Income Equality 2018

     

I have long suspected that the statistics used by progressive advocates to complain about income inequality in America were either flawed or misrepresented. In the June 25 edition of the Wall Street Journal an opinion piece co-authored by Phil Gramm, a former chairman of the Senate banking committee, and Robert B. Ekelund, Jr., a professor emeritus in economics at Auburn University, bore out my suspicions.

The authors cite a new study prepared by the Cato Institute’s John F. Early, a former assistant commissioner of the Bureau of Labor Statistics that provides the “most comprehensive accounting to date of how taxes and government payments affect income distribution in the U.S. Apparently, the traditional statistics used by the Census Bureau do not take into consideration about $1 Trillion dollars in annual government spending.

The value of Medicaid, food stamps, the earned income tax credit and about 85 other Federal government programs is not included. Also, state and local income supplements are not included in calculations of income. On the other hand, reductions in income due to all sorts of taxes are not factored into income distribution statistics.

Here is the authors' conclusion.

“The most surprising finding is the astonishing degree of equality among the bottom 60% of American earners, generated in part by the explosion of social-welfare spending and the economic and wage stagnation during the Obama era.”

In 2013 the income of the bottom 20% in this country amounted to only 2.2% of total earned income but when other forms of income and taxes are factored in, its share jumped to 12.9%, a six-fold jump in earnings. Similarly, the next 20% saw its share of the nation’s income jump from 7% to 13.9%.

When we get to the middle class in the next 20% or third quintile, their total income was not far from their earned income. Primarily wage earners, this group took home only 15.4 % of the national income, not much more than those in the two quintiles at the bottom.

The real inequality, however, is in the fact that this group had to work for most of its income while those in the lower quintiles did not. In fact, many of these middle income families had to work two or more jobs to just stay even with those in the lower quintiles.

Not surprisingly, when taxes are taken into consideration, even the well to do in the top 20% saw their share drop from “57.7% of earnings to 39.3% of consumable income.” I suspect that a society in which the top 20% make only 40% of the consumable income is unprecedented in American or even world history. Even in Communist countries like the former Soviet Union, China, and Cuba, the disparity between rich and poor was much greater.

Based on these new statistics it would appear that income inequality is not the great problem that progressives make it out to be. According to the authors, a much greater problem is the discontent in people who have to work hard to have the same spendable, after tax income of people who do not work at all.

Rather than Russian collusion or Hillary Clinton’s lackluster campaign, Senator Gramm and Professor Ekelund believe that it was this discontent in the middle class that led to Donald Trump’s victory in 2016. The headline above their article was "How Income Equality Helped Trump." The Gramm/Ekelund article was adapted from their forthcoming book, “Freedom and Inequality.” Progressives will never stop complaining about income inequality, but it was income equality that did them in in 2016.

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Korean Summit 2018

I waited a week to give my observations on the summit meeting between President Donald Trump and North Korean leader Kim Jong Un. A media frenzy surrounded the summit but now it is off the front pages and web headlines.

Here are the four points that the two leaders agreed upon in the signed communique.

The United States and the DPRK (Democratic People’s Republic of Korea, a.k.a. North Korea) commit to establish new U.S.- DPRK relations in accordance with the desire of the peoples of the two countries for peace and prosperity. 

 The United States and the DPRK will join their efforts to build a lasting and stable peace regime on the Korean peninsula.

Reaffirming the April, 27, 2018 Panmunjom Declaration, the DPKR commits to work toward complete denuclearization of the Korean peninsula.

 The United States and the DPKR commit to recovering POW/MIA remains, including the immediate repatriation of those already identified.

Apparently, there were other items of agreement not included in the communique. It would appear that President Trump committed the United States to guarantee the security of North Korea. What this guarantee means, remains to be seen. I’m sure it does not involve the same kind of guarantee we give to South Korea.

President Trump also agreed to cancel some impending joint military exercises between United States and South Korean forces. He claimed it would save money but also did admit that the exercises could be viewed as “provocative.” Trump critics on both the left and the right in America were shocked at the President’s use of the word, “provocative.” Why is it hard to imagine that a North Korean dictator might regard a display of American military might just a few hundred miles away from his border as provocative? After all, doesn’t the American media routinely claim that Trump is a madman.

On the contrary, I was impressed by President Trump’s behavior both during and after the summit. It must have been a grueling ordeal for a seventy -year old man but he appeared calm, reasonable and statesmanlike.

In the first place, he gave no bragging assurances about the outcome of the summit. He said it would take time and considerable effort to achieve the goals outlined in the communique. The fact that he left the future negotiations in the hands of Secretary of State Mike Pompeo was assuring. Pompeo certainly has the qualifications and experience to be an outstanding chief diplomat.

I was also impressed by Trump’s behavior and statements in the press conference that followed the meeting with Kim. I was able to see most of the conference on C-Span and Trump handled himself extremely well. He looked tired but he was confident and assured as he took many questions from a media cohort that resembled a pack of jackals.

If memory serves correctly, I believe that President Obama hardly ever gave press conferences, and that when he did speak in public it was usually with a tele-prompter. Trump answered every question off the cuff with ease and clarity. He felt so confident that he even extended the time allotted for questions.

I can’t remember the questions or his actual replies but he made sense. Before the summit, Democrat critics like Connecticut’s junior senator, Chris Murphy, claimed that Trump was unprepared for such a high level meeting. He hardly seemed unprepared to me and no one seems to be making the charge anymore.

I do vividly remember one statement that really went to the heart of the matter. He noted that there are 28 Million people living in Seoul, the capital of South Korea. For someone who is often portrayed as being heartless, it was very interesting to hear his concern for the people of that city which is three times the size of New York city. Seoul is less than 30 miles from the so-called de-militarized border between North and South. Just across the border are missiles which could annihilate the city and its inhabitants.

In that brief statement Trump indicated what the summit was all about and that other concerns were petty. He seemed to understand that it’s not important that he appears on stage with Kim or what flags are displayed. It’s not important if Trump wins a Nobel Prize. President Obama won one for doing practically nothing. The lives of millions of people are at stake.

The Wall Street Journal did run a lead editorial this week warning that President Trump had given away too much. Only time will tell but it doesn’t seem to me that delaying military exercises while waiting for the outcome of negotiations is giving away that much.

It is not hard to imagine why Kim Jong Un would find these exercises provocative and threatening. He sits on a very precarious throne and must certainly be aware of what happened to Muammar Gaddafi in Libya, and Saddam Hussein in Iraq.

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Fathers' Day 2018

A look at the index of labels to the right of this page will show that I have posted little observations of Fathers’ day over the past years. I have tended to use examples from films to illustrate but this year I thought of a real father. Don’t worry, I’m not going to speak about myself.

I would like to remember a friend who passed away a few years ago. Everyone called him Ted although Theodore, which coincidentally means God’s gift, was his real name. He was a small, unassuming, and quiet spoken man who rarely talked about himself but he was one of the most giving men I have ever known.

Ted was an avid gardener and wine maker but by profession he was a master electrician who worked at his trade right until his final illness struck. My wife and I originally met him in an Italian language class but he subsequently became a friend as well as our electrician. I will never forget the night our electricity went out during a violent ice storm. Ted came to the house, climbed a ladder, and repaired a broken power line in the midst of the storm.

The only problem we ever had with Ted was that he was always reluctant to accept payment from friends. There was a large crowd in the church at his funeral and I’m sure that most had also been the recipients of Ted’s generosity. Ted will never be canonized as a saint, but he was one of the multitude of ordinary men who loved their families, their church, and their country.

It was only at his funeral that I realized what a devoted husband and father he had been. At the wake, I saw an old black and white marriage photo. Ted, who served in World War II, was in uniform next to his young Italian war bride who had sewn her beautiful white wedding gown out of Ted’s parachute. I never met his wife because she died shortly before I met Ted, but I know that he loved her until the day he died. They had four or five children and all were there at the funeral with a number of grandchildren. One of the grandchildren gave a brief eulogy in which he described all the things his grandfather had taught him.  

Ted was not big and brawny but he struck me as a real man, a man of great courage and strength. I believe that his generosity towards us sprang not just from his faith, but also from his dedication as a husband and father. It takes real courage to be a father. It takes real courage to make a commitment to give up your own wants in order to live for your wife and children. Someone once said that the best thing a man can do for his children is to love their mother.

In today’s world fatherhood is much maligned. TV shows depict fathers as bumbling idiots. Even commercials usually depict fathers who can’t get anything right. But it is very important that we do all we can to support those who have accepted the challenge. Here is a little prayer for fathers.

Our Father in Heaven, we thank you for all the fathers on earth who,

            like St. Joseph, accept the responsibility to care for and love their children.

            May you strengthen them with the kindness, patience and wisdom they need

            to encourage and guide their children.

            May they be supported by a steadfast wife, a caring family and good friends.

            Most of all, may they know that you and you alone are the source of all that is

            good and truly valuable in this world.

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