Why inequality isn't a problem
One of the hottest buzz phrases from Washington to Davos is "inequality," or more specifically "income inequality." Both abroad and domestically, the political elite and their favorite allies are trotting out charts and rhetoric galore that illustrate a substantial difference in the amount of wealth held by the richest people and that by the poorest.
It makes for a very compelling emotional story to spark outrage (as if we haven't had enough of that lately) and pushes the narrative of the "haves" and "have nots" that is dividing the U.S. and is sure to gain even more traction around the world.
However, I take issue with the entire inequality discussion, as opportunity and prosperity are important objectives, but equality is not only a pipe dream, it isn't desirable.
There is no equality. There's an old and true saying that "Life isn't fair." That's a fancy way of saying that life isn't equal. All of us endure circumstances where we have more or less than those around us. We are not equal in our intelligence or our physical appearance. We are not equal in love and relationships. In my life, having lost both my parents, I have a deficit in family, which I would gladly trade some of my income for. Do we adjust for every circumstance where one person has more than another? Should there be an "ab" limit, where those with six pack abs are capped at having three and the rest redistributed to others? Obviously, I am being facetious to show how ridiculous the notion is. People can always find those who have more or less than they have of various attributes of importance. Money is just one currency and while it has a place and an importance, it should not be the be-all-end-all of focus.
(Read more: Why we shouldn't raise the minimum wage)
Additionally, those of us born in the United States have won the genetic lottery. We live in a land of opportunity sought out by immigrants throughout the world. The poor in the United States are substantially better off than many throughout the world, so where does the inequality argument end? Are we obligated to then make everyone in the world equal, since it was a matter of luck that some of us ended up in America instead of Sierra Leone where the GDP per capital is around $374, or The Congo, where GDP per capita is around $271 and more than 70 percent of the population lives in poverty? There is even an index that shows that the bottom 10 percent of those in the U.S. have a better socio-economic status that those in the top 10 percent of countries like Russia, Portugal, Brazil and Mexico.
Focus on the problem, not the side effect. Shifting attention back to America, inequality isn't the problem — the problem is the level of people in and near poverty (as well as the struggles of those in the middle class of late). The fact that some people have significantly more wealth makes this no more of a problem than if those people were less wealthy.
We need more people focused on solving the problem, not treating the side effect, which is a lack of appropriate skills to put to work more people in our changing economic environment. Education and training are musts, and would be musts regardless of the size of the gap between the poorest and the wealthiest.
(Read more: Marco Rubio: Why lower-income workers are stuck)
Wealth creation helps many. There are too many people who somehow believe, despite our history of growth and wealth creation, that somehow there's a fixed amount of wealth and that one person getting a share only leaves so much for someone else. That's blatantly untrue. Innovation and its effect of wealth creation is what helps to grow the economy and creates more wealth which benefits many people. Take for example the young billionaire, Mark Zuckerberg. His becoming wealthy benefitted many. By starting a company, he left open a job that he could have taken elsewhere to be filled by someone else, plus founded a company that created many new jobs — and wealth. His becoming wealthy through Facebook was not at the expense of anyone (Well, other than maybe the Winklevoss Twins…).
We want people to be rewarded for educated risk-taking, investment and innovation. It's what creates more opportunities for all. Without growth, we end up in a shrinking economic environment, which isn't good for anybody. Many countries have tried to take out these incentives and make everyone equal. Those have all failed miserably. So, I don't concern myself with the fact that some outliers have created a silly amount of wealth. Even if they spend it on insane wine collections or toilets made of gold, there are people who work for the vineyards and commode manufacturers that make a living on that.
I think that as a country, we need to collectively look past emotional headlines to focus on real problems or they won't get solved. These divisive emotional straw men are only serving one purpose: to allow those representing us to get wealthy at our expense with no accountability. If you want to be concerned about inequality, start with the fact that Maryland, home to lawmakers, lobbyists and their cronies, is the 19th largest state in terms of size but the state with the greatest absolute number of millionaires. They're creating these talking points that distract and divide us and as we focus on the debate, they are all lining their own pockets using your tax money. If there's anywhere that you should start narrowing the gap, turn your focus there.
— By Carol Roth
Carol Roth is a "recovering" investment banker (corporate finance), entrepreneur/small-business owner, investor and author of "The Entrepreneur Equation." Follow her on Twitter
(Read more: Live blog: All the news and gossip from Davos: Day 1 | Day 2)