Economic inequality has become a major political issue in America, especially for the Democratic party’s base. Most days, we see an article on the left wing reddit.com/r/politics, or shared on our Facebook newsfeed, or featured in some paper or TV show, explaining a ‘widening gap’ in income/wealth. Much of this gap is exaggerated for political purposes, (watch this video, this video, this video, and also see Chapter 5 of Thomas Sowell’s “Economic Facts and Fallacies: Second Edition” for more on this) but what doesn’t make any sense is why those who are most concerned about this issue would vote Democratic. The Democrats are the party of economic inequality. Here are some reasons why:

Monetary Policy

The Dow Jones Industrial average bottomed out at 6,443 on March 6th, 2009. Recently, on December 23, 2014, it closed above 18,000.

The broad recovery that the stock and bonds markets have experienced these last 5 or so years can largely be attributed to active Federal Reserve policy. You may have heard the phrase “quantitative easing” before. Put in simple terms, it means the Fed has been pumping money into the economy by buying up various securities. For a while, this was being done at a rate of $85 billion a month. QE has driven up the stock and bond market tremendously, allowing those who own stocks and bonds to enjoy a very large increase in their incomes and net worth.

It just so happens that (according to the far far far left people over at ThinkProgress.org) the top 1% of Americans own roughly 50% of all “Stocks, Bonds, and Mutual funds.”

 

 

Ouch. Maybe that’s why the current economic recovery has been so “uneven”, as many people have pointed out time and time again. A lot of the jobs that have been created for those who are unemployed are part time, and low paying. Things are good if you own a lot of stocks and bonds, but not if you’re a regular Joe.

So who supports what the Fed is doing? Almost exclusively, Democrats (see link)! President Barack Obama supports it. Same with Congressional Democrats (most of them at least). In contrast, even more centrist Republicans like ‘establishment’ favorite Mitt Romney opposes quantitative easing. Rick Perry has threatened violence against Ben Bernanke over this, and Ron and Rand Paul would probably burn the Fed building down if they could.

Medicare/Social Security

Medicare and Social Security are dangerous entitlement programs which will cause major fiscal damage to the United States if left untouched. In addition, they are a regressive income redistribution scheme.

The main reason for this is simple: Medicare and Social Security take from the young and working and give to the old and (often) retired. According to CNN, people who are 65 and older have net worths that are 47 times as large as people 35 and younger, on average. In other words, at any given time, the average elderly American has 47 dollars on hand for every one dollar a young America has.

But you see, when the mean and evil Republicans try to reform these programs in ways that save some money (such as raising the retirement age, or using vouchers to incentivize people to cut back on how much they spend), they are trying to throw grandmothers off of cliffs.

 

 

This is a real ad that a left wing group created to attack Republican Paul Ryan for wanting to reform Medicare.

Democrats will do whatever they can to “protect seniors” and prevent reforms to these reverse Robin Hood programs. It’s young people that need some economic protection at this point.

Watch George Will do what George Will does:

 

Immigration

Democrats like illegal immigration. Mainly to get more votes once those immigrants become citizens, or their American born children become adults. However, doing what President Obama recently did with his so called “executive amnesty”, as well as even more far reaching policy prescriptions to legalize millions of immigrants, which the Democratic party would like to see happen, will exacerbate economic inequality in a very large way.

First, it would add millions of Americans to our citizenry. These Americans are, by in large, low skilled and uneducated. That is why illegal immigrants work such low paying jobs. Their incomes would be small, and in addition, corporate profits would go up due to cheap labor. In other words, more money for those who own stocks, and more people at the bottom of the income chain. This increases our inequality on paper, even if it were to help the overall economy grow.

Second, increasing the supply of labor (flashback to ‘Intro to Econ’) decreases the equilibrium price of labor. So, adding workers to the economy (by “economy” I mean the above ground economy where people have to be paid at least minimum wage, which is where immigrants would work if they were legalized) would reduce real wages, even for those Americans who are already here and are trying to get by. The CBO reported that wages would fall slightly over the next ten years when scoring a Senate immigration bill. In other words, workers would still go without a “raise”. As all the leftists keep whining about a “shrinking” middle class, they don’t seem to be aware that they are a key cause of it.

Education

The Democratic platform on education is straightforward: keep money in the hands of school administrators and teachers unions (who get strong benefits compared to private sector workers, as well as middle class salaries and incredible job security), and prevent poor children from escaping failed schools, which keep them in poverty.

Republicans, on the other hand, widely support school choice/vouchers. School choice means the state gives money to parents in the form of a voucher, to spend on their child’s education, instead of giving money directly to the schools. This incentivizes schools to compete for children in order to stay open, improving performance through competition.

Watch this video below to get a better breakdown of school choice:

 

There are many more areas where Democrats and their policies contribute to economic inequality. I will stop here for now, but everything from zoning laws, to corporate tax reform, to Obamacare’s regressive old to young subsidy redistribution, are further examples of this. Do not blindly accept what the Democrats say. They will not reduce inequality. They will only perpetuate it.