Expected or Evil? – Inequality, Part 1

Is inequality the defining moral issue of our time as Bernie Sanders suggests on his website? Or, is inequality a normal outcome in an economy based on people making free choices?

Is inequality being used to stir up class envy to promote the progressive agenda? Worse yet, is such talk, as some have claimed, an effort to generate an internal enemy that must be vanquished, a tactic used by tyrants throughout history to gain control of a nation? Or, is increasing income and wealth inequality a warning sign that we ignore at our peril?

Common sense would tell us that inequality is to be expected. The Bible proclaims that the natural result of hard work is wealth and that laziness leads to poverty. (Proverbs 10:4) However, the Bible is very clear that inequality is too often the result of wealth being gained by some at the expense of others.  Whenever inequality arises due to deceptive and abominable business practices (Deuteronomy 25:13-16) or because of people using power to oppress others (Isaiah 3:13-15) or when the economic gain of the rich is incommensurate with their contribution to society (James 5:4), then inequality is evil and we can be certain that the cries for economic justice will be heard and that the Lord of Hosts will judge those responsible.

Of course, not everyone believes inequality is as much of a problem as some are making it out to be. Citing statistical manipulation, critics of the idea that there is rampant inequality claim proponents have misrepresented the facts and that inequality is not really that far from historical norms. Not surprisingly, those who believe inequality has reached an alarming level often accuse their opponents of statistical shenanigans as well.

The evidence supporting increased income and wealth inequality, in my opinion, is undeniable.  More troubling, however, is that the way wealth is generated in our economy often violates biblical principles. Unjust inequality is the expected result when Biblical principles and commandments are violated and left uncorrected. In the U.S. economy, an unusually high level of inequality indicates mal-investment of resources as wealth is transferred to the rich via asset appreciation instead of invested in future production that benefits all of society. Wealth transferred from the middle class to the poor via government entitlement programs gets a lot of attention, probably because the programs are so visible. But the upward transfers are more harmful because they increase the need for government aid as jobs are lost due to poor allocation of capital.

Since we cannot discern with confidence the motives of others, dismissing inequality on the grounds of it being a tool in the hands of our ideological opponents is foolish if it causes us to ignore an issue that is important to God. Dismissing the need to discuss income and wealth inequality on the grounds that a tyrant might use class envy to gain power is despicable if it allows oppression of another kind to go unchecked.

Ignoring the problem of inequality will come at great peril. Inequality, at its core, is not about envying the rich. It is about a destructive weakening of the middle class and immoral wealth transfers. If a despot comes to power in the U.S. it likely won’t be because he used the issue of inequality to rally the jealous masses, it will be because a corrupted economic system destroyed the engine that drives our economy resulting in poverty on a scale we have not seen before. The clear and present danger that we face is not that speaking out about inequality will result in an imagined future dictator, but rather that by failing to speak out, power, already mostly in the hands of a few people, will easily consolidate into a full-blown plutocracy.  The U.S. government having relinquished its responsibility to restrain evil in the marketplace and the Federal Reserve having manipulated the financial system for the benefit of capital owners will offer solutions to the problems they created that many desperate people will accept.  The rest of us will have no choice but to go along for the ride.

 

Inequality Parts 2 & 3 will critique solutions to inequality proposed by 2016 U.S. presidential candidates.

3 comments

  • Dale, thanks for setting this up. I enjoy it!
    But I have a question about the statement “The evidence supporting increased income and wealth inequality, in my opinion, is undeniable.” Not that I disagree about the widening gap but wouldn’t it be good to have sources? I read a lot of news stories that make blanket statements without supporting information. Maybe set the groundwork first?

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    • Steve, the data that people rely on to make their case for income inequality comes from two main sources. The IRS publishes an annual report based on data it compiles (Statistics of Income or SOI) from tax returns and the Census Bureau publishes an annual report on income based on its Current Population Survey (CPS). For data on wealth distribution, the main source is the Survey of Consumer Finance published every three years by the Federal Reserve. Some economists have published works using this data, notably Emmanuel Saez, Thomas Piketty and Gabriel Zucman. For an interesting read on the subject, I recommend The Price of Inequality by Joseph Stiglitz.

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    • Steve, the Congressional Budget Office (CBO) also issues its report on income distribution based on SOI and CPS.

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