Wall Street might no longer be “occupied,” but the toxin of class warfare that fueled the movement continues to spread. According to a new Pew Research Center survey, about two-thirds of Americans believe strong conflicts exist between the rich and the poor. The number of those most emphatic on this point has doubled in just the past 18 months.
According to the poll, economic inequality ranks ahead of other, more traditional sources of tension including race, age and immigration status. It’s no accident that belief in America as the land of opportunity has, over the past three years, given way to the feeling that this is a land of envy. Far too much of policy in Washington has focused on redistribution instead of growth. The talk has been of taxing the “millionaires and billionaires” instead of trying to figure out how to make the environment more conducive to private-sector investment that helps everyone.
There were taxpayer-funded bailouts of companies that should have been allowed to fail. Bankruptcy is part of capitalism, and risk is the flip side of profit. Markets cannot function well without the discipline imposed by the threat of failure. So it is almost surreal to see Republican presidential hopefuls attack Mitt Romney for his work at Bain Capital, retooling companies for success. The process of creative destruction sometimes means people have to be fired to restore struggling firms to profitability. It’s all part of capitalism. Without it, we would still be lighting our homes with candles and commuting to work on horses.
Technological innovation driven by capitalism in the last century has improved our living standards. In 1960, the amount of income generated per capita was $15,644, using 2005 dollars. By 2008, that figure was $43,250. The improvement extends far beyond the monetary. Life expectancy, a critical quality of life indicator, increased from 69.7 years in 1960 to 78 years by 2008, and is projected to rise to 78.9 years by 2015, according to the U.S. Census Bureau.
The neo-hippie rhetoric simply has no basis in fact. The rich are indeed getting richer, but so are the poor. As Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame found in a study for the American Enterprise Institute, the material well-being of the poor and middle class steadily increased over most of the period between 1980 and 2009. The Cato Institute’s Alan Reynolds has pointed out that the top 1 percent’s share of the nation’s wealth and income - a constant target - has dropped in the last two years, just it does during every recession. Recessions, in fact, work quite well in reducing inequality of income distribution. Making everyone poorer, however, is hardly a desirable goal.
That’s a point on which the Pew study offers some hope. There seems to be no increase in support for government measures to reduce income inequality. Only 46 percent considered reducing inequality extremely or very important, while an overwhelming 82 percent placed that importance on economic growth. Congress and the president now just need to act on that message.
Nita Ghei is a contributing Opinion writer for The Washington Times.