Famous billionaire and investor Warren Buffett is by no means scared to share his opinions, and he does so frequently about pretty much any issue that’s on the rise. As per usual, this led Buffett to speak out on the growing issue of income inequality.
The income gap in America, or income inequality, has been increasing for about 30 years. The top 10%’s income averages out to be about 9x as much as the lower 90%, while the top 1%’s income averages out to be 38x more than the bottom 90%. As incomes get higher so does the rate at which they grow— the top 0.1%’s income goes up way quicker than the top 1%, which goes up much faster than the top 10%. To me, it seems obvious that this is an issue, but what about someone in the top 10%? Or 1%? What does Warren Buffett think about this?
“No conspiracy lies behind this depressing fact: The poor are most definitely not poor because the rich are rich, nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America… Instead, this widening gap is an inevitable consequence of an advanced market-based economy,” Buffett commented on the subject.
While Buffett does agree that the increasing income gap is an issue, he disagrees with quite a few people on how he thinks it could be fixed. Buffett by no means supports raising the minimum wage; him and I both agree that raising the minimum wage only, in turn and with time, will only increase the cost of living and decrease the employment rate. Still, that doesn’t change the fact that the Forbes list of the richest American’s grew 2,400% in 30 years, while the median household income only increased 180%.
The Oracle of Omaha does offer up what he thinks might be a solution— trying to make an earned income tax credit more attainable for working and lower class— but ultimately, Buffett is calling for government officials to step in.
“If you told my parents, that under these circumstances, there would be millions and millions of people living in poverty, they would’ve said it was impossible… But as the economy gets more specialized, as a natural consequence, a lot of the wealth flows to the top… But you really shouldn’t have an economy with over $50,000 in GDP per person and have lots of people living in poverty who are willing to work. I mean, that makes no sense and we need governmental policies to correct that.”
Buffett is wise enough to recognize that in a country with as much wealth as America has, we can do something to help fix the income gap. However, the question that remains now, is how? While many advocate for an increased minimum wage, Buffett calls for an improved income text credit system and government action, but many others think that would be an issue as well. While we do know Buffett thinks America will do just fine under Trump’s administration, is this an issue our new, wealthy president will consider?