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PAX, LUX ET VERITAS SINCE 1965
Post How Can Government Mitigate Income Inequality?
Created by John Eipper on 06/12/18 5:50 AM

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How Can Government Mitigate Income Inequality? (Istvan Simon, USA, 06/12/18 5:50 am)

While no one can dispute Richard Hancock's comment on income inequality, namely that there can be no equal incomes anywhere because people have different skills and abilities, I strongly feel that Richard's observation, while strictly speaking true, is also an excuse for the inexcusable income inequality in our country.

JE in his comments very appropriately brought out the relevant statistics of how much the innocent-sounding truism repeated by Richard is meant to hide. So let me start further discussion with this opinion which I consider to be true as well: The levels of income inequality in the United States have reached scandalous and unsustainable levels, and cannot be explained away by skill levels or differences in effort. On the contrary, the rich in this country work much less hard than the illegal immigrants that our disgraceful president is trying to deport.

President Trump's administration is corrupt from top to bottom. Richard's fellow Oklahoman Scott Pruitt, for example, aside from causing great harm to our country by dismantling protections to the environment in favor of polluters, is extravagantly spending taxpayer money in the most scandalous ways. He is corrupt, and was already corrupt in his scandalous career in Oklahoma. He should be sitting in prison, not being a cabinet official in the Trump administration. And Scott Pruitt is just one example of a thoroughly criminally corrupt administration.

So why bring this up in a discussion on income inequality? For plenty of very good reasons. It shows not only an example of where a corrupt official gets completely undeserved financial rewards by abusing his government office powers, practically a résumé for Pruitt all through his corrupt career. But it is also one of the real reasons for the scandalous income inequality in our country. Contrary to what Richard seems to suggest with his comment, skill levels or effort have very little to do with the levels of income inequality we have. Government passing laws in favor of the rich is a much more important contributing factor. While one remedy is what Richard suggests to improve people's skills with affordable trade schools and courses, and no one can be against this excellent idea, by itself it will not affect much at all the real problem and the real causes for the scandalous levels of income inequality in the USA. Government has a role in it, and government must be also where we need to seek changes to help mitigate the problem.

How can government help to mitigate the income inequality problem? There is a long list of actions that government can and should do:

1. Income tax and using the tax for social spending is an important tool. Unfortunately, the rich have successfully fought this by corrupting politicians and propagating the myth that tax cuts produce growth that benefit the poor. It does not. This is a lie and a myth.

The Social Security System and Medicare, created by Democrats in government, is an example of successful government programs that helped alleviate much of the former poverty of seniors in retirement in our country. Yet the GOP is constantly trying to undermine these successful programs by "entitlement reform." We the people of the United States will not let these corrupt officials succeed in gutting these successful government programs. Paul Ryan, a major proponent of this disgraceful approach, got the message. He will not run for re-election.

2. Medicare for all is a must in the United States, and it will have to happen. Health care is of course a major source of economic inequity, and one that actually kills the less privileged. Medicare for all will help solve this problem, and it must happen, because the dysfunctional health care system that our government helped create based on private insurance is unsustainable. The health care system of the United States is inefficient, unbelievably expensive, and delivers mediocre results when measured with common statistical measures of its overall effectiveness, e.g. infant mortality, life expectancy at birth and at various other stages of life, and similar measurements. All these measurements indicate that we are not getting our money's worth in health care.

3. The repeal of the disastrous Citizens United Supreme Court decision is essential. Corruption of government by lobbying of the undeserving rich for economic welfare for themselves through political contributions which are little disguised bribes to buy legislation favorable to the payer. These are the sources of much of the rot in our democracy, and also causes income inequality The poor do not contribute to political campaigns, and so they get the short end in legislation Both main parties in our political system are guilty of this, but the GOP is far worse than the Democrats, and does far more to reward the rich than the Democrats do,

There is much more to be said, but I hope these initial points will motivate a fruitful discussion on this important topic.

JE comments:  Progressive taxation, universal healthcare, and better oversight of campaign finance.  Can we assume that these will be the three pillars, besides anti-Trumpism, of whoever runs against Trump in 2020? 

Will Trump run in 2020?

This Sunday (June 17th) I'll get to observe presidential elections in Colombia.  The two candidates are Iván Duque, of strongman former president Álvaro Uribe's Centro Democrático, and former M-19 guerrilla and Bogotá mayor Gustavo Petro.  The polls show a toss-up.


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  • Working for the Federal Government: Hoof and Mouth Commission and Peace Corps (Richard Hancock, USA 06/14/18 8:31 AM)

    It was good to hear from Tor Guimaraes, Istvan Simon, and Tim Brown. I think that we all agree in feeling that the inequality in the United States is too great. Our disagreement is in how to accomplish a change without going bankrupt from a growing deficit in our national debt. Tor and Istvan favor higher taxes to cut down on the incomes of CEOs. I have to ask the question, "Can this be accomplished without slowing economic growth to an extent that our economy will slow, making it impossible to raise the income of poor people?"



    Higher taxes means growing government spending. I feel that a larger government will not spur new growth in the economy. I have had some experience with the national government and do not feel confident that a larger government is an engine of growth. I worked for the federal government on two different occasions: with the Foot and Mouth Commission in Mexico in 1950 and with the Peace Corps in 1962-63. While at the University of Oklahoma, I managed three technical assistance programs for USAID, in Panama, Nicaragua and Colombia.



    On the Hoof and Mouth Commission, the greatest number of American employees were livestock inspectors who were Spanish-speaking cowboys, both Anglos and Mexican-Americans. The greatest number were from Texas, followed by New Mexico, Arizona and California. These Inspectors lived in rural villages with a Mexican counterpart and inspected livestock to see that they were free from "aftosa" (foot and mouth). These men were mostly bilingual in Spanish and English and also bicultural. Their bosses were veterinarians, from Washington, DC in the Bureau of Animal Industry. They did not speak Spanish nor were they familiar with Mexico, and they had very poor relationships with the livestock inspectors. Although the Commission did ultimately control "aftosa" in Mexico, I was surprised that they couldn't employ veterinarians who had experience equal to that of the livestock inspectors. I am sure that such veterinarians did exist in border states.



    Serving as Peace Corps Director in El Salvador was perhaps the top experience of my life. We were the second Peace Corps group in Latin America, and we have had reunions with our Peace Corps volunteers for fifty-five years. We were lucky that Ambassador Murat Williams was a firm supporter of the Peace Corps; otherwise we would have suffered a miserable time, because USAID made no effort to cooperate with us. Since they were our administrative backers, I had to call the Ambassador frequently to get their cooperation, which they otherwise refused.



    Early in the program, a Political Officer, who may also have been a CIA agent, asked if he could meet with the volunteers the next time we had a meeting. I didn't think this was a great idea, but I couldn't say no. This officer was accompanied by a major who was serving as a military attaché. After making his introductory remarks, the Political Officer asked the volunteers to report to him any suspicious behavior that they might observe. This idea was not pleasing to the volunteers, and some of them asked some very pointed questions about the military. Apparently, they had seen unpleasant episodes involving the military draft. It appeared that the military used strong-arm tactics to enforce the draft law and were not at all flexible in allowing exemptions for men who had families and who were subsistence farmers.


    Much to my surprise, the Political Officer began to defend the conduct of the military, which would be indefensible in the eyes of almost any American citizen. All he needed to say that this was El Salvador, not the United States, and that the Embassy really had no right to intervene in local matters, but instead he became impatient with the questions. The more he defended the military, the hotter the discussion became. I felt an impulse to intervene, but on second thought I felt that these Embassy officials should be able to conduct a reasonable discussion with their fellow Americans without getting their noses too far out of joint. The two officers left in something of a huff.



    The Ambassador called me on the carpet after this meeting, asking me, "What is this I hear about your volunteers being opposed to the Alliance for Progress?" I replied that I had just returned from a meeting in Panama, during which Sargent Shriver had told us that we served the United States best by not being identified with official programs. In a few days the Ambassador called me in and apologized, showing me a fax in which an Undersecretary verified the statement that Shriver had given us in Panama. A few days later, the Political Officer asked me if I could influence the Ambassador to "get off his back." I said nothing to the Ambassador.



    I will relate just one more instance of my disappointment in government. We had a contract with USAID to develop a college called Santa María la Antigua (SMU) in Panama. They needed help in everything. I sent our University of Oklahoma planner, Richard Kuhlman, an architect who played a strong role in this program. Some of the SMU supporters were architects and Kuhlman wanted to do the plan himself, with all the detail work being accomplished by the office staff of these architects at no cost. Kuhlman figured that he could come up with a complete plan for $30,000. USAID said that using the free labor of those architects could lead to a conflict of interest, so they let the contract to a California company for $250,000.



    My experience in dealing with businesses has been mostly satisfactory. They have responded to my needs quite satisfactorily. If they did not perform in this manner with their customers, they would shortly be bankrupt.



    Businesses have Boards of Directors concerned with administering a successful company. A department gets rewarded for saving money. In contrast, a government entity will never create a surplus to be used for funding other entities. A director of a government entity has no incentive to operate as cheaply as possible.



    We must have both government and business. Both have their proper roles and should cooperate harmoniously and learn from each other's successes for the benefit of our nation.


    JE comments:  Richard, your encounter with the Political Officer is historically significant.  What do we know about CIA meddling in the Peace Corps' early years?  Were PC volunteers expected to be the "eyes and ears" of US interests?  This could be the topic of a very interesting book.


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    • CEO Income: What Would Jesus Do? (Tor Guimaraes, USA 06/15/18 5:25 AM)
      Richard Hancock stated on June 14th that I favor "higher taxes to cut down on the incomes of CEOs." And he asked, "Can this be accomplished without slowing economic growth to an extent that our economy will slow, making it impossible to raise the income of poor people?"

      This question is ideologically problematic. The main point is obscene disparity in income distribution, not higher taxes which is only one way to even the score. The way good capitalist economic growth happens comes from entrepreneurship, which only hires workers to produce something which can be sold at a profit only to people with money to buy. If the greedy people take all the income for themselves, demand for new products will shrink and economic growth will stall. That is the truth, regardless if CEOs make $1 million or $100 million. And don't forget, when America was at its greatest (a chicken in every pot, a car in every garage) the tax rates were the highest ever.


      From another perspective, if my salary is $10 million and my workers make poverty salaries, Jesus would raise hell, justifiably. If I manipulate the Board of Directors to raise my salary to $50 million, I will accumulate so much wealth only useful to buy elections, spoil my kids, and other mischief. Jesus would not like that either.


      The important point to focus on is the obscene income differential. Why should anyone make 500-800 times more income than another worker whose family is in poverty? That has never been the American way. That is the banana republic way. Even the robber baron JP Morgan stated that 20 times worker's salaries is sufficient reward for the more talented/productive people. Earlier the magic number was 6 times, I believe. Check it out.


      JE comments:  I added the Jesus reference in the subject line.  Hope it doesn't sound too flippant, but then again, CEOs aren't known for storing their treasures in Heaven.

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    • How Independent was the US Peace Corps in the 1960s? (Richard Hancock, USA 06/19/18 5:32 AM)
      On June 14th, John E asked about CIA meddling in the early days of the US Peace Corps.

      During the two years that I was Peace Corps Director in El Salvador, I was totally independent and ran the program as I saw fit.  Ambassador Williams was supportive but never domineering.


      I am sure that this was true of all directors during the term of Sargent Shriver as the national Peace Corps Director. I have no idea what the situation is now.


      JE comments:  Many thanks, Richard.  It is "common knowledge" here in Colombia that American Peace Corps volunteers in this country were among the first links (late 1960s and early '70s) in the drug trafficking chain between Colombia and the US.  See, for example, the popular 2004 film El Rey


      There may have been a couple of bad apples, but I assume the assumption is an exaggeration.  Have you heard anything about this, Richard?

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      • Peace Corps Volunteers in Colombia: Links to Drug Trafficking? (Richard Hancock, USA 06/20/18 7:58 AM)

        In response to John E's question of June 19th, I heard nothing of Peace Corps Volunteers in Colombia being involved in drug trafficking.


        JE comments:  I know of no hard evidence, but the rumor is widely accepted in Colombia.  See this Financial Times review of Juan Gabriel Vásquez's The Sound of Things Falling:


        https://www.ft.com/content/62fb672e-3246-11e2-916a-00144feabdc0


        With this note, I will board our flight from Pereira, capital of Colombia's "Eje Cafetero" (Coffee Region).  Time permitting, the next WAIS posts will come from Ft Lauderdale.


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        • "Common Knowledge" in Colombia, Mexico; from Gary Moore (John Eipper, USA 06/22/18 10:31 AM)

          Gary Moore writes:



          Reprising JE's observation on what social science used to call "collective behavior,"
          in this case on Richard Hancock's admirable experience in the Peace Corps (June 20th), the talk turned to "common knowledge" in Colombia about the CIA. Did the
          CIA start the drug smuggling epidemic? Was the CIA hiding in the Peace Corps?


          Yeah, it's also common knowledge in Colombia that babies are kidnapped for their kidneys.
          It was common knowledge in Mexico in the 1970s, including among some intellectuals,
          that Mexico was suffering a drought because the US had stolen its rain.


          What's the standard of credibility when consensus itself is credulous?


          JE comments:  Perhaps the most pervasive urban legend in present-day Colombia:  former president (and current kingmaker) Álvaro Uribe is in cahoots with the Medellín drug traffickers--indeed, he is the biggest, baddest, and most untouchable narco of all.  Common knowledge.

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