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Inequality and A Tale of Two Ukrainians

Melanie Sturm | @ThinkAgainUSA Read Comments - 7
Publish Date: 
Thu, 02/27/2014

 

Last week, as Ukrainian émigré-turned-tech tycoon Jan Koum prepared to cash a multi-billion dollar check from Facebook -- acquirer of his start-up “WhatsApp” -- Ukrainian President Viktor Yanukovich was checking-out of his Gatsby-esque estate where he’d cached his stolen plunder.

That the two Ukrainians derived their riches under diametrically opposed systems – free enterprise versus banana republic – Illustrates why all income inequalities are not created equal.  

Most don’t resent the rich -- only the undeservedly rich – as a recent Venezuelan protest sign conveyed: “These Castro-Chavistas speak like Marx, govern like Stalin, and live like Rockefeller, while the people suffer!”

Koum’s affluence springs from a free society in which everyone has a God-given right to go as far as their work and talent will take them. Yanukovich’s hijacked wealth is exploitive, depriving others of dignity, opportunity, and economic mobility. One system disperses power as it champions an individual’s right to pursue happiness; the other concentrates it while stifling human potential.

There will always be a top 1%. The question is: will they be hardworking and productive people whose value creation benefits society – think Steve Jobs and JK Rowling -- or cronies living off perks extracted from the labor of the little people? 

In America, we have increasing numbers of both which is why we must Think Again before allowing policymakers to concentrate more power in the name of social justice. In fact, economic liberalization is the real cure.

Economically freer countries enjoy greater growth, opportunity, civil rights and health, as evident in the yawning gap between North and South Korea, and in Asia where hundreds of millions have escaped grinding poverty.

To secure their freedoms, Ukrainian protestors resemble Koum’s mother. She fled Kiev for California in 1992 with 16-year-old Jan in search of religious liberty, privacy from Ukraine’s surveillance state and the opportunity to realize a better life.

Though they struggled upon arrival, relying on public assistance, Jan’s climb from food stamps to Facebook fortune was jagged and improbable -- a journey he honored by signing the $19 billion sale agreement outside the building that once housed the food stamp office.

The Koum tale is a triumph made possible by America’s system of free enterprise and limited government, which produced human history’s most dynamic and decent society.

Today the American Dream is increasingly out-of-reach for those stuck in government dependency or struggling to survive amidst stagnant wages, declining job mobility, and ever-increasing health care, food and energy costs. 

Confusing the symptom with the disease, President Obama rails against income inequality, pronouncing it “the defining challenge of our time.” But he has it backwards -- economic stagnation causes income inequality, not vice versa.

Obama also ignores the social mobility-impairing trend of single motherhood, which exploded from 4 percent in 1960 to 42 percent currently, accounting for 50 percent of chronic poverty.

Instead of targeted policies to eradicate poverty – eliminating welfare’s marriage penalty and allowing parents to choose the school that’s best for their child --- Obama’s proposed minimum wage hike and unemployment-insurance extension are mere Band-Aids on the cancer of opportunity inequality.

Five years of Obama’s trickle-down-government policies have buoyed Wall Street, corporate America and Washington, DC where seven of America’s wealthiest counties reside – like the capital of “Hunger Games” whose powerful aristocracy lives off the tribute paid by impoverished citizens in the territories.

Despite trillions of stimulus and War on Poverty spending -- causing debt to swell 63 percent -- the nearly five-year economic recovery has one-quarter the GDP growth rate of the Reagan recovery. Though the stock market has doubled, median household income fell 6 percent, labor force participation hit a 35-year low, and a record 47 million Americans now live in poverty.

While not Yanukovich-style graft, our government transfers hundreds of billions of dollars annually to the affluent, thanks to cronyism, corporate welfare and entitlement programs that don’t distinguish between ordinary Americans and corporate jet owners.

Last year, America’s richest 10% captured the greatest share of pre-tax income growth since the Roaring 20’s, according to University of California-Berkeley economist Emanuel Saez.  He also showed the top 1% capturing 95 percent of income gains during the Obama Recovery (2009-present), compared to 65 percent during the Bush expansion (2002-2007).

That so many Americans have fallen behind is both appalling and avoidable, and a reflection of America’s deteriorating freedoms.  Formerly second in the Wall Street Journal/Heritage Index of Economic Freedom behind Hong Kong, America is now twelfth -- below Estonia.

Bequeathing our children an economically stagnant America is a choice, not a destiny.  Our real “defining challenge” is to restore the growth that creates jobs, opportunity, social mobility and future Jan Koum’s.

Think Again -- Shouldn’t our goal be to unleash the dreams and talents of all Americans – especially former food stamp clients – so they can lead fulfilling and happy lives?

 

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A very interesting point of

A very interesting point of view. Not sure if there is really an answer to your questions though. Just won't work with the two party system that has taken over all bought by wall street.

Melanie: It may just be a

Melanie: It may just be a coincidence, with baseball season around the corner, but you have hit another home run. I notice a recent change, that you are now mentioning Obama by name. Good move.

Your column is right on and

Your column is right on and expresses why we are in the economic funk we are. I add one more consequence to this disastrous policy and that is the Federal Reserve actions.

Their zero interest rate policy has destroyed the the living standards of many seniors who rely on their MM and CD safe haven investments while broadening the income inequality by causing the more well off to invest their excess money in the more risky market, where thy can afford a loss. This has the consequence of increasing demand for stcks and creating rapid increases in the value of their investments.

The rich get richer simply because they can risk to invest for higher yields while the mass of others can't.

The functional relationship

The functional relationship of the desire to achieve and be productive has been replaced with the desire to be entertained by glorified athletes, actors and the social media, while enjoying the fruits that others have grown. The educational system has removed basic learning requirements of survival and replaced them with social issue demands.

Thank you Melanie for your

Thank you Melanie for your commentary in the Aspen Times today 2.27.14.  I believe it is on target.  It is interesting, (your last paragraph), as today is the official kick off of the "Brother's Keepers" initiative by the President which promises $2 billion for black and Hispanic boys while there is no mention for girls, caucasian males, Chinease etc, etc.  I would not begrudge blacks or Hispanics any hand up but would not be so exclusive of others.  The point being a level playing field for all.

Thank you for the commentary, I enjoyed reading it.

'll give you a B, maybe B+.

'll give you a B, maybe B+.

You're absolutely right on when you say there will always be a 1% and the real question is whether they earned their money by the creation of value that benefited everyone, or whether they extracted other people's wealth like Yanukovich.

But then you suggest that "economic stagnation causes income inequality, not vice versa" and that it's Obama's policies that are causing stagnation. I'm with you in disagreeing with Obama's policies, but regardless of government policies and whether there is stagnation or growth, there will always be a 1% as you said. There will always be income inequality. Income, whether high or low, is itself morally neutral. The issue isn't whether some people have higher incomes than others; instead, the issue ought to be whether each earns what he gets by creating value or by extracting it -- the one is civilized, the other predatory.

I don't know Koum's full story, but if he created value that other people are willing to pay for, then it's right and proper for him to enjoy his fortune; on the other hand, single mothers of multiple children with multiple unidentified fathers who all live off government and create nothing of value deserve to be poor. That type of inequality is only justice and ought not to be considered a problem. And there will always be people of both types. "Jobs, opportunity, social mobility" will not change that.

Mobility works in both directions. Poverty is the proper result of economic irresponsibility.

Most don’t resent the

Most don’t resent the rich

I'd say that that is true, however a large, vocal portion on the populace strongly resent those that have succeeded and have become wealthier via hard work.

Ever notice that the Left-O-Crats have no problems with celebs that make millions and really do nothing to "create" wealth & opportunity for others but go insane over business men that spend their lives developing business that employ hundreds or thousands ?

why is that? Perhaps because they are not "blessed" by the so called intelligentsia ?

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