Class warfare debate asks the wrong question

The Occupy Movement crystallized the political debate around income inequality with a simple percentage: Us, the 99 percent, versus them, the 1 percent. That theme resonates in the presidential debate as GOP presidential candidate Mitt Romney strives to persuade voters that, if elected, he will cut taxes for us (middle class and small business) while President Obama says he wants to close tax loopholes benefiting them (millionaires).

The debate goes right to the heart of what it means to be an American.

Does wealth accrue to those who work harder and innovate more or to those with special privilege or perhaps who engage in corruption like insider trading? The real question, suggests a new Rand report, is what accounts for the inequality?

We know the United States is not living up to its moniker as “the land of opportunity.” Try this: By Rand’s measure, there is more inequality in the United States than in India.

Rand economists cite an indicator of inequality that relates the percentage of the population to the percentage of total income. Thus, if 1 percent of the population received 1 percent of the nation’s total income — and there is no gap between percentage of population and percentage of income for any other group — the co-efficient is zero. On that scale, Namibia has the greatest income inequality, Sweden the least, and the United States is in the middle, with European nations, Japan, South Korea, India, Turkey and Israel with less inequality than the United States and Brazil with more inequality.

How does demonizing the 1 percent or the 47 percent address our nation’s problems, both social and economic? The presidential candidates seem to be talking about the wrong things (tax the wealthy or take away entitlements or union wages) instead of what accounts for the widening gap and what we can do about it. What do you think?

Lois Kazakoff