share numbers buttress the popular notion that the “rich are getting richer while the poor are getting poorer.”

Second:

  • The median household income in 2006 was $48,201, just a trifle ahead of its 1998 level ($48,034).
  • That seems to confirm the Democrat candidate’s claims of middle-class stagnation.

Demographic changes in the size and composition of U.S. households have distorted the statistics in important ways, explains Schiller:

  • All the Census Bureau tells us is that the share of the pie consumed by the poor has been shrinking (to 3.4 percent in 2006 from 4.1 percent in 1970); but the “pie” has grown enormously.
  • This year’s real gross domestic product (GDP) of $14 trillion is three times that of 1970. So the absolute size of the slice received by the bottom 20 percent has increased to $476 billion from $181 billion.
  • Allowing for population growth shows that the average income of people at the bottom of the income distribution has risen 36 percent.

They’re not rich, but they’re certainly not poorer.  In reality, economic growth has raised incomes across the board, says Schiller.

Source: Brad Schiller, “The Inequality Myth,” Wall Street Journal, March 10, 2008.

For text:

http://online.wsj.com/article/SB120511125873823431.html  

For more on Economic Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=17

Posted in Government and Politics, Poverty, Socialism | Tagged: , , , , , , | 5 Comments »

HAPPINESS AND INEQUALITY

Posted by Tony Listi on October 22, 2007

http://www.ncpa.org/sub/dpd/index.php?Article_ID=15163

The Democrats are correct that income inequality in America has increased over the decades, but their “egalitarian” attacks are misleading, says Arthur C. Brooks, a professor at Syracuse University and a visiting scholar at the American Enterprise Institute,

According to the U.S. Census Bureau’s “Gini coefficient,” in which zero indicates no inequality and one is perfect inequality:

-Over the past 40 years, the Gini coefficient in the United States has increased by a quarter, to .47 today from .39 in 1970.
-In European countries, Gini coefficients generally sit below .30, indicating substantially less income inequality.
Yet income is just one item of importance in the lives of Americans, says Brooks. There are many others — from love to faith to happiness — that we care about, some of them far more:

-For example, the 2004 General Social Survey’s measure of happiness generates a coefficient for the inequality of American happiness of .18 (using the Gini coefficient model), while the 2002 International Social Survey Program produces a coefficient of .20.
-Moreover, while the average happiness level in America has not changed much since the early 1970s (and remains above that of most of our European allies), the inequality in our happiness has fallen by about a point since then.
If greater income equality is our end goal, bringing the top down is as useful as bringing the bottom up, says Brooks. This is about as sensible as depressing the happy for the sake of the sad. There is no doubt the egalitarians among our politicians and pundits want the best for America. But to focus on inequality — and then only inequality in income — creates policies based on either rank materialism or raw envy. These motivations do little to inspire, and even less to lead.

Source: Arthur C. Brooks, “Happiness and Inequality,” Wall Street Journal, October 22, 2007.

For text:

http://online.wsj.com/article/SB119301749588666639.html

For more on Social Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=28

Posted in Economics, Government and Politics, Poverty | Tagged: , , , , , , | Leave a Comment »