Obama Slams American “Inequality” During $7,700-Per-Minute Speech

June 16, 2017

Obama Slams American “Inequality” During $7,700-Per-Minute Speech Image Source: YouTube

On June 5th, President Obama made a speech at the Chamber of Commerce in Montreal. In it, he urged the world to combat income inequality.

Although his exact speaking fee for the event was not revealed, Obama has demanded at least a $400,000 speaking fee for other speeches.

It was not the first time Obama talked about what he sees as a need to reduce economic differences. During his 2008 presidential campaign, he told Joe the Plumber how he wanted to spread the wealth around.

Perhaps he is more talk than walk, so to speak, or will he spread the wealth around from his $400,000 Montreal speaking fee? That comes out to roughly $7,700 per minute — a staggering sum.

Fighting Income Inequality?

In the 1980s, when I was a college student back in Sweden, I took a semester off to work as a substitute teacher. About a month into the semester, I was given the opportunity to add more money to my modest paycheck. The assistant principal asked me to take on some extra classes to fill in for a teacher who had to go on sick leave.

To find out exactly how much more money I would be able to pocket, I went to the local library to find a current tax table (yes, life before the internet…). I crunched the numbers and found out that even at my modest income, the extra earnings would bump me up into the 50-percent tax bracket.

The government would take half of that extra money I would make.

Surprised and – frankly – irritated, I called the office of my local member of parliament to ask why I had to pay such a high marginal income tax. The staffer explained, passionately, that it was all in the name of fighting income inequality. Those who make “a lot” should pay more so that government could give to those who make “a little.”

I never quite figured out how making “a lot” applied to me, but some three decades later I am reminded of those arguments as I listened to President Obama’s speech at the Chamber of Commerce. His criticism of income inequality rang eerily familiar to me.

Income redistribution in Sweden

The problems begin when egalitarians go from word to action. Despite some feeble tax-reform efforts, Swedes still pay 50-60 percent in marginal income taxes.

They do so in the name of fighting income inequality, and for this they have paid a price. Two years ago, in a comparison of European countries to U.S. states, the Mises Institute concluded:

Since Sweden is held up as a sort of promised land by American socialists, let’s compare it first. We find that, if it were to join the US as a state, Sweden would be poorer than all but 12 states, with a median income of $27,167. Median residents in states like Colorado ($35,830), Massachusetts ($37,626), Virginia ($39,291), Washington ($36,343), and Utah ($36,036) have considerably higher incomes than Sweden.

In addition to these compelling numbers, let us not forget that Swedes pay approximately twice the taxes that Americans pay. To make things even worse for the wealth-spreading egalitarians in Sweden, they really do not get anything more for their taxes.

A 2003 research report on public-sector efficiency in industrialized countries, written by three economists at the European Central Bank, explained that Swedes get half as much public-sector services per dollar paid in taxes as we Americans do.

In other words: not only do egalitarian policies run out of wealth to spread around, but they also run out of money to pay for all the promises they make to people in the very name of fighting inequality.

American left is turning toward radical socialism

Obama may have been all about egalitarian talk and no walk, but his followers are more ambitious. Inspired by him and Senator Sanders, the American left has clearly taken a turn for radicalism.

A good example is the idea that we can sacrifice economic growth if it means we reduce income inequality. One of the gurus on this subject, Thomas Piketty, may have been discredited for sloppy research, but other egalitarians are still trying to find evidence that the economy will grow better if we spread the wealth around.

They continuously fail to do so, which should not surprise anyone, and at least some egalitarians are honest enough to admit as much. But those who do not accept facts are beginning to ditch economic growth altogether.

Sacrificing growth in the name of equality will hurt our children

Neither President Obama, nor his ardent supporters, seem to have any problem with him going down in history as the first president without a single year of at least three percent growth.

If we continue with sub-three percent growth, we will guarantee that our children and grandchildren grow up to a life no more prosperous than ours. In fact, with sustained growth rates below two percent, which is common in egalitarian European welfare states, our children’s lives will be less prosperous than ours.

As a nation, we will walk backwards into the future.

Obama’s hypocrisy is typical of leftist politicians, and it serves to highlight the problem with socialism — those who make the decisions that hurt the rest of us, are never impacted themselves.

To someone who grew up in a politically engineered egalitarian welfare state, the obsession with income equality among the American left is worrisome, but perhaps not surprising. After all, another continent – Europe – had to go full fledge with the same egalitarian experiment before they found themselves stuck in a quagmire of economic stagnation, mass youth unemployment and endless budget deficits.

None of this will probably be enough to deter the left in their quest to turn America into Sweden. Or Venezuela. Perhaps those who felt the Bern last year will need to feel the burn from the socialist hot plate before they pull their hand back and start re-examining their beliefs.

Let us hope it does not come to that, because the world cannot afford to lose America.

Sven Larson

Sven Larson is an economist specializing in macroeconomics and the welfare state. He has worked for several free-market think tanks and is the author of "Industrial Poverty" a book about the European economic crisis. His forthcoming book "The Rise of Big Government" explains how egalitarianism conquered America. He has a Ph.D in Social Sciences with a Major in Economics from Roskilde University, Denmark.