One of the hot topics for the moment is economic inequality. I think it's great that this has caught the public eye, and hope the situation improves, but I'm pessimistic that we'll have some lasting change. I'm not going into too much background, that can be easily found elsewhere, but am going to go through my thoughts as a New Zealander now living in the USA.
First, the whole system is set up to transfer wealth to the rich. Sure, income tax structures are progressive, so generally people earning more pay a higher income tax rate than those earning less. However, GST/sales taxes are regressive, cancelling this out to some extent. Then there are government handouts in both directions. Do the rich need handouts? Of course not. But they get them anyway.
Here are a few examples: In NZ, there is no capital gains tax or anything of it's ilk. So income earned via capital gains is not taxed. Who are the majority of investors? The wealthy of course. They then get handed potentially enormous tax cuts by not having to pay income tax of what may be the majority of their income. In the US, there is a capital gains tax, but it decreases well below the income tax rate for things held for >1 year. Then there are many ways round this, e.g. making donations or dying to name a couple. Again, another handout predominantly made to the already well off. Then look at subsidies for solar panels and electric cars. I agree with the idea of pushing new technology that is necessary to avoid too much climate change, but look at who the main recipients of these subsidies are: the well off.
There are also various schemes for lower income people: working for families, earned income tax credit, food stamps, etc. These do transfer some wealth into those less well off, but they are small in dollar amount compared to the subsidies given to the well off above.
The other key part of the problem is wage disparity. I think we should live in a society where effort pays off, and the more work you put in the better you should be compensated. However I think the wage disparity in modern companies has gone way too far. CEOs are paid millions, whereas people doing the actual work are often paid at or near the minimum wage. Do CEOs really add 100s to 1000s of times more value than the people doing the real work? And even if they do, should they be compensated like that.
To an outside observer, the incredibly high salaries in the executive ranks appears to be a case of the rich scratching each others backs. Salaries are set by well compensated boards, whose members are usually former executives or executives at other companies. It is in all of their best interests to ensure each other are well compensated. Is it in the best interests of the company? Hard to say. The question I ask is does executive A, earning $x million add enough extra value over a good person willing to do the same job for a still well compensated $x hundred thousand. I think it would usually not be the case. Perhaps all employees of a company should have some say in executive salaries?
But even if the exorbitant salaries at the top were brought down to just well compensated. How would we bring salaries at the bottom up? This is a difficult problem. There are many possible solutions, none of which are ideal: raising the minimum wage, stronger labour unions. Then more complicated ones such as increasing (cross industry) salary transparency so employees have greater bargaining power, working towards a lower unemployment rate so employers have to compete in pay and benefits for a limited pool of employees. The latter seem better long term solutions, but I wouldn't be opposed to the first two, and I definitely think the minimum wage should be raised high enough that it is sufficient to live on.
Too much rambling for now. Maybe more later
