Misinformation leads to Equity Gap

In a recent survey Michael Norton, an associate professor at the Harvard Business School, and his colleague Dan Ariely examined Americans thoughts on the equality gap. The results indicate that Americans think the gap is much smaller than it really is and they would like to see it reduced.

Mr. Norton and his colleague suggest that perhaps Americans are not well informed on this particular topic. I don’t think a lack of information is the issue here. I think Americans are informed but the information they are getting is wrong. The ultra rich spend all sorts of money to convince the poor to fight against their own interests. They do this because having the poor fight against their own interests directly benefits the ultra rich. It seems to me that Americans are informed on a bunch of economic ideas but thanks to the ultra rich that information is misinformation.

The ultra rich sell the idea of upward mobility to keep taxes low by convincing the poor that they too can be rich someday. The best part is that if you fail to become rich they will claim is has nothing to do with the old boys club or the situation you were born into, but you just didn’t work hard enough. Research shows America is not a particularly good place for upward mobility and that the whole idea is flawed but that doesn’t stop 54% of 18-29 years olds from thinking they will someday be rich.

The ultra rich sell the idea that unions are bad when in fact unions are the major reason we have safe working conditions, child labor laws and eight hour work days instead of the twelve that companies preferred. Labor Unions were an American invention and are as good of symbols of patriotism as baseball and apple pie. Instead the ultra rich would have you believe they ruin America and are the devils work. The current attack on teachers unions is an example of the benefit to the ultra rich from this belief. Education is one of the major determiners of income level and by eliminating money from the education process in the name of deficits not only do the rich keep their taxes low but it lessens the chances of poor and middle class kids achieving any form of upward mobility. The ultra rich don’t send their kids to public school so a lower class of education in the general populous just assures an easier path for their kids to become ultra rich.

The ultra rich sell the idea that they, the top 1% of wage earners pay more than their fair share of taxes when the reality is they hold 38% of the wealth while only paying 34% of the taxes. In fact the lower we make taxes on the ultra rich the higher their portion of the tax bill becomes. How convenient that the solution to the problem they have fabricated leads to the problem itself. They have set up their own self fulfilling prophecy.

The same is true with the inequity that exists in our country. The ultra rich act like they are so overburdened and that they are being taxed to death. The data shows that the gap is getting bigger and it gets bigger every time we cut taxes. If, as Norton and Ariely suggest, Americans want to see the equity gap closed the graphs below indicate that the best way to close the gap is to increase the top marginal tax rate. Unfortunately people have been so conditioned to loath tax hikes that closing the equity gap is nearly impossible. Luckily for the ultra rich they have also convinced Americans that the rich getting richer is good for all of us and that the Trickle Down Theory actually works.

At some point the class warfare that is being waged by the ultra rich will be exposed and demonstrations like those in Wisconsin will become more prevalent as the middle class stands up for themselves and demand to be treated fairly.