We’ve noted for years [9] that it’s a myth [10] that conservatives accept runaway inequality.
Conservatives are very concerned about the stunning collapse of upward mobility [11].
A poll [12] from Gallup shows that a majority of Republicans think we’ve got too much inequality:
Two out of three Americans are dissatisfied with the way income and wealth are currently distributed in the U.S. This includes three-fourths of Democrats and 54% of Republicans.
And the conservative website Townhall.com ran a story last month entitled, “Inequality is a Conservative Issue [13]“.
In fact, there are at least 6 solid conservative reasons – based upon conservative values – for reducing runaway inequality:
(1) It has now finally become widely accepted by economists that inequality drags down the economy [14]. Conservatives like prosperity and economic growth, not things which pull down the economy;
(2) Inequality increases the nation’s debt [15]. Conservatives don’t like debt;
(3) Runaway inequality leads to social unrest and violence [16]. Conservatives like stability and order;
(4) Much of the cause of our soaring inequality is bailouts for the big banks and [17]socialism [17] for the buddies [17] of the high-and-mighty at the Federal Reserve, Treasury, and White House. The government has consistently picked Wall Street over Main Street [18], and virtually [19]all [19] of the the big banks’ profits [19] come from taxpayer bailouts. The Fed is still throwing many tens of billions a month at the big banks in “the greatest backdoor Wall Street bailout of all time”, which [20]sucks the wealth away [20] from the rest of the economy [20]. Conservatives don’t like bailouts (a 2012 Harris poll showed that 87% of Republicans [21] are against bank bailouts) or socialism; and
(5) One of the biggest causes of runaway inequality is that the big banks are manipulating [22]every [22] market [22], and committing massive [23] crimes [23]. Fraud disproportionally benefits the big banks, makes boom-bust cycles more severe, and otherwise harms the economy … all of which increase inequality [24] and warp the market. These actions artificially redistribute wealth from honest, hard-working people to a handful of crooks. Conservatives hate redistribution … as well as crooks.
(6) Religious leaders have slammed [25] the criminality of the heads of the big banks; and the Bible teaches [26]- and top economists agree [26] – that their crimes must be punished, or else things will get worse. A 2011 Gallup poll showed that 91% of U.S. conservatives [27] believe that the Bible is either literally true or is the inspired word of God. If the crimes of the bankers are punished, inequality will start to decline, because a more lawful, orderly and even playing field will be reestablished.
We’re not calling for redistributing wealth from the rich. But we do support clawing back ill-gotten gains [28] from criminals under well-established fraud principles:
The government could use existing laws to force ill-gotten gains to be disgorged [29] (see this [30] and this [31]) [and] fraudulent transfers to be voided …
We’re mainly talking about stopping further redistribution from Main Street to Wall Street. As Robert Shiller said [32] in 2009:
And it’s not like we want to level income. I’m not saying spread the wealth around, which got Obama in trouble. But I think, I would hope that this would be a time for a national consideration about policies that would focus on restraining any possible further increases in inequality.
For example, if we stop bailing out the Wall Street welfare queens [33], the big banks would focus more on traditional lending and less on speculative casino gambling [34]. Indeed, if we break up the big banks, it will increase the ability of smaller banks to make loans to Main Street [35], which will level the playing field.
We don’t even have to use government power to break up the banks … if the government just stops propping them up, they’ll collapse on their own. Indeed, many Republicans have pointed out that the big banks would fail on their own [36] if the government stopped bailing them out [37].
And using current fraud laws would do the trick in prosecuting Wall Street criminality.
Postscript: If you want to know the stunning truth of how bad inequality has gotten, read this [38].
If you want to hear what top economists say inequality does to our economy, click here [14].
And if you want to find out whether government policy is making things better or worse, here’s your answer [17].