Ahh... Thanksgiving. The time a year where 2 glasses of wine makes everybody an expert on politics and why you're still single... And naturally, Occupy Wall Street will be a topic of conversation: some supporters, some detractors, and others who just don't understand what it's all about.
I thought I might help out by giving you an analogy for why income inequality is bad... that just about everybody can understand. It's a poker analogy that was first used by Henry Morgenthau, who was FDR's secretary of state. Altho... lazy me learned it by watching Bill Maher ;-)
Imagine a weekly game of poker. You and a few buddies get together once a week to play Texas Hold-em.
Naturally, everybody comes to the table with the same number of chips: "All men are created equal" after all.
Slowly, through a combination of skill, hard work, and luck, the money gets concentrated into fewer and fewer hands.
When you fall behind a little, you can make a comeback. But if you fall behind a lot, it's pretty much impossible to catch up.
Once the players who fall behind run out of chips, they are out of the game.
Once the top player has all the chips, the game ends.
Sound a bit familiar? This is the exact same problem as "income inequality." If we all started out equally, anybody could get rich. Sometimes hard work and skill pays off, but sometimes you get dealt bad hand after bad hand, and you fall behind... and then you have to struggle just to stay in the game.
Now... if you're rich, it's easy to stay rich, and easy to get richer. If a rich person has an average amount of skill, it's pretty tough for them to believe that their winnings are due to blind luck... although that happens quite often.
Naturally, this winner-take-all approach is fine for a weekly game of poker with some friends... because you go home as friends, and play the next game in a week. But in the real world, people starve when the game ends, and there is no next game. If poker were played more like the economy, it would go like this:
You're at a poker table with all of your friends. The card rules are fixed, but we can tweak the rules about how money gets put into the pot, and how it's taken out of the pot. Also, if a person runs out of poker chips, he dies.
Yikes... sounds a bit like a twilight zone episode, but it's pretty close to the truth... So what rules would you add to this game to make sure nobody dies?
Solving this problem is not easy... which is why so many people in the OWS movement have vastly different approaches. Some call for better education and a safety net for the unlucky. Some are calling for the very rich to put in more than they currently do, because of their unfair advantage in the game. Some are asking for specific rich players to just follow the damn rules, and stop with the outright theft!
So ask your relatives... how would you solve this problem?
And enjoy the fireworks ;-)