Thursday, February 25, 2016

Big Government Widens the Wealth Income Gap

The Economic Innovation Group report discussed in today's NY Times points out that the wealth and income gaps in the US have consistently widened since the 2008 recession.   This should come as no surprise.

Check out the pay scales of government employees.  They have risen dramatically since 2008.  Cloistered, quasi-government, institutions such as colleges and universities now pay low seven figure salaries to their top administrators when the same administrative positions barely paid low six figures fifteen years ago.  Virtually everyone whose life depends upon the government is doing much, much better than they were doing in 2008 and those at the bottom of the economic pile have made zero progress.

This is what happens when merit no longer determines who gets what.  The Gores and Clintons were doing reasonably well before 2008. But, after 2008, they went from single figure millionaires to centillionaires, worth well over 100 million dollars.  How did they "merit" all that money?  The answer:  they didn't.  Merit has been replaced by government largesse.

When Hillary Clinton spoke at Berkeley and was paid $ 300,000 for a two hour talk, unsuspecting taxpayers were paying the freight.  That wasn't a market transaction.  That was a government handout to a very wealthy person.  No one attending the Clinton speech paid anything at all.  Poor taxpayers, who weren't in attendance and had no idea they were footing this nonsense, were stuck with the bill.

And, so it goes.

Once the government determines who gets what, then the rich get richer and the poor stagnate. That's what has been going on since the Obama folks got into office and it will continue as long as government picks the winners and losers.  Only the return of merit-based compensation can provide hope for lower and middle incomes, who don't have a friend in government orchestrating $ 300,000 paydays for a two hour speech to a bunch of college kids.

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