January 24, 2014
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 5 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 economic growth;
(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 socialismfor 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, andvirtually 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 or socialism; and
(5) One of the biggest causes of runaway inequality is that the big banks are manipulatingevery market, and committing massive crimes. These actions artificially redistributewealth from honest, hard-working people to a handful of crooks. Conservatives hate redistribution … as well as crooks. In addition, 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. On the other hand, 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.
This is an area of agreement between people of good faith on the left and on the right. As Robert Shillersaid 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.
If we stop bailing out the fraudsters and financial gamblers, the big banks would focus more on traditional lending and less on speculative plays which only make the rich richer and the poor poorer, and which guarantee future economic crises (which hurt the poor more than the rich).
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.
Moreover, both conservatives and liberals agree that we need to prosecute financial fraud. As I’ve previously noted, fraud disproportionally benefits the big players, makes boom-bust cycles more severe, and otherwise harms the economy – all of which increase inequality and warp the market.
And prosecutors could claw back ill-gotten gains from the criminals and use that money to help the economy:
Postscript: If you want to know the stunning truth of how bad inequality has gotten, read this.
If you want to hear what top economists say inequality does to our economy, click here.
And if you want to find out whether government policy is making things better or worse, here’s your answer.
This article was posted: Friday, January 24, 2014 at 6:36 am