The Gaping Hole in the Gap Argument

    Much ado has been made about the growing gap between the so-called “rich” and the “poor”. Whether this gap is growing is itself a matter of debate. But let’s accept, for a moment, that it is indeed increasing. What does this mean?

    First, is the gap increasing because the rich are getting richer? Or is it because the poor are getting poorer? Or both? The answer is that both the rich and poor are getting richer in real terms. The U.S. Census Bureau (www.census.gov) data on household income clearly shows an upward trend for both, indeed all, groups. And aside from this increase in monetary income, real wealth has been increasing in other ways as well. For instance more “poor” households have things like cell phones, computers, internet access, and Playstations than they did several years ago. Any sensible person would say that’s an increase in wealth – not a decrease!

    So if the “poor” are getting “richer”, what’s with the growing gap? The answer is that the “rich” are getting “richer” too. Arguably, they are getting richer at a faster rate. But what problems does this pose? None that I can see. Unless, of course, you are the sort that begrudges your neighbor’s success. If you received a pay a raise and a new car, would you have a right to be outraged because your neighbor got a similar raise, car, and also a swimming pool? Do you have a fundamental right to have a swimming pool too? Could it possibly be that your neighbor earned his swimming pool? Now let’s say that after some time, you too get a swimming pool. But by now your neighbor has his own private jet. Do you get upset at this difference in wealth? If so, what specifically entitles you to what your neighbor has?

    A good friend of mine who is very astute once said that in the future the “poor” would eventually live in ten-bedroom mansions and the “rich” would own space stations. Nevertheless, there would still be some moaning about the vast material disparity between the two groups. As outrageous as this comparison may seem, in comparison to previous times, this is precisely the case today. Just compare present-day average material affluence to that of just about any time in the past. If the “wealth gap” argument were valid, it would mean that a poor person in the Middle Ages was better off than a “poor” person today. The truth is that a “poor” person today has more and is better off than even the nobility of that day!

    On June 26th, the New York Times wrote, “The 400 wealthiest taxpayers accounted for more than 1 percent of all the income in the United States in 2000, more than double their share just eight years earlier, according to new data from the Internal Revenue Service.” This report has made many green with envy. Many in various internet forums have been seen complaining about this and proposing that this wealth be confiscated and redistributed to others (or themselves). They have somehow adopted the notion that this wealth somehow belongs to them. If it didn’t, why else would they lay claim to it? And what claim can they lay to it? What did they do to deserve it?

    Apparently some of their idea that it belongs to them derives from the fact that they assume out of hand that these rich 400 obtained their wealth by stealing and cheating, or else inherited it. They pass these bold judgments and condemnations without even knowing who these 400 are. How would these same master judges of character react to someone judgmentally attributing their comparative poverty to laziness and stupidity?

    The interesting thing these people took no time to seek out themselves, and that the New York Times article failed to point out was that these 400 wealthiest taxpayers in 2000 were not the same ones as in 1992. In fact, more than three-quarters of the 400 were not in the top group more than once during that time. According to the Joint Economic Committee less than one percent of the 400 “were among this group every year from 1992 to 2000.” Incidentally, the lower 50 percent of American earners paid less than 4 percent of total federal income taxes in 2000. In the same year, the top 25 percent – those earning $55,000 or above – paid 84 percent of the total!

    If homogeneity of income and wealth is our goal, let us consider two things:

    1 – Considering the fact that individuals do not produce (or contribute to society) in the same degree, how does it make sense to reward all the same? Some people are highly motivated, creative, inventive, productive, and hard-working. Others would prefer to drift through life just getting by. How is it equitable to reward both types of people the same?

    2 – Where in the world have we seen a society where wealth and income were uniform? If we have seen such a society, it has been uniformly destitute. It would have to be because it is impossible to raise all people – productive and unproductive – to a high level without their cooperation. So the only way for them to have the same wealth is to have very little wealth at all. In a society where people are allowed to pursue their own potential, we will invariably have a large gap between some individuals. It is inevitable because some are productive and motivated, while others are not productive at all. So unless you reward lack of productivity, you cannot reach equilibrium without bringing the productive individuals down.

    I once heard a man piously declare that he, and all people, should be able to make a living, a good living, without any “job skills”. He said that people should not have to have “job skills” to make a living. Let us analyze this statement.

    What are “job skills”? I would have to assume that they are skills or abilities that allow one to productively contribute to society. If a person is without these, it is impossible for him/her to fully contribute. So what this man was saying, in effect, was that nobody should have to be able to contribute to society. Put another way, everybody should be able to get by comfortably without contributing anything.

    Now we begin to see the utter absurdity in this statement. If nobody could contribute to society, society would collapse under its own weight. Who would provide the necessities? The government? But what is the government? Isn’t it just a collection of people? Isn’t it just a product of society? Is it a god? Is it some mysterious, all-powerful force in the universe from which all blessings flow? While the obvious answer is “no”, it is surprising how many people will tell you that all these things can simply be provided by the government. But how does the government get these things to begin with? People have to produce them. And without the ability to produce, nobody – not even the government – can obtain them. That is, not without coercive force and slavery.

    So what of the gap between rich and poor? We have seen from the above and if we try to “harmonize” wealth among individuals, we will only succeed in rewarding lack of productivity, and will tear down and discourage productivity. And without this productivity among individuals, the entire society will suffer. We also have seen that this gap is a natural occurrence as sure as the Grand Canyon is a result of natural processes. But we’ve also seen that the level at which the “poor” live today is much higher than it has been anywhere in the past. It is nothing more than jealousy that prompts one whose life has improved to still covet, envy, and begrudge the success of his neighbor.

    If those at the bottom are content with their contribution to society, and their lives are not falling into decline, then I say, let the gap grow! Let it widen! And let me be at the top of it! Were this the aspiration of most individuals, we could raise the floor yet more. But instead we find an abundance of people who would, rather than aspiring to prosperity and greatness, actually accept and embrace failure. One of the harshest (yet ignorant) critics of the top 400 I saw once stated quite confidently that he was poor and would surely remain such. With an attitude like this, how can he expect anything else? If only he could see beyond his prejudice and bias that the rich, who he hates and loathes so rabidly without cause, are where they are largely, if not entirely, because they hold the very opposite attitude.