Thursday, September 24, 2015

Inequality and Economic Growth

Only economic growth reduces inequality.  All efforts to legislate equality with arbitrary rules and income transfers simply preserves the position of the powerful at the expense of the weak.

A primer for how to increase inequality would include the following recommendations:

1. Enact a minimum wage and increase it regularly
2. Have an extremely progressive income tax and consider a wealth tax
3. Enact employer mandates that provide workers with health care, old age benefits, etc.
4. Encourage constant litigation between employees and employers
5. Mandate price controls on drugs and other essentials
6. Discourage the formation of new business by excessive rules on licensing and massive regulation.  Continue to add to these licensing and regulatory mandates so that new business are effectively precuded from any hope of success

If you pursue the above agenda faithfully, inequality of income, wealth, and power will be the inevitable result and the inequality gaps will grow over time.  Those in power use the policies cited above to maintain their position, regardless of merit or effort, because each of the above penalize merit and effort and reward political and social influence. (The last thirty years in the US provide important anecdotal evidence of the effects of 1-6 on the level of inequality).

So, to preserve the position of the rich, you should join forces with those who advocate the policies listed above and you will get your wish -- a society with dramatic inequality of income and wealth (the old Soviet Union, modern day Cuba, North Korea, Venezuela are excellent contemporary examples of income and wealth extremes.  In each of these societies, extreme versions of policies 1 through 6 were/are enforced at the point of a gun and were successful at implanting extreme inequality in their societies).

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