The Obstacles to Income Equality

President Obama has made a presidential initiative to tackle income inequality: clearly, he wants big results without Congressional involvement. But there are some fearsome obstacles that make this end-run initiative unwise and likely impossible.

Yes, the gap between the highest and lowest earners and lowest is chasmic. Yes, too many salaries still reflect sexism, racism, and a host of other prejudices. And, yes, minimum and living wage laws are inadequate to counter such corrosive and deeply entrenched forces.

Let’s go back to basics. The founding fathers clearly said: “all men are created equal”. The more one reflects on that wisdom, the more confusing things get — what about women? Are all men created to be equal forever? And, even as they exit the womb, aren’t they predisposed and predestined by genetic and social factors? Obviously, the founders simply forgot about women and didn’t know about DNA. As for forever, surely they envisioned equality forever and for all, but what is that supposed to really mean?

Nothing in the world can guarantee that primal equality, if it really ever existed; but equality of opportunity is another matter entirely. Opportunity goes way beyond, and is quite different from, luck in parentage; opportunity is simply what a person makes out of his or her circumstances — good or bad. And those efforts — to overcome adversity, cope with equality both specific and systemic, in short, make the best of a random world — can and should be ranked and rewarded. It is perfectly appropriate, in fact essential, to acknowledge hard work, intelligence, and leadership.

Most of us believe in economic growth as a prerequisite for opportunities, earnings and good life. A rising tide may not lift all boats in exactly the same way — remember, the ocean is made of waves! — but it does lift most boats. And a rising tide beats a falling tide when it comes to creating more opportunity for all.

To sustain economic growth, we must foster innovation, ambition and hard work; and to do that, employees everywhere should be properly motivated by their managers with rewards, both tangible and intangible. A good manager will differentiate the brighter, harder working employees without creating unhealthy and counterproductive feelings among those left behind; capping incomes can easily lead to capping ambitions.

Washington can be a den of vipers at the bottom of a snake pit, and all of these issues elicit so much hissing one can barely think quietly, let alone act sensibly: witness the recent nutty arguments against raising the minimum wage. That does not diminish the goal of income equality, but it does mean that efforts toward fairness and equality must be very carefully calibrated, tested and balanced.

The founding fathers were wise to involve Congress in making major social order decisions. If income inequality is not a major topic, I do not know what is. Electing a functional Congress, rather than a limp gesture of sidestepping the one we have, must be a first step toward tackling inequality.


How to Have an Impact in Today’s World

Everybody at some point in their lives has asked themselves how to make things happen. Those things may range from making the basketball squad, getting into college, getting the unemployment check, to getting nominated to run for a political job [including President]–that is: the full gamut of life.

There are a lot of different theories about how to go about such an important process in life.

Rule I- Check all the boxes carefully.

Rule II- Stoke the fire in your belly.

Rule III- Play the angles carefully.

Rule IV–Make a lot of friends along the way.

Rule V–Stay focused.

Rule VI-Make it clear that you are serious.

Rule VII–Work hard all the time.

Rule VIII- Be nice to everyone–you meet the same people going up and down.

Rule IX–Be Careful and diplomatic.

Rule X–Concentrate and stay focused.

There is a great story from about 1900. JP Morgan had just merged a bunch of steel companies into US Steel. One of the important companies was Carnegie Steel run by Andrew Carnegie. It was not the largest, but it was the best run and most profitable. Morgan asked Carnegie to become the CEO. He accepted and then wondered why. He had been happily running his own great business and US Steel was a new problem every minute. He asked a friend of his who was an early version of a management consultant [say, for example, the head of McKinsey which did not yet exist], how he could get a grip on this beast called USS.

His friend said he had no idea, but, the friend did suggest that Carnegie make a list of the 10 most important things he needed to do-in their order of importance–and that they lunch in a week and he might have an idea.

They met a week later and Carnegie passed the list over to his friend saying, “OK genius now what do I do?” His friend barely looked at the list and put his hand over the bottom seven items and said; “OK, finish the first three and add three more!”

And, it worked for Carnegie, as it will work for you and everybody you know. So Rule X is really all you need, but it can not hurt to remember the first 9.