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Nutshells

Income Inequality in a Nutshell



Income inequality is to free markets and our quality of life as the wake is to a ship that carries us safely and comfortably across the stormy north Atlantic. The former is a natural consequence of the latter. The only way to reduce or eliminate the wake of income inequality is to do the same to the ship of freedom.

Those who wish to reduce income inequality, should be very careful of what they wish for.

Discussion

2 thoughts on “Income Inequality in a Nutshell

  1. So just to be clear, you’re saying that the ship has to be smaller in order to churn up less water, and if that happens, fewer people can get onboard at all? Not sure I totally agree with this–at least I hope there is some way to at least operate more efficiently–but wanted to make sure I was jumping off from the right understanding of your statement.

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    Posted by Cedar Kennan | January 22, 2012, 2:16 pm
    • The idea I was trying to express was not that fewer people would be able to enjoy freedom, it was that there would be less freedom and less opportunity for everyone to enjoy. Basically, income inequality is a natural consequence of how money works in the free market. A quick example: If you make $100,000 and I make $40,000 there’s a $60,000 income gap between us. If we both get a 5% raise, or if we both invest the money where it earns 5% interest, our new incomes, or wealth, are $105,000 and $42,000 and there’s a $63,000 income gap between us; “income inequality” has increased. That basic principle applies everywhere – whether it is income, or investment, or venture capital, or manufacturing – the more money one has the more one can make. The process helps even – or especially – the “little guy” at the low end of the income scale. Google “The Miracle of Compound Interest.” Most people don’t stay in the low end. Through the course of a lifetime most people move up to higher brackets. If we want to reduce income inquality then we have to somehow intervene in theses processes and artifically force them to not happen, or at least to slow down; we have to take some of the “free” out of free market and that hurts everyone.

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      Posted by TheIndependentWhig | January 24, 2012, 8:21 pm

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