The call for a higher minimum wage is an admission that policies are stifling economic growth. The best way to increase worker pay is to create a demand for their labor. This means stimulating investment and encouraging risk taking. Capitalism requires optimism.
Yet the question remains how much of our stagnation is due to poor policy and how much is due to a social and economic shift. Such shifts usually signal the need to drastically reallocate resources. The political challenge is to aid those who are on the painful end of the change without slowing down the needed transition.
Part of the solution to such changes in the past was the mobility of the people to move to where the opportunities were. Strong safety nets may prolong such needed adjustment by discouraging mobility. Perhaps there should be incentives to relocate when needed. Instead the programs seem to encourage people to stay in dying towns and industries.
The thought process that criticizes the wealthy and the 1% is the same as ethnic or racial bigotry. The wealthy are faceless and stereotyped and treated as a monolithic bloc. They are not considered as individuals. If they were they would be seen as the diverse souls that they are. Warren Buffet, Steve Jobs, Elon Musk, and Mark Zuckerberg do not fit the same wealthy stereotype as Donald Trump.
The attraction that so many of the middle and working class have for Donald Trump raises the question of how much inequality is a problem in the eyes of the voters. They rally in record numbers to a candidate who brags how rich he is and engages in gaudy conspicuous consumption. This stands in stark contrast to Warren Buffet who could buy and sell Trump several times over.
The measurements of inequality are distorted and exaggerated and I contend that it is a much greater problem in the minds of the academics and politicians than it is in the minds of the voters. The absolute level of poverty and the stagnation of middle class income is a far greater problem. The middle class does not care how rich Donald Trump or Warren Buffett is: they care that their own prosperity has flat lined or declined.
I just read the Annual Report of Berkshire and will be attending the annual meeting. In reading Warren’s report (very simple report- no glossy covers and no pictures) he remains optimistic and runs his business as of the government is irrelevant. They should be.
That does not mean we should ignore them, but perhaps we give them too much consideration when we plan our lives.