December 18, 2011

Wealth inequity nothing new

Perhaps the most articulated concern of the Occupy Wall Street movement is the degeneration in the income distribution among Americans. It's a valid concern, even if solutions are elusive.

Any innovative wave results in a shift in income distribution. The Industrial Revolution shifted the means of production from the elite to the industrialist. The increase in productivity concentrated wealth on the world's first nouveau-riche. Peasants moved from rural to urban serfdom. Their collective frustration fomented revolt, first through the words of Karl Marx, then through Lenin and Stalin.

Many who were fortunate enough escaped to America, a land of opportunity where heroic Horatio Alger types could pull themselves up by their bootstraps. The American Dream was that anyone could go from poverty to prosperity through wit and hard work.

This dream worked for generations. With each new innovation came a new cadre of millionaires — and prosperity for the working class who powered the factories.

Henry Ford had an understanding of the need to employ workers at a living wage that could allow them to purchase the products they made.

Then, something changed. First, our middle-class affluence induced us to prefer to be paid more and work less. Hard jobs became undesirable, and were farmed out to guest workers and illegal aliens.

Innovations in manufacturing allowed 10,000 workers in plants to be replaced by 1,000 workers and 1,000 robots. The amount a worker could produce went up dramatically, but much of those gains went to the corporations that purchased the machines.

This dramatic increase in productivity and profits but with stagnant wages had its effect on our national distribution of income. The rich got richer while middle-class incomes rose at a much slower pace. Opportunities for the least-skilled workers declined.

One cannot contain human ingenuity.

Instead, we must figure out ways to harness ingenuity for the good of all. The enlightened wealthy know this. An extremely unfair distribution of income dries up their markets and makes the vast middle class unhappy and unpredictable. The Occupy Wall Street movement is a symptom rather than a disease.

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