Fed, Not Capitalism, Responsible for Income Inequality

“Income inequality in the United States has been growing for decades, but the trend appears to have accelerated during the Obama administration.”                                                                                                 The New York Times

Today, America has the widest gap in income equality in history.

If capitalism is to blame, as French economist Thomas Piketty claimed in his bestseller, Capital in the Twenty First Century, how can that be?

During the past eight years, the federal government has virtually taken control of healthcare, the Internet (regs to come) and, to a great degree, the financial sector. The minimum wage has doubled in many markets and spending on entitlement programs such as the supplemental nutritional assistance program (SNAP) has skyrocketed.Gini Coefficient

In other words, America has moved much closer to socialism, with greater government control over our lives. Capitalism has ebbed, as fewer businesses are being formed and fewer still are going public.

President Obama made income inequality the main theme of his 2015 Economic Report of the President and his last two State of the Union speeches.  As Occupy Wall Street, MoveOn.org and other left-wing and left-leaning organizations have made income equality their rallying cry, the gap between rich and poor has widened.

How come?

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In Defense of Capitalism

“The problem is we don’t have enough free markets.”

                                                                  Ron Paul

The U.S. economy is operating with the invisible hand tied behind its back.  And that’s unlikely to change if we elect another President Clinton or a President Trump.

Unfortunately, capitalism has become unfashionable.  Media, academia, some members of Congress and others would have you believe that “profits” are bad and income inequality is America’s biggest challenge (Note: Socialist actors like Sean Penn, Susan Sarandon and Jane Fonda also make plenty of profits and contribute little to the economy.  When are they going to equalize their incomes?).

When’s the last time you heard a presidential candidate—or any politician, for that matter—extoll the virtues of capitalism?  This year, we have a socialist running for president and millions of millennials supporting him.

Hillary Clinton reacted by moving almost as far to the left as Bernie Sanders.  She did mention capitalism in the nearly ignored Democratic debates, but only to say that we need to save capitalism from itself.  She’s half right … we need to save capitalism—from politicians, academics and the legion of “activists” who are clueless about economics.

You’d think that as a billionaire, presumed Republican nominee Donald Trump would be a die-hard capitalist, but he is a protectionist whose immigration policies, if enacted, would continue to stifle business formation.  Given that he has also personally benefited from eminent domain, his support of capitalism appears to be of the crony type.

Other Republican candidates have spoken out against “crony capitalism,” but we have not seen a lot of support for honest-to-goodness, free-market capitalism.  You know—the capitalism that made the United States the wealthiest, most successful country in history.

Why Capitalism Rules

The concept of capitalism is simple enough.

In a capitalist country, trade and industry are controlled by private owners, rather than by the state.  The more private owners succeed, the greater the profit they make.  Ada

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