imagesThere has been much clamoring about income or wealth inequality among government and the press lately. Why are we so focused on inequality when it clearly opens the door for government meddling? Perhaps the question answers itself? Lets look at the issue ourselves. This question came to me this morning when, upon waking, I found an article I shared on Flipboard received a bit more attention than usual. The article Oops! Philly Fed Admits QE Widens Inequality points out a recent Fed revelation that monetary policy sometimes exacerbates the problem of inequality.The reason I shared this particular article had more to do with the unintended consequences of monetary policy, namely the damaging effects of fiat money, than with inequality. The author mentions this, but focusses his discussion on inequality.

This begs the question: what makes the issue of inequality worth focussing on? Is inequality a serious issue worth government attention, or is it a political hack the Left has drummed up as ammunition to continue its policy goals of exiling the productive class?  I believe it is the latter. The reason is simply that government interests use inequality to justify more wealth-redistribution policies. One of the latest, proposed by Thomas Piketty, is a global wealth tax.  CNBC reported back in March and quoted Piketty saying, “A progressive tax on net wealth…is a better indicator of the ability of very wealthy individuals to contribute to the common good.”  Whoa!  Who said the wealthy should be on the hook for the “common good?”  And how would said “common good” be defined anyway? What we have here is agenda setting by government and media, not open discussion among the people. They are asserting: “Inequality is a problem and here is what we will do about it.”

So how should we look at the issue of inequality?  Yaron Brook, Executive Director of the Ayn Rand Institute, has this to say: “the only sense in which equality is relevant is political equality,” equality of freedom from coercion whether from my neighbor or my government.  The Declaration of Independence says exactly that: “all men are created equal,” but only in the sense of one’s right to be left alone to enjoy life, liberty, and the pursuit of happiness.

Mr. Brook goes on to say that economic inequality is not relevant. It is a consequence of the market, born from the division of labor, trade, and specialization. Perhaps most importantly, economic inequality is a consequence of the creation of values, values we all benefit from, values that can only be created in a free market. This final point leads into Mr. Brook’s next assertion, namely that government coercion is all around us, one whose primary characteristic is wealth redistribution.

41jyfSF9YGLSo why not focus on inequality?  Because to do so sanctions government involvement in matters of economic inequality, which legitimizes wealth redistribution. This is immoral. The fact of inequality as it exists today must be recognized as a phenomenon born not from free markets, but from mixed-economy directives and institutions like the Federal Reserve.  These policies are immoral because they are nothing less than legalized plunder.  The French economist Frédéric Bastiat introduced the concept of legalized plunder in his tract The Law.  The purpose of law is as follows:

“The law is the organization of the natural right of lawful defense.  It is the substitution of a common force for individual forces.  And this common force is to do only what the individual forces have a natural and lawful right to do: to protect persons, liberties, and properties; to maintain the right of each, and to cause justice to reign over us all.”

But this is not the extent of the law according to past governments or our current government.

“The law has been used to destroy its own objective: It has been applied to annihilating the justice that it was supposed to maintain; to limiting and destroying rights which its real purpose was to respect.  The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others.  It has converted legalized plunder in a right, in order to protect plunder.”

The act of plunder as a right is a concept not discussed much today, but the reality of wealth redistribution to combat inequality is exactly that.  The government frames the debate within the scope of one’s right to another’s wealth, but no such right exists today nor at any time in America prior to the signing of the Declaration of Independence.

The issue of economic inequality is therefore part of the rhetoric Washington employs to justify wealth redistribution.  And wealth redistribution, the taking of your money and giving it to someone else, is theft. But why do we fail to view it as such. Partly because such programs like Social Security and Medicare have already been around for generations. In a sense, then, we are used to them. However, according to Don Watkins from the Ayn Rand Institute there are two more reasons for confusion here:

“The answer has two parts, one economic, one moral. Economically, we are taught to view wealth as a social product, not an individual creation, and the person from whom wealth is “redistributed” is thus one who got an unequal share of “society’s” resources. Morally, we are taught that a person’s need entitles him to support by others.”

The economic and moral are two spheres intimately entwined throughout our daily lives, and it is not until we view these issues with both in mind that we can see government for what it has become.  I will close with a few more words from Mr. Watkins:

“So is wealth redistribution stealing? You bet it is. But to see that is not easy. It requires grasping that wealth is created by individuals and morally belongs to those individuals, regardless of who claims to need it more — and that requires the willingness to examine (or reexamine) some of the deepest issues in economics and philosophy.”