Everyone is talking about Mr. Romney's
latest gaffe: His statements to the effect that those who don't pay
federal income tax are part of a poor, taker group that mooches off
the rest and will vote to keep it that way.
Of course, the pundits rush in to
provide the backstop facts: It truly is a much smaller group than
Romney claimed who are actually free from federal income tax (most
the elderly), and no, those in the lower half of the national income
don't predominately vote for only one party, nor are they moochers in
any real sense: They have jobs!
But what Mitt inadvertently cast a
light upon is something that we should be talking about: namely, the
large gap between the median income in the country and the average,
and the impacts that has upon our society.
The median income in the U.S. is
roughly $40,000 per year* – that is the point at which half the
earners earn more, and half earn less. (I am going to use the per
worker median rather than the household median ($50,000) to
illuminate the individual's position within the workforce.)
Our Gross National Product (GNP) for
2011 was $15 trillion dollars – the sum of all productive activity
in the nation for the year. Our workforce was 142 million people
(fn1) – which works out to an average production per worker of
approximately $100,000 annually.
This is a large difference: The average
is significantly right skewed – in fact, earning upwards of
$100,000 per year would place you in the top 16% of the nation's
earners (and the top 20% of the nation's households.)
This shows that the fruits of our labor
are accruing not across society, but predominately to a small
percentage of the individuals. Now, while it is reasonable to believe
that many are much more productive than others, it is hard to make a
case that the distribution of productive ability shouldn't be a
normal Bell Curve or standard distribution where the median and the
average are closely in alignment.
There is a natural phenomenon behind
some of this skewing: The time-value property of capital vs the
ephemeral or transient property of labor. What any labor makes today
doesn't compound into higher production tomorrow: Another unit must
be produced with new labor tomorrow. However, money, through
compounding, can earn more tomorrow than it earned today.
But what should concern us is the rest
of the structure of society that places a premium on capital and
capital earnings and forces this skewing to the the extreme level we
see in our country. The structure of our economy is largely ours to
choose: The laws that govern contracts, employment, money flows
(taxes, tariffs), the formation of corporations, all provide this
structure and hence impact the resulting distribution.
We should be talking about how we
restructure so that all workers (and I'm talking the workers here,
not those who choose to freeload) share equitably in the production
of the nation. What changes do we need to make to restore the median
worker's salary closer to where it should be near the average? What
changes to our views of capital and labor do we need to foster to
allow us to hold the worker in esteem, to perceive and accept the
liberating effects of equality?
For surely many would willingly pay
more federal taxes if their position in society was both monetarily
richer and more esteemed, with the positive effect of an increase in
commitment to the shared goals of our nation. There has been much
research that has shown that gross inequality is a detriment to a
society in both decreases in individual happiness and increases in
civil unrest and a tearing of the social fabric that binds people to
one another.
That is as far as a defense of Mr.
Romney's comments I can make. Although we can thank him for bringing
to light the problems of having a large financially extractive class
by being a member of that class and forcing the research revealing
the destructive nature of Private Equity, his comments are/were
atrocious. They reveal a shallow individual with neither empathy nor
moral compassion who has been thoroughly corrupted by the
accumulation of ill-gotten money. There is nothing likable about a
mindset that would deprive workers of the ability to make a modest
and fair wage and then condemn them for not being rich enough to
afford to pay taxes.
But, he has opened the door. We must
have the discussion. Changing the structure so that everyone shares
from the ground (or labor-hour) up is truly the way to progressive
societal equality, for with the equality comes opportunity, and with
opportunity comes the increases in productive capability and our
living standard. This is exactly the progressive attitude towards
wealth redistribution – not through taxes to correct an unfair
system (although a progressive system is likely always needed to
overcome the effects of chance), but structural changes to promote an
equitable sharing of the productive capacity of all.
* I'm drawing all my data from
stats.oecd.org
fn1: If you count our 14 million
unemployed, our workforce is 156 million. I'm splitting the
difference in my average calculation because I can see strong reasons
to use either figure.
