Friday, December 31, 2010

Equality?

I found myself reading a WSJ article (http://online.wsj.com/article/SB10001424052748703581204576033861522959234.html?mod=googlenews_wsj#articleTabs%3Darticle) about the evils of progressive taxation and it got me to thinking about income inequality. Specifically the article stated that the US tax system was far more progressive than those of the Nordic countries since the rich pay a much higher proportion of their income in the US... OK, but look at the distribution of income in those countries. The Nordic countries lead the world in equality of wealth distribution. No matter how progressive their tax structures might be, most people end up paying at a substantially similar rate. In contrast, the income inequality in the US is more similar to a third world country than it is to a Western Democracy. Even with a flat tax where the rich pay the same proportion of their incomes, the rich would still pay most of the taxes.


Countries, as much as individuals, have self images that are sometimes out of touch with reality. America, for example, is the land of opportunity. Everyone knows that their own ancestors carved homesteads out of the wilderness and that a poor boy raised in a rustic cabin built of hand hewn logs could grow up to be president. Anyone, by dint of hard work and self sacrifice, can rise to the highest levels of society. There is some truth behind this national mythos, of course, but there is also a good deal of careful selection of facts. Much of this description of the American Dream can be found, already full-blown, in Crèvecoeur's description of colonial America and is supported by Ben Franklin's assertion that there were no poor people in America. It goes without saying that this vision of America ignored the condition of slaves and displaced native peoples. In fact, this instant rags-to-riches scenario was heavily dependent on having free, or nearly free, land and that is long gone. It has been a long time since America could grow without limits by wresting more land from displaced natives in order to give it to newly arrived European settlers. Over the past couple centuries the opportunity to rise above the socioeconomic class of one's birth has become increasingly rarer but still, there are exceptions. As long as we continue to believe that our country offers opportunity we can point to those exceptions and use them as proof that things are still as they always were.

The truth is that, today, economic inequality in the US is greater than it is in most developed countries and opportunities for upward mobility are less common than they are in much of Europe. For many generations the belief in the American dream provided incentive to work hard, to do the difficult now and the impossible in a short while. Today it is a political tool used to manipulate the poor into voting against their own self-interest. After all, if you or your children will someday be rich, shouldn't you try to provide a favorable environment?

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