Tuesday, December 10, 2013

Romancing Economic Inequality

The destination of Economic Inequality is not as important as the way in which we get there.

When I proposed the notion of a magic wand either doubling, or halving everyone's wealth, on at least two occasions, I've heard the objection that this wealth-doubling would cause inflation. This happened despite the fact that I proposed the hypothetical taking pains to avoid the inflation objection.

The trouble with hypothetical scenarios is that an objection can posit a 2nd hypothetical on top of it to cloud thinking.

I just realized a powerful, real source of Economic Inequality and like most social problems it was caused by an earlier cure to another social problem.

Contrast this with the 1950s where we had a male breadwinner and a female housewife. He was 100% responsible for breadwinning and she was doing whatever Donna Reed did. If she made any butter-and-egg money, it was off the books.

These were the times past when men were men, and women were property. This was unfair to the fairer sex and enlightened societies like ours went along with women's liberation. Instead of being shunted into traditional female occupations in the secretarial pool or in nursing, women sought and acquired the right to follow traditionally-male vocations like doctoring and lawyering.

You've come a long way, baby, and nowadays we see women succeeding in all of the high-status, high paid jobs. This is good. A woman needs a man as much as a fish needs a bicycle, but Cupid did not get the memo. Liberated women fall in love and marry. Ain't love grand!

BUT romance is not completely random. People are attracted to people with whom they share interests and experiences. Despite what Hollywood might tell you, a hotshot lawyer guy will not be as strongly attracted to the chauffeur's daughter as he will be attracted to the girl in his law school study group. Same goes for the hotshot lady doctor and the dashing internist.

Consider three classes of wage-earner:

  • Ms. Big Lawyer can hook up with Mr. Big Lawyer and buy the nearest McMansion. 
  • Ms. Average Worker can hook up with Mr. Average Worker and buy one of those little pink houses for you and me. 
  • Ms. Minimum Wage can hook up with Mr. Minimum Wage and live in subsidized housing.

In the inflation-adjusted, women barefoot-and-pregnant, 1950s, these three households would have yearly incomes of, say $80k, $50k, and $15k, respectively with one breadwinner carrying one housewife. The economic difference is $65k. But when both partners work full time incomes double to: $160k, $100k, and $30k and the inequality doubles to $130k.

You can't blame this Economic Inequality on Republicans or Democrats.

It's Cupid's fault.

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