Op-Ed

Ky. Voices: Wealth redistribution unfair, yet economic insecurity volatile

Michael Coblenz 
is an intellectual property attorney 
in Lexington.
Michael Coblenz is an intellectual property attorney in Lexington.

Here's a history lesson: Economic insecurity creates political instability and can lead to social upheaval.

There's no doubt we're seeing some of that today, as economic problems have created unsettled politics. Two of the past three elections have swept out the party in power, first the Republicans in 2006 and then the Democrats in 2010.

There's little doubt that the protests of the Tea Party in 2010 and the "Occupy Wall Street" movement a year later were political manifestations of economic trouble. The difference between where the Tea Party and OWS lay the blame couldn't be more stark, but both were clearly responding to economic uncertainly.

Throughout history, and across the world, the greater the economic instability the greater the social unrest and political upheaval.

Over the past 30 years, the economic situation of the working class in America has deteriorated dramatically. Opportunities have diminished and real wages have stagnated. There are numerous causes. Chief among them are automation, computerization and international trade. Automation replaced laborers with machinery. Computers eliminated entire career fields, like typists, secretaries and draftsmen. International trade created a worldwide glut in low skilled and low cost labor, and a worldwide shift in low cost manufacturing.

This has been a body blow to mid- and low-wage workers, but the highly placed and educated have benefited enormously. When companies replace workers with robots and secretaries with software, the savings are passed on to executives and shareholders. This upward shift in wealth also benefited from significant reductions in the tax rate on upper income since 1980.

Those who support low tax rates for the wealthy argue that it's unfair to take money from one group and give it to another. It is unfair to over-tax the wealthy, because it creates a disincentive to produce, which weakens the economy.

And giving money to the poor through welfare programs eliminates the gut-wrenching impetus to strive. I completely agree. Wealth distribution, however defined, is fundamentally unfair.

But as disparities in wealth grow, and as opportunities to advance diminish, economic instability increases. And the lessons of history are clear: political instability and social unrest increase in proportion to economic uncertainty.

In extreme cases, economic collapse leads to social and political upheaval. Throughout history and across the world, extreme poverty and hopelessness led to extreme reactions. There's no question that the revolutions that began in France in 1789, spread across Europe over the next century and culminated in Russia in 1911 had their roots in economic despair. Nor is there any doubt that the rise of fascism in the 1930's was the end product of economic upheaval.

The lesson of history is that in extreme cases of political upheaval terrible, terrible things happen. Cities burn, people die, and the wealthy often lose their money. In some cases the wealthy lose their heads along with their money. I think that burning cities, overthrowing the existing order and murdering the upper classes is unfair.

Honestly, I think it is probably more unfair to kill the rich than to raise their taxes. Destruction of the old order is more unfair, I would wager, than a modest tax hike and a slight increase in social spending.

The extreme reactions to economic tumult that were common in Europe never happened in the United States. Many historians agree that for most of our history, our vast land mass provided the opportunity that removed the element of helplessness from the sting of poverty. And social and political havoc was avoided in the 1930s, after the frontier had closed, because the government essentially, and effectively, bought off the poor through the introduction of welfare programs.

But we're now seeing vast increases in the disparity between the rich and poor, record increases in poverty and dramatic reduction in opportunity all at the same time. History tells us that this is a troubling mix. But if you discuss this history you're accused of class warfare and stoking resentment of the rich. Actually, understanding this history, and learning and applying its lessons, is the best way to avoid real, not rhetorical, class warfare.

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