Closing the Wealth Gap

The cry of the “99%” is loud and clear: “Redistribute America’s Wealth!” President Obama, many national and local political leaders, and labor unions cheer on the “Occupy” activists. Let’s redistribute. Let’s confiscate. In fact, let’s abolish wealth.

Realistically, it doesn’t take a math major to tell you if we confiscate all of the wealth of the top 1%, it still wouldn’t really put a dent in the $14 Trillion in federal debt we face. And when that bill comes due, who will pay it? Who do we occupy then? That’s the question the Greeks are asking now, with their government debt at 160 percent of GDP.

Throughout history, many governments have addressed this issue of redistribution of the wealth, the Soviet Union prominently among them. History shows that those abolishing wealth are those who hold the power: the Party, the People’s Army, the Politburo, the Mullahs. In other words those in power abolish wealth for everyone except themselves and those they favor.

It’s worth mentioning that the President’s support for the “Occupy Wall Street” movement has not slowed down the flow of contributions from the wealthy on Wall Street to the Obama campaign. Those contributions are at record levels. What do they know that we don’t know?

There is one good example of a country that successfully abolished an aristocracy in favor of a meritocracy. There is one good example of a country in which nepotism and favoritism have never overcome the power of entrepreneurship and invention. There is one good example of a country that has established true social and economic mobility. The example, of course, is the United States of America. And the example is unique in the world. You and I have never heard of half of the 400 wealthiest Americans Forbes will highlight in 2015—simply because they have not made their fortunes yet.

Still, it’s true that the gap between rich and poor is too great in our country. Worse, still, is the gap between the rich and the middle class. The real income and standard of the living of our middle class has been declining through the past four Presidencies—but never as far or fast as under the current President.

What do we do about that? The answer is that Americans must once again make most of what we buy. Manufacturing jobs must be re-established in this country. American small businesses must be allowed to grow and prosper once again. A number of forces are combining now to bring that goal closer:

1. First, the income of Chinese, Indian, Latin American, and other emerging economies’ workers is rising quickly. When you add transportation and corruption charges to those labor costs, it’s becoming too expensive to buy from them in many product categories already.
2. Second, there has been an erosion of the power of the American labor union movement, which had made U.S. manufacturing uncompetitive in the world. Roughly 15 percent of our working population, the share of union members in the country, had eroded the global competitiveness of the other 85 percent. But that’s changing. For example, the two-tiered wage agreements made by Ford and General Motors are allowing those companies to once again re-open or build manufacturing facilities in the U.S.
3. Third, the immigration policies enacted after 2001 are being relaxed and made more economically progressive. This will re-open the “Golden Door” to the world’s entrepreneurs and inventors. The late Steven Jobs said that if 30,000 computer engineers from India, China, and other countries—already educated in the United States—were allowed to immigrate to this country, then that would allow Apple alone to move hundreds of thousands of jobs here. Just the other day, the Wall Street Journal reported on the flight of entrepreneurs from China, particularly to the United States, as they have become frustrated by government corruption and the resulting toxic business and social environment there.
4. Fourth, and most important, it is generally accepted that whether Barack Obama is re-elected or not, our next Congress will be elected with an overwhelming mandate to remove the regulatory hurdles placed in front of small businesses and to reform our tax code to make it globally competitive and attractive for American companies to be taxed here rather than overseas. No question, this will all move more quickly if the President is not re-elected. Still, the train is leaving with or without him.

Reviving—not redistributing—our economy and the spirit of American entrepreneurship is what we need to do to close those gaps and open opportunity for all. Maybe what we need to do to achieve that is to occupy Washington.