Saturday, November 3, 2012

Has the 1% Caused Our Economic Woes?

The Occupy Wall Street crowd emphasizes the growing disparity of wealth between the poor and the rich.  They typically make the incorrect assumption that it is this disparity that is the cause of the poor getting poorer.  This assumption is in turn based upon the false premise that there is a fixed amount of wealth, and that if one gets more, someone else (or multiple others) loses out by an equivalent amount.  Hence, if one gets a raise, someone else, or multiple someones, somewhere, are getting less.  A parallel illogical thought would be that if one gains weight, then someone else, somewhere else, will lose a comparable amount of weight.
Additionally, in our modern statistics-oriented society, the overall growing disparity in wealth portrayed in various graphs is not experienced by either rich or poor.  The poor know that they are poor.  The rich know that they are rich.  The poor may know they have less disposable income than they did, say, ten years ago, and the rich may know that their assets have grown over the past ten years, but the disparity between the two groups is not directly experienced.  The leftist premise is that the disparity is the cause of the pain, whereas actually it is the diminished buying power that is the actual source of pain.  The statistical category "disparity" is portrayed as an economic thumbscrew that is putting a punishing pressure on the poor and middle class, an invisible but nonetheless real torture device that is increasing the pain of those millions of people.  However, that view is an intellectual illusion -- disparity is an effect of other political and economic dynamics.  For example, is the poverty in our major cities caused by the profits of rich people or by misgovernance of those cities, which has been in the hands of Democratic leftists for decades?

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