SHARING THE WEALTH

SHARING THE WEALTH

A Concept to Ponder


Nothing seems crystal clear anymore. There is a dull film, a kind of haze, clouding many of the principles that are purported to have made America great. Our economy, and its ability to grow and prosper, is dependent upon a strong middle class. No one disagrees with that. Yet, there are only a few who are willing to support legislation or policies that would reinvigorate our dying middle class. And there are a whole lot fewer willing to sacrifice even a smidgen to save our crumbling economic foundation. We all seem to think it will take care of itself. Or even worse, we think those Wall Street financiers – the ones we baled out so they could get right back into the business of gouging us – will fix everything. How gullible can we be?

As we watch the middle class decline, with hardworking folks falling toward or below the poverty line, we cling desperately to the adage that this is The Land of Opportunity. It is true that we Americans are free to embark on entrepreneurial enterprises, to start a business, to change jobs, to move from one city to another in search of better employment opportunities; and there are some success stories. There are many more stories, however, of financial ruin or economic deterioration that reflect the eroding quality of life now confronting so many of our intelligent, educated, hardworking individuals and families.

With that in mind, consider our heroes and role models – political leaders, athletes, entertainers, executives, pundits – the vastly overpaid celebrities who we actually believe have earned and deserve their astronomic incomes. In fact, we insist that American capitalism was built on and is dependent upon that sky-is-the-limit philosophy of income and return on investment. It’s what makes America great. As we say that however, we fail to see America’s greatness fading; we refuse to admit that there is anything wrong with our basic economic concepts, concepts that have worked for 150 years.

The nonsense and naivety brought forth in support of our economic system, reinforced by the insistence that the opportunity to accumulate limitless wealth is paramount in promoting and sustaining our way of life, are attitudes that all but insure that meaningful reform is hopeless. Reform that could remedy much of what ails our economy would never be considered by the majority of Americans today. Rich or poor, Americans have been led to believe the system is fine, it’s the best we can hope for, and with hard work and intelligence anyone can succeed and even become wealthy. We believe this despite current trends showing no growth in real income, buying power or overall financial well being for all but the very wealthy. We have been convinced that taxes create bigger, more intrusive government; that more government leads to less individual freedom; that a reduction in individual freedom equates to a restriction of economic opportunity which, of course, stifles incentive, thus blocking economic progress. But in reality we could significantly increase tax revenues and enhance our nation’s economic well-being without incurring those negative repercussions.

The exorbitant incomes generated by our top executives, athletes, entertainers, etc. are testament to those individuals’ prowess in their professional endeavors. It is argued that without those extremely lavish incentives we would lose the contributions those individuals provide to the economy and to society in general. Really? What else would they do and where would they go if, say, instead of multimillions they were limited to just a few million? They would still be doing exactly what they’re doing today because their status wouldn’t change. They would continue to constitute society’s wealthiest class. They would still be identified as the most successful in their fields of endeavor. And they would maintain their precious and idolized celebrity status. Further- more, such an income restriction could be implemented without any change to the competitive system and measurement of success currently in place.

These individuals would continue to compete for the same multimillion dollar contracts as they are now. Their egos, as well as their competitive rankings, would be no different than they are today. For example, consider a professional athlete who distinguishes him/herself by commanding a $120 million multiyear contract. With a maximum income limit placed at two million dollars a year, that athlete would still receive all the accolades and the distinction of “earning” that $120 million. The contract would still be the measurement upon which salary caps are calculated, and the contract would also provide that athlete with bragging rights so important to salve sensitive egos. Most of the money, however, would go toward enhancing the well-being of the American economy. And the same holds true for entertainers, executives, financiers, and all other grossly overpaid individuals.

What is there in such a scheme that would destroy individual incentive? What else would these wealthy folks do? Granted, the concept of sharing or spreading the wealth has been given a bad name. It’s socialism! It’ll destroy the capitalist system upon which our great democratic republic is based. But how would any of us suffer? And, really, how would the system suffer? There would be no adverse affect on the GDP from limiting individual income as long as the total contractual dollars were circulated. The GDP would grow, however, and the national debt would diminish, if all those millions of dollars provided a significant hike in buying power for those without it and thus would increase tax revenues where none or very little exist today.

Think about it. Then explain to me how such a system would be detrimental to the economy, the nation or the individual?

A.N. Pavia
May, 2010