The runaway success of French economist Thomas Piketty’s book on income inequality seems to be bringing out the billionaires to opine on the same subject.
Last week it was Goldman Sachs CEO Lloyd Blankfein, who uncomfortably took to CBS to declare that income inequality was “destabilizing” our nation and “responsible for the divisions in our country.”
This week it was bond king Bill Gross of Pimco, who called the yawning gap in wealth a threat to US capitalism. Like Warren Buffett, Gross, who has already made his fortune, called for higher taxes on those who are still working hard to build their fortunes.
The mainstream media lapped up the comments — as if the .0001 percenters among us have a lock on insights when it comes to leveling out some of the income disparity across the continent.
What’s ironic is that Buffett, and to a greater extent Blankfein and Gross, have accumulated all those zeros on their net worth by buying, selling, slicing and dicing US debt obligations.
That’s to say the more than $8 trillion in federal debt tallied up since the financial crisis directly accrues to Goldman’s and Pimco’s bottom lines.
But don’t take it from me. Last year, when a more grounded Gross pondered the subject, he got to the root of the whole income inequality conundrum: “I and others in the magnificent 1 percent grew up in a gilded age of credit, where those who borrowed money or charged fees on expanding financial assets had a much better chance of making it to the big tent than those who used their hands for a living.” He was right.
Trouble is, while talk of income inequality now grabs headlines and cocktail party conversations, nothing has changed since the “age of credit” first took hold back in the 1980s. The government is still printing IOUs at a near-record pace and the Federal Reserve’s six-year, rock-bottom interest- rate policies have kept the party swaying well past dawn.
Unfortunately, a higher minimum wage and slightly higher capital gains taxes won’t close a gap that has been 30 years in the making and steeped in a credit binge of epic proportions. At best, these policy moves will make the rich get richer a little slower. Making the poor and middle class get richer faster is a tougher challenge that these billionaires might want to spend more time thinking about addressing.