How Globalization, Feminism and Capitalism Contribute to Income Inequality

Inequality has been the political problem du jour for a hot minute now. Apparently the growth in wealth in the top earning capital class has been soaring to stratospheric levels while middle class incomes have stayed flat or trended down. And just like any problem, what has been thrown its way has been either platitudes or vindictive ‘punish the rich’ rhetoric which don’t really deal with the issues.

First off, as a social conservative (and realist) I’m always reluctant to jump right into ‘solving’ social problems right at their point of expression. The first reason is that most problems are more complex than their primary expression may tell you, for instance the source of income equality has so many contributors that go beyond the pay check. Which leads to my second reason for being careful to jump into solutions: when you solve the problem at its point of expression you end up creating a host of other problems because you did not get to its fundamental problems. Again using this income inequality issue, if we taxed the rich higher and redistributed more to the lower end you might have ‘solved’ that problem but it’s only a matter of time.

One of the truths about this fallen world we live in is that there is no free lunch. I personally don’t believe you can solve any of the world’s problems in a real sense, you just exchange one set of problems for another, hopefully more palatable, set. At some point in our social evolution we came to realize the virtues of feminism, of globalization and perhaps much much longer than that, capitalism. We made the choice as a society to encourage and propel these virtues and we still firmly believe in them. But I also believe that these virtues have a big role to play in income inequality. Here’s how.

Globalization opened wage earners to competition from all the world’s wage earners. Cheap labor is a real thing and there’s way more of it than there is cheap capital. Therefore, while capital can be deployed to earn increasingly higher returns as the market sizes get bigger, wage earnings are falling or staying flat as the supply of labor at ever cheaper prices continues to expand. There is no magic to it. Supply and demand says that is how it must be. The only way not to have that scenario is to roll back globalization and reinstate the national monopoly on labor which is one of the reasons Donald Trump won in 2016 on an anti globalization platform.

Feminism contributed to this scenario in two ways. In the first, feminism established that women should rightly be part of the work force. I don’t think anyone can argue with that assertion given that a woman can do almost any kind of work just fine. But supply and demand is what it is, so you can’t double the work force and expect wages to keep climbing. And as feminism spread globally, all that cheap labor around the world in point A above is also doubling. That is one side.

The other side is the rise of assortative mating. Men at the top of the income hierarchy can marry from the bottom easily. In the past this spread the class structures and encouraged mingling among classes as well as class mobility. If you’re a teacher who married a physician, you just joined the 1%. Women tend to marry up or at the same level of their income and status hierarchy much more than under it, which means that as they have climbed up the income hierarchy themselves as part of the labor force, they increasingly marry within that level or higher. Physicians marry fellow physicians, or high earning businessmen, politicians marry lawyers or fellow pols, PhDs marry other PhDs or high level consultants etc.

This means that high earning couples today are way more high earning than high earning couples of the past, and the low earning couples of today tend to be much more closed off from their higher ups. There’s a bigger gap. And this gap perpetuates itself as the children of the new elite marry within or above their level while also reaching to be higher than their parents.

Finally capitalism anchors all this by making it less fashionable to interrupt supply and demand with potentially less favorable tax rates for the investor class, by perpetuating the advantages of the rich, by celebrating the billionaire class and reducing barriers to entry for entrepreneurs who have access and resources to take on new ventures, and keep the proceeds.

So do we roll back globalisation, feminism and capitalism for the sake of income inequality? I don’t think so. I like a largely global world where women are free to make their choice and live to their potential and where risk taking is rewarded. It’s a great world to live in. So what then should be done?

I believe strongly that education is important. Give people the keys to operate in this new world. Right now the education system is still operating on a model where wages and jobs are the primary driver for economic success. If you want to close the income gap, find a way to give everyone the same kind of education the rich give their children. That was how mass education was born but while the way rich children are educated has changed, the educational system for everyone else has not. That’s one possible solution.

The other is to attach some kind of social security tax to capital returns type of transactions so that as the rich make more their contribution to the safety net goes up as well.

Anyhow these are just my thoughts. Maybe one day I’ll be President and translate these thoughts to decisive action but until then, let me just think bruv.

-e.

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