Weekend Economists Examine (E)sc(h)atology January 24-26, 2014

[Demeter]

13. 54% of Republicans Say We’ve Got Too Much Inequality

THE LAST TRUMP IS BLOWING

http://www.washingtonsblog.com/2014/01/54-republicans-say-weve-got-much-inequality.html


6 Conservative Reasons – Based Upon Conservative Values – For Making Sure Inequality Doesn’t Spiral Out of Control Even More

We’ve noted for years that it’s a myth that conservatives accept runaway inequality. Conservatives are very concerned about the stunning collapse of upward mobility. A poll from Gallup shows that a majority of Republicans think we’ve got too much inequality:

Two out of three Americans are dissatisfied with the way income and wealth are currently distributed in the U.S. This includes three-fourths of Democrats and 54% of Republicans.

And the conservative website Townhall.com ran a story last month entitled, “Inequality is a Conservative Issue“. In fact, there are at least 6 solid conservative reasons – based upon conservative values – for reducing runaway inequality:

(1) It has now finally become widely accepted by economists that inequality drags down the economy. Conservatives like prosperity and economic growth, not things which pull down the economy;

(2) Inequality increases the nation’s debt. Conservatives don’t like debt;

(3) Runaway inequality leads to social unrest and violence. Conservatives like stability and order;

(4) Much of the cause of our soaring inequality is bailouts for the big banks and socialism for the buddies of the high-and-mighty at the Federal Reserve, Treasury, and White House. The government has consistently picked Wall Street over Main Street, and virtually all of the the big banks’ profits come from taxpayer bailouts. The Fed is still throwing many tens of billions a month at the big banks in “the greatest backdoor Wall Street bailout of all time”, which sucks the wealth away from the rest of the economy. Conservatives don’t like bailouts (a 2012 Harris poll showed that 87% of Republicans are against bank bailouts) or socialism; and

(5) One of the biggest causes of runaway inequality is that the big banks are manipulating every market, and committing massive crimes. Fraud disproportionally benefits the big banks, makes boom-bust cycles more severe, and otherwise harms the economy … all of which increase inequality and warp the market. These actions artificially redistribute wealth from honest, hard-working people to a handful of crooks. Conservatives hate redistribution … as well as crooks.

(6) Religious leaders have slammed the criminality of the heads of the big banks; and the Bible teaches - and top economists agree – that their crimes must be punished, or else things will get worse. A 2011 Gallup poll showed that 91% of U.S. conservatives believe that the Bible is either literally true or is the inspired word of God. If the crimes of the bankers are punished, inequality will start to decline, because a more lawful, orderly and even playing field will be reestablished.

We’re not calling for redistributing wealth from the rich. But we do support clawing back ill-gotten gains from criminals under well-established fraud principles:

The government could use existing laws to force ill-gotten gains to be disgorged (see this and this) and fraudulent transfers to be voided …

We’re mainly talking about stopping further redistribution from Main Street to Wall Street. As Robert Shiller said in 2009:

And it’s not like we want to level income. I’m not saying spread the wealth around, which got Obama in trouble. But I think, I would hope that this would be a time for a national consideration about policies that would focus on restraining any possible further increases in inequality.

For example, if we stop bailing out the Wall Street welfare queens, the big banks would focus more on traditional lending and less on speculative casino gambling. Indeed, if we break up the big banks, it will increase the ability of smaller banks to make loans to Main Street, which will level the playing field. We don’t even have to use government power to break up the banks … if the government just stops propping them up, they’ll collapse on their own. Indeed, many Republicans have pointed out that the big banks would fail on their own if the government stopped bailing them out. And using current fraud laws would do the trick in prosecuting Wall Street criminality.

Postscript: If you want to know the stunning truth of how bad inequality has gotten, read
http://www.washingtonsblog.com/2013/09/the-stunning-truth-about-inequality-in-america.html

If you want to hear what top economists say inequality does to our economy:
http://www.washingtonsblog.com/2013/12/mainstream-economists-finally-admit-runaway-inequality-hurting-economy.html

And if you want to find out whether government policy is making things better or worse, here’s your answer: http://www.washingtonsblog.com/2013/09/bad-government-policy-has-created-the-worst-inequality-in-world-history-and-it-is-destroying-our-economy.html