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TheStreet Open House

The Terrible Truth About Income Inequality: Opinion

Similarly, Dodd-Frank financial reforms impose regulatory costs so onerous that small banks are selling out to bigger ones. In the bargain, small business loans and mortgages are tougher to obtain, and grandma can't get a decent rate on CDs. Bank executives pull down huge bonuses but also make generous contributions to political candidates.

ObamaCare has effectively monopolized many local markets for health insurance and hospital care, and reinforces pharmaceutical companies' ability to charge higher drug prices than prevail in other wealthy countries like Germany and Holland.

To salve the masses, Washington politicians exempt nearly 50% of voters from income taxes, and offer subsidized health care, food stamps and the earned income tax credit for lower-income Americans.

All are great vote-buying schemes financed by heavy taxes on most upper-income Americans.

But those politicians skillfully exclude from those high taxes the very top of the one percent -- the oligarchs in communications, finance and other industries are often paid in stock options, which are subject to much lower capital-gains tax rates.

A recent Wall Street Journal poll found the majority of Americans view the economic and political system stacked against them, and most are dissatisfied with Obama's handling of the economy.

>>Read More: Verizon Playing Defense In $130 Billion Deal

Meanwhile, the economics profession -- composed mostly of left leaning academics -- is enamored with French economist and author Thomas Piketty's thesis, in the new bestseller, Capital in the Twenty-First Century, that growing inequality is the natural outcome of capitalism and confiscatory taxes are the answer.

Both notions are wrong.

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