Ignore Income Inequality

Income inequality seems to have great resonance.  An example is where Scott S. Powell argues in the WSJ that we should do away with or change Sarbanes-Oxley (SOX) because it increases income inequality:

With corporate tax reform in the rearview mirror, Congress and the Trump administration should pare back a misguided regulatory regime [SOX] that imposes unnecessary costs on public companies, discourages initial public offerings, and skews the distribution of wealth toward the very rich.

We would support adjustments to SOX but not because it changes income inequality. In addition, it is not clear what impact SOX has on income inequality.  More public companies might mean more rich folks.  On the other hand, Michael Tanner has a great article at NRO where he takes issue with what he properly describes as our dangerous obsession with income inequality.  Read it all but here is how he starts:

Yippee! Last week’s sell off on Wall Street wiped out more than $3 trillion in wealth. Overnight, economic equality increased. True, you and I aren’t any better off — in fact, some of those losses came out of our 401(k)s and pension plans — but the important thing is that the biggest losers were evil rich people. Warren Buffet lost more than $5 billion, Jeff Bezos more than $3 billion. All together, the world’s 500 wealthiest people lost more than $180 billion. Aren’t you happy?

He answers his rhetorical questions with of course not.

Sidebar: One of the problems with our dangerous obsession over income inequality is the challenges of measuring it.  The losses Michael describes are not part of a US tax return so it would be difficult to measure the impact.  Two major problems with any argument about income inequality is how to measure it and what is the goal using that measurement system.  End Sidebar.

Michael points out that capitalism has provided great benefits in the US.  Others (here is a video) have pointed out how it has helped the the world.  We need to promote economic freedom, defeat crony capitalism, and protect the needy.  Any argument that cites changing income inequality as a benefit should be ignored so that we can focus on serious stuff.

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