Sanity Injection

Injecting a dose of sanity into your day’s news and current events.

The gap between rich and poor: Who cares?

Posted by sanityinjection on March 21, 2009

You don’t have to delve too far in the media to find some self-important journalist or politician pontificating that “the gap between the richest and the poorest in our society is greater than it has ever been.” They say it like it’s a terrible, terrible thing and we should all be ashamed.

But consider: Why is it that the gap is getting bigger? There can only be three answers: Either the rich are getting richer, the poor are getting poorer, or both.

Well, until the recent recession, it has certainly been true that the rich were getting richer. But were the poor getting poorer? Not at all. Compare the standard of living of someone at the federal poverty level to what it was twenty, fifty, 75 years ago and there’s no question the poor are better off today. Heck, even homeless people have shelters, which admittedly aren’t great places to be, but they’re a great improvement over dying of exposure.

So the question is: Is it a bad thing for the rich to get richer? Ask yourself this question: How does it affect my life negatively if a rich person makes $1 million a year instead of $750,000? Isn’t the more important question for me whether it is easier or harder to put food on my table and send my kids to college? If my ability to do that is improving, why on earth should I care if a rich person is getting rich even faster? How does that hurt me?

The answer is, it boils down to sour grapes. People don’t like the idea that someone else is prospering faster and greater than they are. But life is not a zero-sum game. In fact, it’s more often the case that a rising tide lifts all boats, because the rich invest money in our economy that helps create jobs and bring new technologies into our lives. The government didn’t give you TiVo, rich people did.

Poor people continue to come here to America because it’s better to be poor here than most other places in the world. So please, let’s have an end to this nonsense about “the gap between rich and poor”.

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4 Responses to “The gap between rich and poor: Who cares?”

  1. Jason said

    Well said SI.

    The fact that we have had and continue to maintain a booming middle class as a buffer between the poor and the rich is also another plus, plus in America’s prosperity. It is those who like to take the “rich is getting richer” nonsense and assume because it have negative effects on emerging economies or banana republics that it will have the same effects here. Rarely, do the consider the political and economical makeup in America that has, so far, proved to allow for continuous gains and a rising standard of living.

    It really is demagoguery and class warfare centered on sour grapes when those arguments are made. It certainly isn’t based off of any real evidence as you pointed out.

  2. Ronnie said

    The problem with discussing the economy has to do with how an economy fundamentally works. What has spared the United States from sweeping changes to our basic economic structure(socialism or worse), is the strength of our middle class. Trust me, if the we had a smaller middle class and more in poverty, we would adopt much more progressive socialist ideology.

    So lets split this argument up into two sides…

    The lower class say to the wealthy that, you become wealthy on the backs of the poor. The lower class buy your products, work in your factories/businesses. People making 100x more than the average american aren’t doing 100x the work. They work harder, but not 100x as hard. Without the lower classes, you wouldn’t be wealthy.

    The rich say to the lower class. You wouldn’t have a job without me, I provide you with employment. I worked hard, and I’m not going to just give my money away because you are jealous of what I have accomplished. If you take my money then I can’t afford to pay as many exployees, or I have to raise prices, or both. I won’t have as much money to invest in my business. We won’t be able to afford new technologies, to update the factories and make them more efficient. Which will bring down the standard of living for everyone. You need me.

    In my opinion. The biggest problem in America has to do with our values as a society. Part of what is called the “American dream”. To become rich. Capitalism inherently causes selfishness and greed. Its good that people can become wealthy in America, without the wealthy our economy would not be able to invest in innovative new technologies. There would still be some innovation, but in most cases it would come along much slower.

    But on the other hand, large gaps in income causes much higher crime. Which brings down the quality of life of everyone.

    The only way to fix the system, would be to find a way to keep investment and technological innovation as well financed as it is now. While also narrowing the gap between rich and poor.

  3. sanityinjection said

    One method often proposed to “narrow the gap” between rich and poor is to raise taxes on the rich. The rich, it is argued, can easily afford to pay a little more in taxes without suffering.

    Here’s what happened when the state of Maryland decided to raise taxes only on millionaires: Maryland lost money, because 33% of the state’s millionaires changed their residency to another state:

    http://online.wsj.com/article/SB124329282377252471.html

    Wasn’t there some old tale about “killing the golden goose”?

  4. Jocuri said

    Jocuri…

    […]The gap between rich and poor: Who cares? « Sanity Injection[…]…

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