Sen. Bernie Sanders, I-Vt., has called the level of income and wealth inequality in the United States "grotesque." Sen. Elizabeth Warren, D-Mass., frequently calls for a leveling of the economic playing field and rails against a U.S. economy that is, "doing great for a thinner and thinner slice at the top."
As a solution to this apparent unfairness, Sanders and Warren, two of the top 2020 Democratic presidential candidates, have proposed significant new taxes that they say target the wealthy and large corporations. On Fox Nation's "Deep Dive," Wall Street Journal columnist Mary Anastasia O'Grady and a panel of experts took on "income inequality" in America and debated whether or not it justifies the Democrats' proposals.
"[Income inequality] measures don't actually tell you the information you want to know about whether a country is a just country," said Ian Vasquez, who is the director of the Cato Institute's Center for Global Liberty and Prosperity.
"The United States by standard inequality measures is just as unequal as the Congo," he continued. "Yet the United States ranks among the best countries in the United Nations' human development indicators. It has the rule of law. It's got a government that works relatively well. There are freedoms here and opportunities here and we're much, much more prosperous. That's not at all the case in Congo."
In fact, as the Cato Institute notes, the common measurement used to determine income inequality indicates that the U.S., Sweden, and Denmark have similar levels of inequality. But despite that,self-described "Democratic-socialist" Sanders has hailed Sweden and Denmark as a model for the U.S.
Phil Magness, a senior research fellow at the American Institute for Economic Research, argued that measurements of Americans' ability to improve their economic circumstances are far better indicators of economic fairness in society than is income inequality.
"The mobility issue is the key statistic that we'd have to look to here," he said. "The Census just released a big study a couple of weeks ago that showed that, yes, the middle class was getting smaller, but it was only getting smaller because people were moving from the middle class into the upper class over time."
"You think about who are the richest billionaires in America. It's Mark Zuckerberg, who created a company out of his dorm room at Harvard," said Magness. "It's Bill Gates, who created a company basically out of his garage. These are people that are self-made. They started out in a much lower quintile than, you know, a robber baron of the past who inherited his wealth."
O'Grady asked why Warren and others are harping on the income inequality narrative if it is not a practical measurement.
"The narrative of inequality can be used as a political tool," said Roberto Salinas-Leon, who is the director of the Center for Latin America at Atlas Network. "Basically what you're doing there is you're inflaming rage and you're using visceral narratives rather than constructive narratives or reasoned discourse to try and solve our problems."
In addition, Magness argued that Sanders and Warren are attempting to hide their true intentions from voters, because their big-government proposals would dramatically raise taxes, as former Obama administration treasury adviser Steven Rattner recently noted in the New York Times.
"Taxes are unpopular. Politicians have not had success historically running on, 'I'm going to raise taxes.' They do try to change the narrative here," Magness said. "This is why inequality becomes kind of this catch-all phrase for a whole litany of other programs."
"Because someone else is going to be taxed not me, right?" offered O'Grady.
"Exactly," agreed Magness. "I think the way that they're trying to play it out politically is using the inequality mantra as this catch-all phrase for just a standard litany of traditional progressive left-leaning policies that have failed in the past."
"It almost seems like they're these Democratic politicians are marketing a free lunch... As we know, there is no such thing," said O'Grady.
"What's ironic about some of these programs, especially the social spending programs like Social Security, Medicare and so on, is that while they reduce income inequality, they apparently, according to a number of studies, increase wealth inequality," noted Vasquez. "Because people have a disincentive... to save. They can count on these government programs unlike the rich and they're also taxed... so it reduces the savings and assets of most people, except the rich."
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