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Reality Check: Wealth Redistribution

We tend to think of wealth as how much money is in a system and who has how much of it. But that is a shallow if not childlike view of wealth. If you lift the veil and peer underneath you quickly realize a historical fact going back to the dawn of civilization... that wealth is created through work to be done and labor to do it.

It was this laboring class that made America great, embodied the American Dream, outpaced productivity growth of all other nations, and through their savings built the dominant economy of the world.

But I digress...

Let's take a look at a few ways wealth can be redistributed now that we know that wealth is any asset, and that finished goods and skilled services are far more valuable than the raw materials/resources they're made from.

Taxes -

Sure enough, taxes are the most certain and inevitable form of wealth redistribution. Yet it's pretty straight forward, happens like clockwork and there are dozens of ways to prepare for or hedge against them. True, we have a bloated and abused entitlement system that none of us should be paying for... But let's be honest, since most of our foreign policy revolves around the storied but rarely defined "American Interests" (which is largely economic, thus commercial, thus involving corporate interests), it stands to reason that we all benefit from taxes in very different ways.

Taxes are the only point of conversation when the subject of wealth redistribution is put on the table... and it shouldn't be. Let's look at some other ways in which wealth is redistributed...

Inflation - This is a no-brainer. Inflation robs from everyone. The reason we were told we needed a fiat currency was so that we could have an "elastic" money supply. Which means we can add dollars to the system when needed (weakening it and/or reducing it's value) and it could retract back to it's original supply. There has never been a meaningful retraction. The dollar is worth less than 3% of it's original value when we were on the gold standard at $35.

This impacts the working class and the poor to a far greater extent, especially when wages don't keep pace with productivity and inflationary cost of living increases.

Recession/Depression - Sadly, this is not widely known, or perhaps recognized and it certainly seems far from the public consciousness, that the rich get richer, but during severe downturns, they get richer faster.

The reason for this is the consolidation of assets and competition. Bankruptcy asset sales, corporate take-overs, foreclosures, etc...

Job Outsourcing - The theft of producer jobs from the American labor market via free-trade outsourcing had decimated the American Dream and the middle class as much as any other factor. Made in America, producer jobs and American labor are all national resources in my opinion.

The jobs that brought money into this country by selling what we made better than anyone else to other countries have been gutted and now we are sending all of our money to countries that are selling what we no longer make.

It's bad enough that wages for what jobs we still have have not increased in line with increases in productivity, corporate profit or executive compensation (which I'll get to in a minute), but the wealth created by offshore labor in the form of finished goods never even sees an american hand until the executive level.

So not only have the companies who built their reputations and business on the backs of the American worker shipped out their jobs, but all the wealth created is concentrated at the top without ever passing through the American economy.

Income Inequality - This is a big one and will get it's own post in the days to come. For now let me just touch on this issue...

Again, real wealth is created through applied labor to produce finished products or skilled service. Without these labor created resources, there is nothing for managers to manage, salespeople to sell or marketers to market. So how is that wealth distributed?


As productivity, profits, and markets rise, so should wages for everyone. When CEO compensation rises 100 times faster than labor wages, there is an obvious theft of wealth from the bottom by the top. You can try to justify it with clever soundbites, but the reality is that wealth created by the labor force is being unfairly distributed.

Market Manipulation - Thanks to the bubble of this and the crash of that which destroyed our economy and sent interest rates into the toilet, there is little incentive to save for the average person in a safe and reliable way... at a bank with an interest bearing account. Real estate assets which were always a safe place to increase wealth plummeted in value leaving many owing more than their property is worth.

So while the middle class has been gutted of jobs, savings opportunities, assets, equity, fair rises in wages tied to productivity and profit, and retirement funds in the market by the 1% and the corporations they control, the 1% are using the excuse that the poorest are eating up too much of what they are already being taxed.

Wealth redistribution is real alright, it's just not what you thought it was...
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