Wednesday, July 22, 2015

Why Income Inequality Is The New Climate Change

For many years the farce known alternatively as "global warming" and then "climate change" was the favorite bogeyman of the left, the ill that had to be defeated to preserve life on earth. Just as the right always has a new foreign enemy that threatens our very existence and "American way of life", the left requires a domestic enemy to combat with endless rules, regulations and of course taxes to keep the bureaucracy employed.  By most measures the climate change farce is dying out. There have been enough cold winters and enough demonstrably bad and politically driven "research" to make most people outside of a few urban enclaves pretty much laugh off the whole thing, the recent encyclical by Jorge Bergoglio notwithstanding (and largely ignored by most Roman Catholics anyway). While "climate change" is still out there siphoning off resources to groups that are "fighting" against it, whatever "it" is, the latest bogeyman is "income inequality" and for the same reason, it sounds bad and it can (and does) mean anything so it provides great cover for any sort of new rule or regulation.

Income inequality is just like climate change for the simple reason that both are vague and they both defy definition such that they are incredibly useful tools for rhetoric. The climate is always changing, it never stays the same. I saw just the other day ominous warnings of a mini-ice age coming in the next decade or so, which seems weird because I though the earth was warming? Huh. Likewise income is always unequal, even in paradisiacal settings like North Korea and the Soviet Union there were those who had more than others. If you think that the dictators of Cuba, North Korea, etc. live in the same manner as the peasants, you are naive or nuts or both. The "problem" of "income inequality" is impossible to solve, thus it can be used as cover for just about any policy someone wants to push and how can you be against it? After all, who wants to be labeled as being in favor of "income inequality"?!

This is going to be a huge issue in the 2016 election. Presumptive Democrat nominee Hillary "Pay to play" Clinton is already banging the drum on this issue in her frantic attempt to squelch the rising distaste of Democrat primary voters who are giving Bernie Sanders a serious look. Of course no one has any specifics but you can be sure that whoever the nominee is, promising to act on income inequality will be at the top of their platform. It will be an effective tactic because the average American registered voter can't think much beyond their next Facebook status update and is likewise clueless about economics.

It is easy to complain about income inequality as long as you don't have to think about it very much. "How terrible that the CEO of company X makes 150 times more than the entry level worker! That is unfair!". Is it really? Perhaps wages are set by a system where the more responsibility a job has, the more experience and education it requires and subsequently the more scarce the pool of applicants for a job, the more a job does (and should) pay.  Let me walk through this notion. This is going to be a little long but stay with me.

For example. Jobs that pay $10/hour and under can be done by virtually anyone. I mean just about any functional teen-ager or adult can assemble a Big Mac or stock Cap'n Crunch on the shelf at Wal-Mart. Because anyone can do it and it requires essentially no skill other than showing up to work, it shouldn't pay much. No, it seriously shouldn't. That doesn't mean people don't work hard at their job, it just means that anyone can do it so it has little value and besides anyone who works hard at one of those jobs won't stay in that wage level for long. When you get to jobs making $10-$20, you are talking lower level supervisory jobs and some less skilled manufacturing. It is harder to do and requires more talent and experience. The pool of people to fill these jobs is smaller and the work is more demanding. Thus it pays more. $20-$30/ hour and you are in more professional office and medical careers, these require not just experience and talent but also investment in education. $30/hour and up, where I used to be a few years ago, requires substantial work, lots of experience, lots of talent (usually) and education. The job I did was very specialized, you couldn't take someone off the street and have them do it without first investing a lot of years in training them. It took me a long time to get to that pay scale and the job I was in absolutely was worth more than triple what someone who worked in an entry level service industry job. If I wasn't getting paid a lot more, I would not have put up with long hours (with no overtime pay), extensive travel, lots of stress, always being available to clients, etc. When you get much above that scale you are talking executive level leadership and professionals (accountants, doctors, lawyers), people who have a rare blend of talent and education. For example, I used to work for a couple of international financial services firms. They had assets under management in the hundreds of billions of dollars, in an extremely regulated industry with a complex organization that required someone who could manage a firm with tens of thousands of employees. I have met a tiny handful of people in my entire career who were even in the conversation for a job like that. People who are that driven and that skilled are a tiny minority of the population. I would say that I am a pretty smart guy and a better than decent communicator. I would never put myself in charge of an organization of even 25 people, much less 25,000. The vast majority of the population does not possess the basic intellectual capacity to even begin to run a company like Wal-Mart or Ford or Chase. The guy who runs Chase, Jamie Dimon, (and I used to work for Chase) seems like a pompous jerk but he can do a job that only a small number of people in the entire world are even capable of contemplating. Should be get paid as much as he does? I don't know, that is between him and the shareholders of Chase. Should someone who is at the top of a company with a quarter-million employees and revenue of close to $100,000,000,000 make 100 times what a teller does? How about 1000 times? It is silly to ask because I am pretty sure that not a single teller at Chase has the skill, drive and talent to run the company. As a bank manager for Chase I certainly didn't. I made a nice salary running a branch with 10-12 employees. Dimon runs an organization with a quarter of a million employees. I cannot even fathom the complexity of that and neither can you. Heck, Wal-Mart has over 2 million employees. I would think the CEO deserves a lot more than the stocker in Spokane, Washington. So yeah it is easy to get all outraged over "income inequality" and "pay disparity" but when you stop and think about it, it isn't quite so cut and dried. The fact of the matter is that we need people who are able and willing to do very hard, very high stress jobs and they should get paid more, a lot more, than someone with no skills and little experience. Making $250,000 a year is a lot of money but would Jamie Dimon run J.P. Morgan Chase for that amount? Not on your life. You might think you would but a) you probably couldn't run Chase for more than 15 minutes and b) if you could (or I could)  we wouldn't do it for $250,000 a year either.

As far as "what to do about it?", who says we can or should? What I make in my work is what people are willing to pay me for what I am willing to do. I have voluntarily cut my own pay by changing professions by more than half for the sake of my health. I have a lot of skills and experience but I am not using them fully in what I do now so I don't expect someone to pay me what I used to make. Besides, what someone else makes is none of my business. Not even a little bit and it isn't yours. If LeBron James or Taylor Swift or Jamie Dimon makes millions of dollars a year, how is that my business? Why do I have a say in how much they should be allowed to make or how much they should be allowed to keep? I don't buy tickets or merchandise for the NBA, I sure as heck don't spend money on Taylor Swift songs and I don't bank at Chase nor am I a shareholder. Like Paul says in 1 Thessalonians 4:11, to paraphrase, just go about your life and mind your own beeswax.

A lot of people in the church get up in arms about this but I think that outrage is misplaced. Greed is a sin but nowhere in Scripture do we see a mandate to go to Caesar and seek to have him use his sword to confiscate from some to give to others. God is indeed angry at greed but He will also deal out the judgment (for a graphic example see Luke 16:19-31). If someone in the church is in need, the church should help them out rather than going to Caesar. It is not loving, charitable, dare I say not Christian, to take from some by force and give to others. Someone who claims to be a peacemaker when it comes to going to war but has no problem with coercing some people to give to others doesn't really understand what being a peacemaker is all about.

At the end of the day, you should make what an employer feels your work is worth to that organization. If you think you deserve more, do something about it. The best way to combat "income inequality" is to free up capital for investment which in turn creates jobs and thereby increases competition for workers who will then make more money. The dirty little secret behind the calls for "income equality" is that most of the people chattering about it are millionaires already and have created their own tax shelters to hide their wealth. Meanwhile the suckers in the middle-class will end up paying high prices while their wages stay put, meaning that the ones who are going to really suffer are the most productive members of our society. It might just be that is the whole point of this exercise in the first place.

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