(This is the seventh in a series of posts analyzing each chapter in Jim Wallis’s new book, Rediscovering Values.)
Every time I began a chapter of Wallis’s book, Rediscovering Values, I expected to find quite a bit that I disagreed with. Perhaps it was my general experience of being at odds with Wallis’s politics, but so far I’ve been rather impressed with the points he’s been making. While I’ve been rather critical of certain missed opportunities and failed explanations, in general Wallis is preaching a great message of a return to what he calls “the new old values.”
Then I read the chapter about income gaps. Citing the prophets and biblical archeological finds that report that when wealth equality in ancient Israel existed, prophets did not, and when inequality existed, the prophets were calling Israel back to equality. Wallis is unclear about what kind of inequality he’s talking about, but it is clear that he doesn’t like the “gap” between the rich and the poor. When the gap becomes greater (again, we must ask, by what measure?), economic turmoil is on the horizon.
The rest of the chapter is a diatribe about how back in the “good ole’ days” when Wallis grew up, the income gap between CEOs and the average worker was much less than it is today, and how today the rich are getting richer and the poor are getting poorer. Citing various statistics that supposedly prove his point, he uses large numbers like the billion dollar salaries of employees to arouse our emotional anger. And if that were not enough to arouse our anger, he cites Reagan tax cut revolution, as if they were the source of the income inequality that has occurred over the past 30 years! (He ignores the fact that the government taxing wealth actually squelches productivity, wages, and social progress, not to mention its ethical considerations.)
I’m not economist, but I have learned a few things that Wallis would be better off knowing:
- In a market economy free from coercion (and when people are protected from it), wealth is not “distributed,” but is created
- The categories of “rich” and “poor” are not only relative categories, they are fluid; in other words, the same people who qualify as “poor” are by and large not poor given a certain amount of time, nor are the rich
- Anybody can cite a statistic and say, “Aha!” to prove their point
- A free market does not create “winners” and “losers” in the same way the government does
William Anderson, a Christian economist who has written about economic inequality, points out that inequality can be and is often created by the government more often than from a free market.
If there are dark economic clouds on the horizon, they have been placed there by the state. Violent government intervention into peaceful exchange and production can never result in production of more wealth. Instead, government creates winners and losers and changes the system of incentives. Where once people had to be inventive and creative in order to create products that others wished to purchase, now they must pay off their respective politician who will then attempt to change the structure of property rights in order to transfer wealth from productive to non-productive people….
Then there is the Federal Reserve System, which inflates the currency and creates its own set of winners and losers. Of course, as the Austrian Economists have demonstrated, an economic boom fed by currency expansion cannot sustain itself for long, and when the inevitable bust occurs, many economic opportunities are lost.
Art Carden, another Christian economist, deals with the question of how to measure inequality, and that many measurements are misleading and used only to supposedly “prove” a particular political side of the argument. He says that “[o]ur measurements of income and income inequality don’t account for the true differences, or lack thereof, between the sets of goods that the rich and the poor are able to consume. While income figures suggest that the gap between the rich and the poor is expanding, these figures may be misleading.” He argues that it may be better “to think of ‘inequality’ in terms of our ability to substitute the goods available to the poor for the goods available to the rich.”
There are many articles that deal with the eagerness by many political pundits to use the arguments about inequality to support agendas of wealth redistribution (though distribution may be the more accurate term). Walter Williams ponders the question, “Are the poor getting poorer?” here. Thomas Sowell deals with inequality here and here.
Do I fault Wallis for railing against inequality? Not really. He’s merely pointing out something that may be harmful. And while he does write that “the gap was the deliberate result of public policy and political decisions made to benefit one group over another” (pg. 87), he is content to blame the Reagan revolution for such deliberateness, rather than explain the economics of central banking and its very own creation of winners and losers through its wealth distribution program for the politically well-connected.