Inputs = Outputs

The accepted understanding is the rich are getting richer and the poor are getting poorer. It is a convenient refrain as it captures headlines. Further, it contributes to the vilification of capitalism. I like debate; however, I prefer debates that are based upon fact not emotion. Remember, as former US Senator Daniel Patrick Moynihan said “everyone is entitled to their own opinion but not their own facts. Truth be told, the rich are indeed getting richer, but…spoiler alert…the poor are getting richer as well. The actual issue is that the delta (gap) between rich and poor is growing. This is the reality, and that is a much different issue and not necessarily inherently bad. It is that issue, which I wish to address in this article. 

Income distribution is traditionally studied by rank order, the simple process of highest to lowest. That distribution list is separated into quintiles. The fifth quintile is often the immigrant entrance gate. It is a starting point to a new life, in a new country with abundant opportunities. This is a journey that my own family navigated as did many of yours. If one embraces this “land of opportunity”, then this particular lower quintile is simply a temporary stop along the way to greater opportunities in life and income. Ideally, and often, the case is those in the first quintile come from the second, and those in the second come from the third and so forth. 

We are a great country, which provides opportunities like no other! It is an environment that we share with three hundred million others. However, we must count our blessings,-primarily for the opportunities provided by having been born here or the product of some very brave ancestors, who at great risk immigrated so subsequent generations would have a better life. Seven billion others will never have our opportunity. Should one find them self not moving up the hierarchy of opportunity, then on the way to joining the growing chorus of those denouncing capitalism, business, or success, please invoke a cause for pause. Glance in the mirror, for some introspection. Yes, why don’t you revisit that all too ubiquitous “why me?” question…. It is indeed a great question “why you?”…why you indeed! After all, did you not exist in the same country of opportunities as others? 

The press, for headline purposes, wants to continue fueling a class warfare. A few years ago, in my home state of Illinois, a gubernatorial candidate had a platform of raising the taxes on only those earning over $200,000.00 per year. His logic, no doubt, was that only 3% of the state’s population fell into that category. Presumably his strategy was that in a democracy, majority rules, and majority elects. Obviously, he felt he would ignite a burning ember within the masses to tax, tax, and tax the rich and redistribute, redistribute, redistribute. Any wonder why Illinois is ranked last in just about every measurement concerning business climate? The question the media never asked was; what percent of the jobs created are created by those “three-percenters”? The answer: All of them! 

The nation’s media has moved the narrative of class warfare to vilification of success, and, the discussion on income inequality to an even more of a granular level of those damn “one-percenters.” Yes, those one-percenters who already pay 40% of all taxes (the top 10% of wage earners pay 70% of all federal income taxes), which, according to the media and the policy makers is apparently not enough. In an attempt to stem any hate mail of course, I want to acknowledge that there are bad people, greedy people, corrupt people, exploitive people, yet they are the exception, not the rule. They are the outliers, not the “typicals”, which is why they are in the headlines to begin with. Those “typicals” which are so well represented throughout our PVF Industry, are on a high road more crowded than most want to acknowledge. In the big picture perspective, for every additional dollar those people spent in taxes, it is a dollar not spent on job creation in the all-important private sector. What better poster children for doing things right than our own pipe, valve and fitting industry and those more successful, individuals and families, who continue to invest in our industries, our states, our counties, and our country each and every day with the odds continually being stacked against them. (NOTE: 12% of our nation’s GDP is exhausted on government regulation compliance.) 

Too many believe we are no longer the greatest show on earth. Even our policy makers are moving to the models of other less successful countries. Therefore, allow me brief data dump: In America, yes in fact, (note, “fact”) income is 24% less distributed than the 34 member countries of the OECD. This is the basis for the class warfare argument. However, as we are now grounded in facts, let me also point out that US per capita income is 40% higher, household wealth is 210% higher, and median disposable income is 42% higher than that same aforementioned group of advanced nations. Yes, there is a concentration of wealth that is a bit disconcerting, yes it troubles me that the top 85 richest people in the world have more money than the bottom 3.5B, however, remove the kings and the queens and the dynasties of the world. Remove those born on third base going through life thinking they hit the triple, and what is left is the rest of us… a group which includes many very successful individuals. I don’t want to be positioned as an advocate for the 1%; rather I want to advocate for whatever is best for commerce and industry, as that is best for our great nation. Success is the recipe for…more success!

My bottom line is what the media or masses have not yet figured out; why is the wealth output disproportionate? Yes, birthright, tax policies, and legal loopholes all play a role. However, from an attribution rate basis (to what do we attribute an outcome), the number one reason there is inequality in the outputs is that there are inequalities in the inputs! Some people work harder and work smarter. They educate themselves in school, as well as in the streets, drive the trucks, teach in a class room, and work on the loading docks of our very own industry. Some people don’t take their money and run, but continue to reinvest and take risks to create, (yes, indeed) more wealth for themselves, but also opportunities for many more. In my life, no poor person ever gave me a job.

Thus, as the bandwagon of the rich getting richer marches on, vilification of the rich, castigation of the “one percenters”, distain for those successful, I encourage the critics to first and foremost look at the disproportionate inputs…and then reset the debate.

Dr. Donald McNeeley is president and CEO of Chicago Tube and Iron Co., headquartered in Romeoville, Ill., as well as a Professor of Engineering at Northwestern University. Founded in 1914, CT&I is one of the largest steel service centers in the U.S., with 10 subsidiaries throughout the Midwest. Inventory, fabrication and processing is facilitated in over 1.2 million square feet of efficient, state-of-the-art facilities. CT&I houses over 30,000 line items of inventory from some of the world’s premier manufacturers. It has a 90+ year history of consecutive profitability that has provided the necessary capital resources for growth. Contact Dr. McNeeley at (800) 972-0217, or visit www.chicagotube.com.

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