Southern Man

Friday, January 31, 2014

Income Inequity

There has been much wailing and moaning and gnashing of teeth of late about "income inequity" or the idea that some people having more money than others is a Very Bad Thing. Southern Man will now explain why income inequity is inevitable and why you shouldn't worry about it and why it is actually a Good Thing.

Capitalism and free enterprise are the greatest engines of wealth that the world has ever seen. They are engines of wealth because they enable people to provide goods and services that other people want. And even in their highly regulated and overly taxed form here in the good old United States of America capitalism and free enterprise are the means by which anyone - anyone - can better their lot in life.

Case Study 1: Some dude named Wayne, the son of Oklahoma sharecroppers, thinks that people need places to store their stuff. He leases some land and puts up some sheds. He was right - people will gladly pay him for storage. He now has thousands of buildings and is worth millions of dollars. His thoughts? You can get money if you're smart or work hard. I'm not smart, but I worked hard. Full story here.

Case Study 2: Some other dude named Bill drops out of school to implement a programming language (BASIC) for an early microcomputer (the Altair 8800).

You don't even know how to turn it on, much less program it.

It's successful enough that he and a friend hire some other dudes and start a company that they call Micro-Soft and write a lot of other software. A lot of that software was for an operating system called QDOS. When Bill learned that IBM was shopping for an OS for their upcoming line of personal computers he took a chance, borrowed a stack of cash, bought QDOS, and marketed it to IBM. Now we all run Windows.

Case Study 3: Yet another dude who goes by the handle of Southern Man had this notion (back in the early nineties) that he can buy components and build PCs and sell them for a lot less than the stores were charging and still turn a tidy profit. He's right and he builds and sells (and buys at auction and refurbishes and sells) thousands of desktop computers. After a while desktop computers become commodities and he closes the business but not before it paid for ten acres of land and two (used) cars and countless tanks of gas and trunkloads of groceries and many many thousands of dollars in taxes.

Case Study 4: Southern Man's neighbor José worked his ass off mowing lawns in the summer. Pretty soon he has more clients than he can service so he buys a couple of used lawn mowers and hires a couple of other dudes to help him out. Now forty guys drive around in green F-150s with "José's Lawn Service" painted on the side while José sits in the office and works the phones drumming up more business.

That's actually pretty typical of how people gain wealth: they have ideas about goods or services that people might want, they put those ideas into action, and sometimes it takes off. However, apparently Wayne and Bill (to pick on the big winners) are EVIL because they now have all this money. It does not occur to critics that they have all this money because they produced goods and services that people want. It also does not occur to these people that Wayne and Bill have created countles jobs and pay enormous amounts in income tax that support all of the social programs that are so precious to their critics. And that's not to say that Southern Man and José aren't doing well, either. Southern Man has ten acres of land, paid for, and José has a new mini-mansion just up the road. On the world income scale we're both one-percenters by comfortable margins. And we did it by figuring out what people would pay for and providing it.

According to the Global Rich List if you make 25K per year in the USA you're in the top 2% of global incomes.

In other words: capitalism and free markets provide the goods and services that we crave, and income inequity is an inevitable result of those very same free markets.

You may argue that these guys were fortunate and lucky and privileged and not like the rest of us. To some extent, yes. Bill, for example, was born of relatively wealthy parents (he borrowed the money for QDOS from his dad) and had opportunities that many of us do not. The same goes for Southern Man. But Wayne, the son of sharecroppers? Nope. José, who never finished high school? Nope. These guys got where they were by sheer hard work and determination in a country where hard work and determination can result in great rewards. Southern Man spells out his privileges this way: born in the USA (which is like winning the birthright lottery, right there) to parents who stayed together, raised him in the church, taught him the value of both education and hard work, and made sure he had a shot at college. Not everyone was as lucky as he. And not everyone avails themselves of the opportunities that they had (Southern Son comes to mind) and Southern Man is fortunate that he did. And not everyone is really aware of how the system works - the über-liberal Southern Sister, for example, who rails against the evils of income inequity and the injustice inherent in our economic system but who recently borrowed money (capitalism) to open a coffee shop (free enterprise) so that she could (surprise!) convert her ideas and industry into more stuff for her and her family. For all its faults, we do have an economic system in which everyone - everyone - has a shot at becoming more than they are.

Now Southern Man will argue that income inequity really doesnt matter because we have for the last fifty years fought the War on Poverty and we've won. Poverty has been largely eradicated in the First World. And by that Southern Man means that most "poor" people live in constructed homes with indoor plumbing and running water and electricity and refrigerators. Not to mention cable television and cell phones and cars. To call them "poor" is a grave offense to the few who are truly poor - who sleep rough, who have no idea where they will get their next meal, who have no access to medical care. Fortunately, to be truly poor in the First World is increasingly rare. The First World has performed a miracle - in their corner of the globe, for the first time in human history, almost everyone is pretty well off. And they are pretty well off because of the wealth produced by capitalism and free markets. In other words, income inequity is the rising tide that lifts everyone's boat.

It didn't used to be that way.

How did they know he was a king? Because he wasn't covered with sh*t!

So it doen't matter to Southern Man that Bill has ten thousand times as much money as he. Is Bill's water ten thousand times as pure? Is his gasoline ten thousand times better? Bill may drive a Mercedes and Southern Man a Hyundai but we drive on the same roads and burn the same gas. Is his health care ten thousand times as effective? Truth is, had Bill broken his leg while in Southern City he might well have ended up with the same surgeon as Southern Man. Bill may live in the House Of 95 Windows and Southern Man bunks in The Trailer but we both sleep with equal comfort at night; he may dine at $300-per-plate eateries but his meal is not that much better than a good $12 steak at Chili's.

So stop fretting about income inequity. It's inevitable and does a world of good through goods and services and taxes that we wouldn't otherwise have. Except to liberals who erroneously believe that income is a zero-sum game and sing "tax the rich, feed the poor, until there are no rich no more." 'Cause then we'll all be poor. Southern Man suspects that's what they really want.


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