Ethan: President Obama a few weeks back gave one of the best speeches I have heard on income inequality in the United States. Without going into the particulars on how he would solve this issue, I’ll begin by asking whether you and your party see income inequality as a problem.
Phil: That’s a strange question.
Ethan: Let me put it this way. Your side talks about economic growth, as does mine. Your side talks about creating jobs, as does mine. Your side obviously talks about economic opportunity for the poor, as does mine. But rarely do I hear conservatives talk about income inequality in and of itself as a problem. I am curious if you even see it that way.
Phil: Is this a trick question?
Ethan: No, not at all. Very serious.
Phil: Income inequality is real, for sure. The solution is where I suspect we’ll disagree.
Ethan: I understand that it is real. The question is whether conservatives see it as problem. Rick Santorum famously said, “There is income inequality in America. There always has been and, hopefully, and I do say that, there always will be.” Is this the position of most conservatives, and you in particular?
Phil: I can’t speak for Santorum, but my understanding is he was referring to the competitive nature that inequality creates. Financial inequality can drive people to succeed. I certainly agree with that.
Ethan: Understood. But when the inequality becomes as pronounced as it is today, the chasm to cross grows larger and larger.
Phil: Perhaps. But the fundamental debate for conservatives is whether we should have the government make it equal or whether the government needs to deliver better educational results so youngsters are prepared to compete for the best jobs and prepared to innovate and create jobs.
Ethan: The government producing better educational results is the same thing as “government making it equal.”
Phil: We all long for the day when every student is truly well educated by our public schools. What you seem to suggest is government making us equal as Robin Hood would do it — tax the rich and give it to the poor.
Ethan: In order to educate people, you need revenue. And if you tax the wealthy to bring in that revenue, you lower the economic divide by raising revenue from those who can afford it. Then, you have the resources to provide the education needed for others to gain upward mobility. In essence, you kill two birds with one stone.
Phil: Yeah, you kill two birds called “ambition” and “hard work.”
Ethan: And if you don’t, you kill one bird called “equal opportunity.”
Phil: Would you agree that what we earn is based upon the value free markets place upon the service we deliver? Whether you are a computer engineer or a carpenter, someone will pay for your expertise if they want or need it.
Ethan: Sadly, in America, what we earn is often based on what we have and what we started with. There is very little mobility anymore. In real dollars, those with more are able to earn more. Those with less earn less. You are in the financial planning business. You must see this every day. The wealthiest you serve earn more money every year for no other reason than they had more when they started.
Phil: My financial planning clients vary. Some are just starting out. Others have more money than they will ever spend. The distinction and the similarities among them is that those who define their accomplishments by hard work (their willingness to sacrifice today to prepare for tomorrow and their appetite to take risks to fulfill their goals) create most of the income inequality that you seek to change.
Ethan: Sorry Phil, but the money Mary and I have to invest, no matter how much appetite we have for risk, how much sacrifice we make, and how hard we work will never put us in the position of your wealthy clients. This is true for 99 percent of Americans. It is why the middle class has seen its income drop precipitously, while the top 1 percent has seen its go up.
Phil: But government attempts to make us income-equal assume that we all have the same desire, discipline and will to prepare, which is not the case.
Ethan: No. Government (and societal) attempts to reduce income inequality are simply attempts to create equal opportunity. When a few control the majority of resources while schools, Social Security, Head Start, food stamps, unemployment and on and on all suffer from a lack of resources, opportunity is not equal. Income inequality is synonymous with unequal opportunity. And in America, everyone should have equal opportunity.
Phil: After nearly 50 years of The Great Society and hundreds of billions of dollars in education spending at the local, state and federal levels, it is remarkable that we need more for welfare benefits. More government programs are simply not working.
Ethan: Imagine the economic divide if we didn’t have public schools and Medicare and Social Security. Without Social Security, 44 percent of our elders would be below the poverty line. So yes, government programs do work.
Phil: My goal is for all youngsters to finish school with the skills that offer them equal opportunity — combined with strong work ethic — to see their incomes rise. A rising tide lifts all boats, as President John F. Kennedy said.
Ethan: Well, when Kennedy said that, incomes were rising at a steady pace. Today, just a few yachts are taking up most of the ocean, and the rest are anchored, so when the tide rises the smaller boats take on water.
Phil: Now I just feel seasick.