Work, Money, and Financial Distribution

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The above video focuses on one point: there is an unequal distribution of wealth in these United States of America. Now, granted, it disguises that point as three separate graphs (the ideal, the perceived, and the actual distributions of wealth), but the primary point is to spread awareness about the situation.

I will grant a few important concessions to the above video: First, it tries very hard to remain politically neutral. It emphasizes that Republicans and Democrats alike think that the ideal distribution of wealth would spread the dollars a little more evenly than they are now. It does not use terms like “unfair,” which immediately smack of entitlement issues. It admits the economic shortcomings of socialism. It does not push a particular legislation, example, or ideology as the solution to this issue, but merely highlights the issue’s existence.

But there are a few shortcomings in this video, too. Even in its attempts to remain neutral, biases still slide through. There are quotation marks around “dreaded” in describing socialism; this disassociation with the original quote (supposing there were one) implies disagreement with the original speaker, suggesting a left-leaning political view. A right-leaning political view would have left the quotation marks out, implying agreement with the sentiment that socialism is “dreaded.” A truly neutral view would have left the adjective out altogether.

Furthermore, there is a certain amount of emphasis on the term “Republican,” by both word order and verbal accent, that suggests the maker of the video found it important to emphasize Republican agreement with the ideal distribution; this tends to happen when the maker of a video knows s/he is opposed to a group that s/he must convince, and this awareness drives a wedge even as it attempts to build a bridge. A truly neutral view would have said, “Remember: 92% of people agreed with this ideal distribution, regardless of their political perspective.” At least, that’s about as neutral as you can get while making a video about wealth distribution.

There is a hint of agreement with the Occupy Wall Street movement, when the video discusses the enormous wealth of the 1%, and that, too, will drive a wedge between the video’s message and its intended audience. The people who don’t already agree with wealth redistribution also don’t like the Occupy Wall Street movement, and associating yourself with it – even tangentially – is not going to do you any favors. Democrats, in general, support higher taxation and higher entitlements, which is precisely what the Occupiers sought, whereas Republicans tend to oppose that sort of budget, and thereby oppose the Occupiers. If you start suggesting that the Occupiers were right, you’re going to lose most of your audience right there. Better not to mention them at all.

Now, let’s move on to the meat of this issue: the fairness of current wealth distribution. The above video acknowledges that some of the top 20% work harder, and therefore earn more, than lower brackets, but questions whether the CEO works over 300 times as hard as his/her average employee. This highlights precisely why so many Americans are uncomfortable with the current distribution of wealth in these United States: there is an extremely common belief that there is a direct relationship between hard work and money.

Why is that? Well, in the industrial era, it was completely true. The harder you worked, the more you earned, and the more people noticed you, so the more you got promoted. When you got promoted, you got more work and more money. Plus, it’s part of the standard “American dream.” You show up, you work hard, maybe 60-80+ hours of work each week, and sooner or later, you’re going to get rewarded with a cush, highly paid position, like the CEO or the Chairman of the Board. Classic movies and TV shows and books talk constantly about how the wealthy worked hard to get where they are, and you’ve got to work hard, too. (Although, really, we should have seen through that one, because that’s always indicated to be at least a little false through the course of the story – even as far back as Dickens’ Hard Times, in which Josiah Bounderby is shown a fraud for all his claims of being a self-made man.)

Whatever the source, this notion runs rampant among the working class. Perhaps it was an invention of the ruling class to keep the working class working and the ruling class ruling – but I suspect it was less devious than that. It’s not exactly a false notion, after all – if you work harder, you tend to get paid more and get more promotions. But even if you’re the hardest worker in your company, that doesn’t guarantee you’ll become CEO – and even if you become CEO, that doesn’t guarantee you’ll be in the top 10%, much less the top 1%, of American earners and owners. Why? Because work does not equal wealth.

Somewhere along the line, somebody figured out that economic principles can be manipulated. It’s not illegal, despite the connotations of the word “manipulate,” and it’s debatably not even wrong. Instead of working hard, as they say, some people started working smart. They know economics, and they use economics to get money into their own pockets instead of someone else’s. This is where trading on the stock market, managing hedge funds, and controlling investment portfolios becomes far more important than “working hard.” By using economic principles to predict where money will be, you can get your hand into that cookie jar before the cookies even show up; that’s an overly simplistic expression of it, but it’s effectively accurate.

The above video made an important point on this topic, but I’m not sure they realized it: the bottom 50% of Americans own less than 0.5% of all investments, which means that they’re not investing. The reason the top 1% owns 50% of the investments? They’re investing. They did that “hard work makes money” thing for a while, and when they had a little capital saved up, they invested it, and they invested it well. That made them more money, which they invested some more, until suddenly, they own everything and they look like jerks for not giving it away for free.

There’s another reason the rich are rich and the poor are not. Why do you suppose the poor and middle classes are “working hard” but not making money? Is it because the rich are evil? Those dastardly villains, twirling their handlebar mustaches ‘neath their top hats while they smack street urchins with diamond-topped canes! Right?

Wrong. The poor and middle classes are not making money because they’re spending the vast majority of their money paying off debts. Credit card debt, new car debt, new house debt, student loan debt – you name the debt, they’ve got it. Because there’s one other thing that the rich do with their money: they offer it to people who don’t have any. Now, consider for a moment that rich people are rich, so they know how to make money, and they generally don’t do things that don’t provide any return on investment. Loans always make more money in the long run. Not sometimes, not only if you make minimum payments, but always. And poor and middle class people are borrowing for everything from a new lawnmower to a new car to a house they couldn’t afford if they worked for the next eighty years, much less only twenty or thirty. And they’re paying through the nose to keep it that way.

Most folks, by the time they finish a car payment, decide to upgrade to a new car, so they get a new car payment. They finish paying off their house, so they do a little remodeling and put in a room over the garage. And I would comment about what they do when they finish paying off their credit cards if any of them ever did that.

“But– but– but!” you will say, “Everyone knows you need to have good credit!” Maybe. Maybe you need to have good credit. But you can have good credit for a lot less than $10,000 of credit card debt earning interest every month.

But at the end of the day, when you get a loan, you lose money. Loans are for when you need money today to set up something that will be worth more tomorrow, like an education or a house in a good community. A car loses value; certainly other, smaller products do, too. It never makes sense to borrow money to lose it. And yet the poor and middle classes do that every day.

And then they complain that the people they’re losing money to have their money.

The distribution of wealth in America is very unequal. Inequitable. But unfair? Hardly. People are poor because of the choices they make; by making different choices, by saving and spending rather than borrowing and losing, they could develop the capital they need to start investing. And by investing well, they can redistribute the wealth in America legally, equitably–and fairly.