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In a recent Washington Post column, George Will opined that income inequality is a good thing because it brings us cheap imports from China, it helps to create new billionaires, and it produces monopoly profits which all lead to new products from which we all benefit. Here are his words:

“Income inequality in a capitalist system is truly beautiful because it provides the incentive for creative people to gamble on new ideas, and it turns luxuries into common goods. Since 2000, the price of a 50-inch plasma TV has fallen from $20,000 to $550.”

And then he argues that the best way to spread the wealth around is to leave it in the hands of the wealthy. Again, here are his words:

“Personal consumption absorbs a small portion of their money and the remainder is not idle. It is invested by them, using the skill that earned it. Will it be more beneficially employed by the political class of a confiscatory government?

My reply follows.

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Dear George:

While there is some truth in what you say, there is a lot more truth in what you do not say. For example, we do pay less for all those products imported from China. But we lose more than just the jobs that our exported dollars represent. China uses our dollars to pay for their oil imports, while their demand drives up the world price of oil (in spite of the temporary price slump). We all pay big time at the gasoline pumps and for most other fuels in exchange for those cheap imported beach sandals. Also, all producers and employers here have rising transportation costs from the same energy costs which are passed on to us in higher prices for all goods and services produced here. There went our savings. But export dollars also subsidize China's hacking efforts at stealing our secrets; they pay for China’s R&D efforts that gives them the capability to shoot down our satellites; they pay to modernize their standing army; and they even let them buy up large chunks of our land and companies. Notice also that the toothpaste, soap, and t-shirts that we buy from them all depreciate in value to nothing in one year or less, whereas most of their purchases from us go up in value. Finally, they won't let the market determine their exchange rates, thus they plan to keep their trade with us pretty much the way it is indefinitely into the future. But there is more.

We have been running a huge trade deficit with them since about 1980. Their economy has been growing at 10 percent or more every year since then. A few years ago they replaced Japan as the second largest economy in the world. The present projection shows they will replace the U.S. as the largest economy by the early 2020s. By about 2040 they will be so much larger and stronger than us in every way that they will be able virtually to dictate our terms of trade; demand that we get out of the Far East with our military bases; and otherwise dominate the world in trade and geopolitical influences. If the ultimate outcome is less than nuclear war, we very likely could all be speaking Chinese and eating our daily allotment of rice with cheap chopsticks.

About all those entrepreneurial billionaires that we produce every year: 96 percent of all our wealth is directly or indirectly attributable to inherited wealth. Only 4 percent comes from other sources (see my article http://www.authorsden.com/visit/viewarticle.asp?id=7294). But inheritors are indeed hard workers. Choosing your parents wisely is so hard, in fact, it is damned near impossible! Moreover, spending produces 90 percent of all GDP (70 percent from consumers, and 20 percent from the government). Still, that unaccounted for 4 percent wealth number comes to about $260 billion per year. That will account for a few new billionaires, but it is chicken feed compared to that inherited wealth total (currently at $96 trillion and doubling every 10 years) that produces almost no jobs and no GDP. Meanwhile, 50 percent of all Americans have no wealth (a positive net worth), while earning less than $20,000 per year. As to the social costs of inequality: Among 23 industrialized nations examined, we have the highest crime rates, highest incarceration rates, highest suicide rates, highest obesity rates, highest mental health issue rate, most teen pregnancies, highest drug usage rates, lower life expectancies, and serious social immobility (see The Spirit Level).

Is the U.S. government “confiscatory” from its citizens? Ultimately, the wealth of any nation is best described in how much its residents hold, and how that wealth is distributed. Here are some data from the Balance Sheets of the U.S. as compiled by the Federal Reserve. Americans hold $97 trillion dollars of wealth. Of that total, approximately $86 trillion is held by the wealthiest 10 percent; the next 30 percent (the middle class) hold $10 trillion; while the bottom 50 percent hold less than $1 trillion. The U.S. government owes $13 trillion in public debt. The market value of all American assets is approximately $250 trillion, with corporations holding the vast majority of those assets.

From this broad perspective, it is fair to say the composite of all U.S. laws as they impact the production and distribution of wealth among the population confiscate from the bottom 90 percent and direct that wealth to the top 10 percent. And so your observation is correct, except-- you missed who among us are being taken, and who are benefitting.