Income Equality: The Return Of Class Warfare

It’s more than ironic, it is sad, that he who is responsible for the American economy going to part time jobs is now calling for an increase in the minimum wage. “People cannot live on a minimum wage,” shrieks the Left.  Yet is precisely the programs of the Obama regime that has destroyed good paying full time jobs and moved people into lower paying part time work. Look at Obamacare. Since it will cover workers working 30 hours or more per week, employers, in the pursuit of self survival, have started to reduce their work force into part time workers.

So the Left’s remedy for the problem they have created is to double the minimum wage – $7.25/hr to $15/hr –  and eventually require by law that employers pay part time workers the same rate as their full time workers and offer them the exact same benefits that full time workers have.

The truth is that raising the minimum wage actually puts people out of work. Millions of those that earn minimum wage will get fired before they will see their wage raised to $15/hr. Businesses cannot afford to pay people more than they are worth just because they have a need. This idea that raising the minimum wage creates prosperity is economic illiteracy. As wages go up prices follow them. It’s not what you make per hour that is important but the purchasing power of your money. If raising the minimum wage is so beneficial why stop at $15/hr? Why not raise it to $50/hr or better yet $100? When you answer that question you will know why this is a rotten idea.

EVERYTHING THE LEFT DOES DESTROYS THE ECONOMY. They destroy jobs, production and the incentive to invent, expand and create.  The ridiculous, over bearing, stringent, strangling regulations are a cost of doing business that squeezes the profits of every enterprise. That squeeze reduces the ability of businesses to expand and offer their employers higher pay. Then the Left increases taxes. Soaking the rich and over taxing business only discourages success and inhibits economic growth. That again translates into fewer jobs at lower pay. Thirdly the debasement of the currency is in itself a tax, reducing the wealth of every American by significant amounts in order to transfer that wealth to the government.

This is precisely the opposite of Supply Side Economics that this nation prospered so long for under Ronald Reagan. Lower taxes, less regulations and a sound currency lifted America into more than 25 years of unheard of prosperity. We have thrown that all out the window to now embrace Marxist economics and the contrast in results is alarming.

Obama is trying to change the subject to get away from the devastation of Obamacare. Once again he is on the far Left bandwagon’s theme of income inequality. Once again the President is resorting to CLASS WARFARE (this is unifying the nation?). Yet that inequality has increased under Obama. Zero interest rates coupled with Quantitative Easing and large amounts of money given to banks that instead of lending out money are playing the stock market has lead to the top 1% earning even more. And the result has been some getting a bigger piece of the pie without the pie getting any bigger. THERE IS NO ADDITIONAL WEALTH CREATION UNDER THE OBAMA REGIME. He is just redistributing around the same total aggregate of American wealth. He is not adding to the wealth or creating more. And until he does or the next President, hopefully a Republican, does there will be no growth in the economy, no additional jobs worth a dam and no prosperity. The Democrats today are the biggest hindrance to upward mobility that this nation has ever seen.

Of course the Lexington Libertarian has spelled this all out before – right here>>>>  and here >>>>

And before we leave the subject we must also note the effect of the Left and its Nanny, Welfare State on the family. The Left is responsible for the breakup of the family and this has devastating economic effects on individuals trying to make a go of it. Today 80% of all African- American births come from single parent households. The simple truth is that the most prosperous unit in today’s society is a family of two. Single family parents who have to mother multiple children while at the same time make for themselves a decent career are at the bottom of our economic ladder.

Extraordinary claims, it’s been said, require extraordinary evidence. And President Obama made quite an assertion in a speech Thursday at the Center for American Progress: “The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American dream, our way of life and what we stand for around the globe.”

But Obama wasn’t just giving a warning, he was also teaching a partisan, progressive, left-wing history lesson. As he sees it, these toxic trends have been slowly poisoning the US economy and the American Dream for decades. The pro-market or “neoliberal” turn in the nation’s economic policy — tax cuts, deregulation — that started in the late 1970s was, according the president, a big mistake that made rich people even richer and little else.

But much of Obama’s argument is either dubious, deceptive, or demonstrably false. Let’s start with his “fundamental threat” claim. Is Team Obama aware of a 2009 study by researchers Dan Andrews, Christopher Jencks  and Andrew Leigh that finds “no systematic relationship between top income shares and economic growth” in advanced economies. Actually, more inequality is associated with higher GDP growth, according to the analysis.

Let’s move on. Obama:”Since 1979, when I graduated from high school, our productivity is up by more than 90 percent, but the income of the typical family has increased by less than 8 percent.”

Reality check: Obama grossly overstates the productivity-income gap, and the middle-class stagnation argument is a myth. According to the Congressional Budget Office, for the 60 percent of the population in the middle of the income scale (the 21st through 80th percentiles), the growth in average real after-tax household income — meaning after federal taxes have been deducted and government transfers including Social Security and unemployment insurance have been added – was just under 40% from 1979 through 2007, the end of the last business cycle. The CBO numbers sync well with those of Cornell University’s Richard Burkhauser who finds that mean income growth — also taking into a account a broader measure of income — for the middle 20% rose by 37% from 1979 through 2007. And research by the University of Chicago’s Bruce  Meyer and Notre Dame’s James Sullivan find accounting properly for inflation shows median incomes have gone up by about 50% since 1980.

But there’s so much more. Obama claims that starting in the late 1970s, “businesses lobbied Washington to weaken unions and the value of the minimum wage. As the trickle-down ideology became more prominent, taxes were slashes for the wealthiest while investments in things that make us all richer, like schools and infrastructure, were allowed to wither.”

Really? Union membership as a share of total employed peaked in 1954 not the late 1970s, according to the Cleveland Fed. Most Americans in 2010 — not just the rich — paid far less in total taxes — federal, state and local — than they would have paid 30 years ago, according to an analysis by The New York Times. And a 2011 study by Marco Percoco, a professor at Bocconi University in Italy, shows US. public investment has tracked the OECD average since at least 1970, according to Bloomberg. And when a proper inflation adjustment is used, the current minimum of $7.25 is just a nickel below the average from 1960 to 1980.

But it’s not just inequality. Obama also claims “we’ve seen diminished levels of upward mobility in recent years.” Yet a survey of the economic literature by inequality researcher Scott Winship of the Manhattan Institute finds, “Most of the evidence on earnings and income mobility suggests only small changes over recent decades.”

Here’s the bottom line: America’s pro-market turn some three decades ago reversed what then seemed like unstoppable national decline. (Nations that didn’t make that choice, such as Japan and France, have not fared well.) Yes the rich got a lot richer, mostly due to technology and globalization. But the middle-class did pretty well, also. Pre-tax incomes at the bottom end suffered, but the safety net has helped a lot. Inequality has likely increased sharply at the very high end, but has been stable elsewhere along the income distribution spectrum. Mobility could be better, but the big problem is really upward mobility from the very bottom. And America remains the world’s innovation leader.

Obama’s revisionist history and one-sided, black-and-white economic analysis may please his dispirited base, but they won’t help America make the right decisions going going forward about how to boost growth and ensure those economic gains are as broadly shared as possible. Obama makes inequality and mobility just seem like convenient excuses to raise taxes and expand government. By placing those issues within a harshly partisan, left-liberal, progressive framework he makes it harder for right-of-center folks who worry about, say, the effect of automation on the US labor force, to engage in a much-needed policy debate.(1)



To distract attention from the ObamaCare disaster, the President is seeking to focus on income inequality. But here, for him, the ground is even shakier.

The fact is that while income inequality has been getting worse, it is the policies of the Obama Administration that are causing the trend.

During the Clinton years, 45% of all personal income gains went to the top 1% of the population. Under Bush it was 65%. Under Obama it is upwards of 85%.

While the top 1% has seen an average 12% gain in personal income, the rest of the nation has gone up by only 1-2 percent, after inflation.

Instead of solving the problem, Obama is causing it.


Quantitative Easing is the major culprit. Buying $85 billion of bonds and mortgage backed securities each month, the Federal Reserve pumps vast amounts of money into the coffers to the top banks in the nation. Supposed to lend it out to create jobs, most institutions don’t. Either they can’t find borrowers or they are afraid that federal regulators will take a dim view of risky loans.

Or they would just rather give the $85 billion back to the Fed and earn the 3% interest they are offered for keeping their money in Bernanke’s vault. After all, if you don’t have to pay anything for the cash, a 3% federally guaranteed return is a good deal. (And, why lend out the money at 6% when you can get 3% for just letting it sit there with a lot less risk).

Spurred by so massive an inflow of cash, banks are playing the derivative market, investing in stocks, augmenting their salary through stock buybacks which they then add to their own pay envelopes, or just passing out bonuses (expected to top $100 billion this year).

All these policies catalyze income growth at the top of the spectrum and add to the inequality of which Obama — whose policies cause it — complains.

Zero Interest Rates really sock it to the elderly who had hoped to live off their hard earned savings during their retirement years. After socking away fifty or a hundred thousand or more, the retirees had counted on a six to ten percent return on their savings to provide needed old age income. But now they get close to zero. Many are driven to plunge into risky investments in stocks and mutual funds, in many cases tempting fate with their investments. Sick or well, the odds are good that they will outlive the bull market.

ObamaCare is drying up full time jobs and forcing millions into part-time employment. Gallup says that 9.1% of Americans now work part-time but would like full time jobs.

Since the first of the year, there are 152,000 fewer and 400,000 more part-time jobs in our economy.

Why? Since this trend was not evident in ’10, ’11, or ’12, the likely cause is ObamaCare’s requirement that companies with 50 or more full time workers offer health insurance or face a $2,000 per worker per year fine. Firms all over America are cutting back on full time workers and replacing them with part-timers to get in under the fifty worker ceiling. The AFL-CIO has decried this trend as the “death” of the forty hour workweek.

Obama is not the solution. He is the cause of the problem of income inequality.

His proposals to raise corporate taxation and increase the minimum wage are likely to worsen the problem, spurring automation and cutting down on investment which is the only way to raise productivity and wage levels.

Obama’s new-found focus on income inequality is the height of hypocrisy. (2)



(1) Obama’s big inequality speech: short on facts and vision

James Pethokoukis, AEIdeas –


Obama Causes Income Inequality

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