GINN ECONOMIC CONSULTING
  • Home
  • SERVICES
  • Media
  • RESEARCH
  • Speaking
  • Blog
  • About
  • Home
  • SERVICES
  • Media
  • RESEARCH
  • Speaking
  • Blog
  • About

How Government, Not Capitalism, Is Causing Income Inequality

1/17/2012

 
Arguments claiming that income inequality is the foundation of the Great Recession, and of today’s sluggish economic growth, are false because they neglect to include income mobility, economic growth, tax changes, and government programs that keep the poor, well, poor. These myths have led many to look down on the top 1% when we should instead be promoting more of them. Households in this group should not be made the villains of slow economic growth and record budget deficits, which stem primarily from excessive government spending. 
Although there are reasons to doubt some arguments made about income inequality, it is important to start with household income data. The Census Bureau reported that the top 5% of income earners have incomes above $180,000, and the top 1% includes not only millionaires but household incomes above $360,000. A 2011 report by the Tax Foundation noted in 2009 the top 5% had 32% of aggregate income; the top 1% paid 37% of taxes, the top 5% paid 60%, and the bottom 50% paid 2.3% of taxes; there were slightly fewer than 1.4 million households in the top 1% and this group paid the highest average tax rate of 24%. Additional evidence shows that the top 1% own around 40% of the nation's wealth, and 80% of the top 1% earned their income instead of the common misconception that it was inherited. 
Some may argue that a country with an economic system based on capitalism does not have a heart and many people will suffer because they cannot fend for themselves. This is an unfounded argument based on a perception that the government is the primary source of benefits for those who have needs and are unable or unwilling to provide for themselves.
Religious organizations, charities, family members, and NGOs could replace welfare programs. These types of resources would have to be accountable, transparent, and efficient or risk closing; they would also have to provide valuable services because they will be competing for donations. Competition does not exist or is driven out by government programs. This is probably the biggest problem with government programs: they have the power of the purse and remain in business even when they fail. 
To reform our society in a way that benefits everyone, we must educate ourselves and expand our knowledge of our world. As noted by Socrates, "The unquestioned mind is not worth living." In today's divided political sphere, more constructive debates are needed more than ever. Let us keep up the fight for liberty, America!

Comments are closed.

    Vance Ginn, Ph.D.
    ​@LetPeopleProsper

    Vance Ginn, Ph.D., is President of Ginn Economic Consulting and collaborates with more than 20 free-market think tanks to let people prosper. Follow him on X: @vanceginn and subscribe to his newsletter: vanceginn.substack.com

    View my profile on LinkedIn

    Categories

    All
    Antitrust
    Banking
    Biden
    Book Reviews
    Budgets
    Capitalism
    Carbon Tax
    China
    Commentary
    Congress
    COVID
    Debt
    Economic Freedom
    Economy
    Education
    Energy Markets
    ESG
    Fed
    Free Trade
    Ginn Economic Brief
    Healthcare
    Housing
    Immigration
    Inflation
    Interview
    Jobs Report
    Kansas
    Let People Prosper
    Licensing
    Louisiana
    Medicaid
    Medicare
    Minimum Wage
    Occupational Licensing
    Pensions
    Policy Guide
    Poverty
    Price Control
    Property Taxes
    Regulation
    Research
    School Choice
    Socialism
    Speech
    Spending Limits
    Taxes
    Technology
    Testimony
    Texas
    This Week's Economy
    Transparency
    Trump

    RSS Feed

Proudly powered by Weebly