Monday, December 9, 2013

Why "Income Inequality" Is Important

I know that the SCOAMT would like to change the subject from ObamaCare to "the minimum wage."  He thinks that's a better option for him.  Heck, maybe it is.  But I find myself drawn to point out something that might be obvious to some, but certainly isn't to others: they're the same discussion.

Remember, the putative "point" of ObamaCare was to "bend the cost curve down" and "make health care more affordable."  Indeed, the very name of the actual bill says so: "The Affordable Care Act."  And what, exactly, is the point of that if not to address that great bogeyman of the Left- Income Inequality?

Which means that any discussion of the minimum wage by Democrats is based on the same foundation as their discussions about "universal health care," or "welfare," or any number of other things.  And they're all based on a faulty understanding of money.

For some reason- perhaps laziness, perhaps malfeasance, perhaps true ignorance- Democrats continue to insist that all of these things are the same: money and currency, and cost and value.  This is hogwash.

Money is not the same as currency- else the exchange of currency would be a static thing.  If money were the same as currency, a British Pound would always be worth exactly 1.2 US Dollars (or whatever exchange rate).  Instead, we find that currency exchanges fluctuate, now 1 pound is worth 1.2 dollars, now it's worth 1.3, now it's worth 1.1.  Obviously there is something other than the currency which is actually being exchanged here.

Cost is not the same as value.  If it were, the economy could not grow at all.  All exchanges would be either detrimental to one party or, at best, they would be neutral.  If cost were the same as value, then either I (as the seller of some thing) must over-charge to see a profit, or I must under-charge (thus incurring a loss), or I must charge exactly my cost (thus seeing no benefit from the sale).

It is important to note that most liberals know all of this.  Just listen to them discussing the economy.  At one moment they'll tell you "the economy is not a zero sum game" and the very next they'll say, "but it acts like it."  They'll say, "such-and-such adds value to what-have-you" and then they'll decry "profiteering" (as though selling things for profit were akin to being a pirate).

Yet, they act as though they believe these things they obviously know not to be true.  Raising the minimum wage only makes sense if money and currency are the same thing.  Price controls (which are what ObamaCare amounts to) only work if cost is the same thing as value.  "Income Inequality" is only a bad thing if money is the same thing as currency and cost is the same as value.

Since neither of those things is true, then "Income Inequality" cannot be a bad thing.  Indeed, it is a good thing.  That "Income Inequality" is one of the major drivers of any market economy- even one as fettered by regulation and red-tape as ours.  People on the bottom seek to rise to the top.  Thus (if they know the truth that money != currency and cost != value), they seek to become more valuable to their employer (or their customers) while also obtaining more capital (that is: money).  Those who succeed are made "richer" those who fail are made "poorer."

I am not going to engage in a defense of capitalism's record on charity.  Such defenses have already been made, and only the willfully ignorant believe that capitalism does not care for the poor better than socialism.

However, I will point out that the fact that those who fail to become more valuable are made poorer is a driver in the economy.

They are a driver in that the poor still need things.  Thus capitalists seek ways to serve those needs- providing low-cost alternatives to higher-cost goods.  Since the rich didn't get that way by wasting money, they often *also* seize on these lower-cost alternatives, further enriching society in general.

They are a driver in that, absent some perverse incentive, the poor are encouraged by their very "poor-ness" (virtually no one in the USA is "in poverty") to become more valuable.  As they strive to become more valuable, more value is added to the economy, and everyone (including the "poor") benefit.

They are a driver in that, being currently less valuable than others, they can provide low-cost services.  A fry-guy job at QuickyBurger for $7.50/hr is better than no job for $0.00/hr.  By providing those low cost services, the "poor" make services cheaper than they otherwise would be AND make themselves more valuable.

Considered another way- what if there were no "income inequality?"  What if, as the Democrats claim to dream, suddenly the fry-guy at QuickyBurger is making the same as a Personal Banker at MegaBank Corp, who is making the same as a software developer for MegaSoft Industries.

Well then, what personal value is it for someone to put forth the effort to become a banker or a software developer?  Being a fry-guy isn't the most rewarding career, but it's certainly much easier with far less stress (in general) than being a banker or a software developer.  Why pay for certifications or go to school for 4+ years when doing so will have no benefit?  I mean, I can pay several hundred to a couple thousand dollars for classes and certification (to tens of thousands of dollars for a college degree), but then I'm making the same amount as the fry-guy.  What's the point?

For there to be software developers and bankers and electricians and so forth to have any incentive to learn those trades, there must be some value to them.  That is, there must be the promise of more income than they'd get as the fry-guy.  In short, the "challenge" to "remove income inequality" is the quest to destroy an economy- to make an "economy" full of fry-guys and empty of bankers, software developers, and electricians.

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