The Income Gap

You will start to hear more about the income gap now that Democrats are in charge of everything in D.C. Whenever a socialist wants to take a poke at capitalism, they point to the income gap to show how awful it is.

The income gap is the difference in average incomes between the top 20% of households and the bottom 20%. I, for one, don’t think an income gap is bad. In fact, I think it is a wonderful thing. I would go as far as to say the bigger the better.

What the income gap tells us how high the ladder of opportunity is in this country - higher is better, not worse. The income gap tells us how rich poor people can become as they climb up the ladder - richer is better. No income gap means they stay poor. Why do we want that?

The government's most recent report of household incomes showed the bottom 20% average $18,000 per year and the top 20% average $132,000. When politicians go off about the unfairness of this "gap", the implication is that the people at the top got there by stealing it from those at the bottom. It doesn’t work that way.

The top 20% got there by doing things like going to school, staying married, working a long time, staying out of trouble, inventing things, and starting businesses. They earned it.

A significant portion of the bottom 20% don’t work – whether by choice or by circumstance - and many of those who do work are young and just starting out, when they are just beginning to acquire skills and experience that will allow them to earn more later in their lives.

It's not so hard to figure out that people who work will have higher incomes than those who don't work. Likewise, there is nothing mysterious about people making more at the end of a career than those just learning a trade or profession.

When I was 20, my first job paid minimum wage. I was in the bottom of the bottom 20%; but I didn’t stay there, and most of us don’t. Long term studies show that people move up – more so here than in any other country on earth.

Not only do more of us climb up out of poverty, but we climb higher. America has produced more billionaires than the rest of the world combined. All those billionaires push up the average income of the top 20% - they make the income gap bigger, but is that really a problem?

If you make $20,000, you’re going to make $20,000 whether some other guy makes $100,000 or $200,000 or $2,000,000 or $2 billion. You should be hoping he does make $2 billion, because he will pay taxes you don’t have to, and his spending will create more jobs and higher wages for everyone.

Realistically, the only way to reduce the income gap is to enact a "maximum wage" that limits the amount that someone could earn in a year. This always seems like a good idea to Democrats, until they realize that such a scheme would hurt Madonna, George Clooney, George Soros, and other big time campaign donors.

Worst of all, a statutory maximum wage denies the essential freedom to own one's labor. The market will decide what compensation is fair - whether it is the compensation of a CEO, or Madonna, or the author of Bill Clinton's autobiography. Limiting income in the name of reducing the income gap denies opportunities for those most able to contribute to our national prosperity.

Not every child can be President, and not every child can be a billionaire, but every child should have the opportunity to be either one or both. The income gap tells us that hope is alive. That's a good thing.