LLPOH’s Ruminations on Distribution of Wealth

Recently, I have been giving a lot of thought to the issue of wealth distribution, and consideration to whether or not the situation can be markedly improved. After much thought, I am reasonably convinced that there is little to be done to reverse the current distribution patterns, where the top 20% control around 88% of the nation’s wealth. Particularly, I am unable to see a way in which the wealth can be redistributed to the bottom half of population.

The factors that have contributed to my position include the following:

– The American middle class was largely built upon manufacturing. Manufacturing provided relatively well-paid jobs to a large number of unskilled and semi-skilled Americans. A large percentage of Americans had previously relied on low paid agricultural work. When the shift was made from an agrarian society to a manufacturing society, the middle class took off.

– Manufacturing employment has dwindled away markedly – jobs have been lost to low cost countries and as a result of technological development, and as a result of poor government decision-making and excess regulation.

– I do not see these jobs returning in bulk. There are some things that may happen around the fringe, but on the whole the ability of Americans to rely heavily on manufacturing to provide middle-class jobs has disappeared.

– I do not see any business sectors currently able to fill the void of middle-income jobs. There are some opportunities in the energy sector, in provision of educational services to the world, etc., but on the whole I do not believe that enough jobs will be created to offset the number of manufacturing jobs lost.

– Low-paid service sector jobs have replaced many of the more well-paid manufacturing jobs.

– Modern economies are tech driven and require considerable technical expertise

– The bottom half of economic society would have these basic characteristics (in general, where education levels attained correlate to intelligence and education attained correlates to income):
o A median IQ of around 89, and a top of 100
o Less than high school education

– My experience is that persons with IQs/education in this range are capable of menial or repetitive tasks, but cannot undertake tech jobs, operate high-tech equipment capably, be responsible for managing the quality of their own work, etc. As an example, these individuals are often unable to make change for a dollar without the use of a calculator or computer.

– The quality of the education that Americans receive is generally poor, and those in the bottom half are receiving an exceptionally poor education indeed.

So, looking at these factors, I simply cannot see large numbers of jobs to be created that will provide these people with work that will pay well enough to provide what we have come to understand as a middle class livelihood. The work available to them will largely be menial and very poorly paid. I simply see no other possibility. The result is that this group will be incapable of attaining a greater proportion of the nation’s wealth, and will be entirely dependent on capitalists to develop and provide employment.

So I then have considered the top half of the economic pool. At the upper end, the wealth is indeed highly concentrated. As an aside, I have no great problem with that. What I have a problem with is the extreme influence they have over the political system.

If these individuals were unable to influence the political process, then I believe a significant portion of their wealth might be redistributed. That is the good news. The bad news is that I believe that this wealth would make its way into the hands of the lesser wealthy – business owners, etc. I do not think that it would shift the balance of wealth outside of the hands of the top 10%. The top 1% would likely have somewhat less of the total wealth, but the top 10% would remain unchanged. That said, I think this is by far the best option, and needs to be implemented urgently.

Another option would be to “tax the rich” in one form or another. This might work. However, I expect that it would not redistribute wealth, but would rather tend to destroy it entirely. The rich would have less, and the receivers of the largesse would almost universally tend to spend the money and not create wealth, and in the end would be no better off. Additionally, there would be something of a disincentive created, which would result in reduced wealth creation over the long-term.

There may be other options re redistribution of wealth from the very wealthy, and I welcome thoughts on this. However, I do doubt that the redistribution would filter down to the bottom half of economic society.

With respect to those at the lower end of the top half, redistribution of wealth by elimination of the ability to wield political influence would greatly assist in economic mobility. People could start businesses, or grow existing business, without being hindered by influence peddlers. There would be some greater hope of attaining the American Dream.

In summation, I think that there are some issues which simply may be insurmountable. The combination of advanced technology and low-cost competition has created a situation where a significant proportion of the population will struggle mightily to earn a middle-class wage, given that they lack the skill and ability to thrive in such an economy. I truly hope that I am wrong in this, but I simply do not believe that the problem can be fixed.