Columnist: We shouldn’t eliminate income inequality
What’s wrong with income inequality?
A dominant issue in the presidential campaign is “how do we eliminate income equality?” It’s not possible, and we shouldn’t.
The American economic system provides unlimited opportunity for income advancement. One of the primary tenets of our system is incentive. If we work hard and generate an income, we can keep the fruits of our labor. The government or others can’t arbitrarily take it from us. Work more; earn more; keep more. It’s our choice.
Beyond working more, our system facilitates working “better.” Reduce supply by becoming more proficient, and increased income will be the reward. Compared to other economic systems, everyone, in the same career or background, does not make the same money. It’s a function of quality and skill. If we choose to increase our skill level compared with others, “more” will be our reward.
Beyond working better, when compared to other economic systems, ours provides even greater opportunity through entrepreneurship. We can open our own business. Take the risk and if successful, even greater rewards are available. It’s our choice.
This “incentive” concept has been crucial to our economic system being the most effective in history and the backbone that enables us to protect our freedom. People have flocked to our shores since 1787 because of the opportunity this incentive feature provides.
We have learned, however, that some people choose not to take advantage of this feature of our system. They are content with the minimum reward for minimum effort and skill level. Some prefer not to work at all. Economists have traditionally felt 3-4 percent unemployment was “full employment” because some people don’t want to work and will sabotage any attempt to find them work. They choose income inequality. If we believe in freedom, we must allow them to make this choice, but we are not required to subsidize it.
Those advocating some system of income redistribution say “it’s not fair.” They feel the government should take money from those who have and give to those who don’t. If change of behavior is the goal, this method will never work. People don’t value what they get for free. People aren’t going to modify their behavior if they receive money for not changing.
More than any other country, we facilitate making the choice for more income. Education is the route. We provide free education through high school for everyone, not a select few. Those advocating income redistribution cite “19 percent don’t graduate from high school, and their income is low.” Those dropping out chose to do so. No one made them. They chose income inequality.
Our system also provides the opportunity for postsecondary education, which further facilitates higher income. Income redistribution advocates cite “61 percent drop out of community college and 41 percent drop out of four-year universities”; another choice. No one made them quit. Further education is hard and it is expensive, but it is possible. It’s more fun to play in some fashion than to go to class and study. It’s more fun to earn a little now and play compared to work and study now, facilitating a higher level of income in the future.
Most people had to work their way through college. It was their choice, and they will be rewarded as a result. Not taking advantage of educational opportunity is a choice.
This opportunity is available for everyone. It doesn’t matter where we live, what our parents do, if we have one parent or two, our race, our religion or our economic background. Some situations may make the choice more difficult, but not impossible. It just requires work. It’s our choice. It requires taking personal responsibility by choosing to take command of our own life instead of using circumstance as an excuse. Employers desire those who have demonstrated work ethic. Overcoming circumstance is one of the best ways to so demonstrate.
Another proposed solution to income inequality is raise minimum wage to $15 per hour. Sounds nice, but consequences abound. If an employer’s costs increase, there are three possible actions, none of which is economically positive: close the business, raise the price of the product/service or reduce the workforce.
An unintended consequence is even fewer people will choose to take advantage of educational opportunity. If someone earning $10 an hour gets an automatic raise to $15 per hour, why should they increase their education? Many already choose to abandon education and succumb to the attraction of low wages and immediate cash. A minimum wage of $15 per hour will only increase the number not pursuing education.
If our country is to continue to advance, whether it be in an economic or humanitarian regard, we must facilitate the incentive component of our economic system. We must promote work ethic, skill level, entrepreneurial risk and education. An artificially instituted method of eliminating income inequality is counterproductive.
Sure, taxes and the cost of living are high; athletes, celebrities, corporate executives are overpaid, but those are separate issues independent from the level of our income. The government doesn’t owe us a living; that is our personal responsibility. If we believe in freedom of choice, we cannot reward those who choose not to take advantage of the provided opportunities. We must not only continue but facilitate the incentive and educational aspects characterizing our economic system.
Some may feel this is overly simplistic, but it is that simple. Use educational opportunity to obtain a marketable skill, use the skill to obtain a career position, continue to improve your skills, demonstrate work ethic, work hard, work more and income inequality will not be an issue in your life. It is your choice.
Bryan Whiting believes most of our issues are best solved by personal responsibility and an understanding of nonpartisan economics rather than by government intervention. He recently retired after 40 years of teaching marketing, entrepreneurship and economics. His column appears on the first Wednesday of the month.
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User Legend: Moderator Trusted User
Economics may seem complex, but it’s actually common sense, which explains why politicians have difficulty considering the economic effects of their legislation.