Count Raoul Takes on The US President.... Is This a Fair Fight?

President Obama gave a speech last week that, though not dramatic, spoke clearly of his mission over the next three years.  He announced that income inequality was “the defining issue of our time.”  First, I don’t agree, but more importantly, let’s look at what that means.

The headline statistic that follows this statement is how the top 10% of America’s wealthy individuals now control 50% of all personal wealth vs. 30% of the wealth in 1979, roughly 30 years ago.  Now why is that?  Are the wealthy intentionally creating companies and hoarding all the profits and making the workers suffer with minimal wage jobs or slow promotion tracks?  Heck no, they start companies and promote the diligent, intelligent and loyal so that this group might one day be wealthy.  The top 10% who control the money are not just the Bill Gates’ of America but they are the doctors, lawyers and Indian Chiefs who spent their time studying, graduating and making a career of their lives.  But even that did not make them the 10% that controls so much wealth.  The stock market did.

Educated workers who can save a little money donate to 401Ks and other saving vehicles that invest in mutual funds and specific stocks and bonds.  The stock market is up well over 1000% since 1983 and people who have had an opportunity to save have seen their net worth benefit.  Throw in a bit of magic in the residential housing market over the long term and you have a formula that greatly helps a middle management type of guy amass some healthy savings.  But keep in mind, this formula which has worked so well for so many is a gamble.  Stocks we know can tumble like a falling tree and real estate has recently proven to be a big negative for those who only entered the home ownership game in the past ten years.  But still, that’s where the baby boomers got their savings and how the formerly rich became super rich.  Nobody is accused of breaking the law here (there are exceptions) but the wealthy have used the existing system to make themselves more so.  I’m a bit jealous of their moxie, but not their money.

So how will the President attack income inequality?  Will he take money from the rich and give it to the poor?  That’s not really the American way is it?  If a high earner’s income is taxed more than now and his ‘donation’ is spent on new schools or highways or warplanes that will help America and provide some average salary jobs too.  But will it change the income inequality problem the President seeks?  I don’t think so.  The government is going to have to ‘give’ the money to the poor for them to grow in wealth.  I don’t like the idea of my money being given to people I don’t know. 

We don’t have income inequality, we have a talent and education inequality.  America, heck the whole world, is now in a technological employment tsunami.  Kids that drop out of school or even graduate from high school and stop will have a very difficult time joining the 10%.  Their skills are not going to demand big pay checks so their opportunity to save and invest will be stifled.  That’s where President Obama needs to start.  Get these kids educated so they can earn good money rather than expect to resolve income inequality by taxing the 10%.

Don’t get me wrong.  I cringe at the income of public company CEO’s just as I do professional athletes.  They enjoy paychecks I find hard to justify.  But we’re talking about a few thousand individuals when the 10% we are calling overly compensated is made up of more than 30,000,000 Americans (not me).  But if the CEO of a company is the woman who built the enterprise with the sweat and risk required to make it successful, I don’t care if she pays herself a billion a year.  She has earned it.  Even some of the gangsta musicians whose lifestyle and message I don’t respect have earned their money.  I don’t buy their crap, but somebody is.

Switching gears:  I recently came out politically as an Independent and am enjoying the freedom.  This rant today is more in line with conservative GOP thinking but don’t be calling me a Republican yet.  Lots of Americans need serious help feeding their children and finding warmth.  And I personally am willing to pay to see that these improvements take place.  I have seen through volunteer work the pain some suffer and a lecture from me about education, motivation and self-control is an insult when all you want is security and a meal.  But let’s stop the train right now.  Make sure the opportunities are there and the roadblocks of hunger and poor parental guidance are dismantled.  Let’s give the next generation of poor a better chance.  But don’t tell me income inequality is the defining issue.