Inequality

Call me a skeptic, but I remain unconvinced that the current "Occupy Wall Street" movement is really about inequality. Consider the following examples.

1. Much hay has been made about Buffet's nominal tax rate of 17%. Many have pointed out that Buffet's low rate is atypical; however, let's consider this one case on the merits.
   
   Many (even Buffet himself) would like to see his taxes raised from 17% to something like 35%. The money raised would be given to the American workers, reducing "inequality". However, Buffet is another perfect example of a phenomenon I pointed to in an earlier post: he gives nearly every cent he makes to charity, mostly to the poor in other countries. Hence, raising Buffet's taxes would take money headed to the poor and redirect it to middle class Americans, who are quite rich by world standards.
   
   In other words, raising Buffet's taxes would increase inequality by this objective measure. (It would reduce inequality within an already well group, Americans, but increase inequality worldwide.) Hence, raising Buffet's taxes would not be advisable in terms of inequality reduction. It might sound good to you, though, if you happen to be a middle class American.
   
   
2. Much hay has also been made about the fact that the average Fortune 500 CEO makes roughly 200 times the median household income. This is seen as a gross example of inequality.
   
   Let's consider a simple plan to reduce inequality. CEOs continue to make their current salary, but then they take 95% of the cash and burn it. Their effective pay is now only 10 times the median. Hence, inequality is hugely reduced!
   
   Would the protesters prefer that situation to the current one? I doubt it. Yet that situation reduces the inequality in CEO pay leaving everything else constant. Hence, it is a perfect solution if inequality were itself the issue.
   
   One suspects that the solution the protesters want is CEO pay given instead middle class Americans. That does two things: it reduces inequality and makes the middle class better off. As we've seen though, it's not the inequality reduction that would likely make them happy. Hence, we can assume what they really want is just the second part.
   

I have long been suspicious whenever people complain about "inequality" because there have always been plenty of examples showing that people don't actually dislike inequality.

Here's one: if people were really against inequality, they would ban the lottery. The sole purpose of the lottery (aside from making money for the people who run it) is to increase inequality. It takes money from everyone and gives it to a single person. This does not increase the total amount of money; it simply redistributes it in a more unequal way.

If people truly disliked inequality, they would abhor lotteries. But they don't. People seem to quite like the lottery.

This is just one more example. Like those considered above, one has to suspect that the real issue is not inequality. The label of "inequality" is simply a honorable-sounding word to paste on top of base motivations.