“Spread the Wealth” Fails on Its Own Terms

According to a study at MoneyRates.com, income inequality is actually rising, not falling, during the Obama years. Ironically, in electoral “blue” pro-Obama states, income inequality is rising even higher than in “red” states who didn’t vote for Obama.

If it were true that higher, more “progressive” taxation and trillions more in government “stimulus” spending reduced income inequality, then how do we explain these findings?

It’s actually quite simple. In a free market system — a totally free market system, the best case — the standard of living continuously rises for everyone. This includes those even unable or unwilling to work, because those depending on charity from others (or mooching, depending on the precise circumstances) fare better in an economy where everyone is growing richer all the time.

We don’t have a consistently free market system in the United States. We have a partial and hampered one, and have for at least a century. Despite this fact, and despite many government-triggered recessions or depressions along the way, the standard of living has — overall — continued to increase for everyone over time. (One notable exception: Those in government-subsidized lives generated by government housing and permanent welfare payments. You cannot progress if someone makes you dependent on them.)

This demonstrates just how potent capitalism is: Even when hampered, it still delivers the goods. Imagine what capitalism could do if left unrestrained by the government

However, the need always existed for reform or change. What was needed when Obama came to office, and actually long before he came, was full privatization of the economy. If you think the standard of living rose a great deal over the twentieth century, it pales compared to what would have been possible in the twenty-first, had we embarked on a transition to a totally private economy.

Obama, of course, took us in the exact opposite direction. He claimed that it would be a better, more prosperous economy, and of course that has not turned out to be the case. But he more emphatically stated that it would be a “fairer” economy, one in which government took from those who “have too much” and gave to those who “have too little.” Whether you agree with his ideological purpose here, this was his unqualified aim: Spread the wealth.

Yet it hasn’t happened. If the purpose of government is to make income inequality less common, not more common, it seems that we will need completely different policies from the ones Obama (and his supporters in the governments of “blue” states) has imposed.

Don’t get me wrong. I don’t believe it’s the purpose of government to make income inequality greater or lesser. The purpose of government is simply to protect rights. How much money you make, and what you do with it once you make it, is your own business. Government’s job is simply to protect people from violence or fraud, and to uphold voluntarily entered contracts.

If we had such a system, or at least something closer to it, we would not be enduring the high unemployment, high taxes, government bureaucracy and injustice, and restraints on liberty and free association that we see more around us today.

Narcissistic personalities such as Obama also believe it’s their job (and think it’s within their capability) to force people to be “nicer,” and more humane. The problem with that? As government does more and more to make the private economy a more treacherous and insecure place, and as income inequality grows (thanks to government policies), people become more guarded and hostile with one another.

Keep in mind that in a private economy, the constant motivation is profit and success. In a government-controlled system, the constant motivation is political connections and blind adherence to contradictory and confusing government mandates. For details, look at Obamacare, not to mention Medicare and the federalized public school system.

As government erodes capitalism in the name of “humanity,” we actually end up with less wealth for everyone as well as less humanity. To some, it’s worth it if we at least equalize everyone’s income in the process. Of course, that hasn’t happened and it will not happen, not unless we completely decimate private enterprise (as in a Castro-like or Soviet-like Communist system.)

So exactly why are we engaged in all this “spread the wealth” again?

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