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I found Rainer Zitelmann’s post at FEE Stories, questioning narratives in the United States about income inequality strangely crabbed. Here’s the core of it:
f a thesis is repeated hundreds of times, many people believe it; if it is repeated millions of times, hardly anyone doubts it. The United States in particular is repeatedly cited as an example of how the “gap between rich and poor” is constantly widening. But two experts from the Office of Tax Analysis at the U.S. Treasury Department and the U.S. Congress’s Joint Committee on Taxation have now demonstrated in an almost 50-page essay in the renowned Journal of Political Economy that this thesis is simply not true.
The left-wing French economist Thomas Piketty, who is regarded as the principal proponent of the thesis, calculated that the income share of the top one percent of the wealthiest Americans has more than doubled since 1962. Among other things, he uses this to justify calls for taxes on the rich to be raised as high 90 percent and for all young people to be “gifted” a lump-sum of 120,000 euros in start-up money from the state.
The two authors come up with a figure that sounds far less dramatic. The top one percent’s share of pre-tax income in the United States increased from 11.1 percent (1962) to 13.8 percent (2019), i.e. by 2.7 percentage points. However, after taxes and transfer payments are taken into account, the increase was only 0.2 percentage points (from 8.6 to 8.8 percent).
I don’t believe that the question of income inequality can be discussed intelligently without considering what sort of country we want.
What has happened over the last 50 years is that the aggregate income of people in the top quintile of income earners has risen while those of other quintiles has fallen. If you want a country in which 20% of the people pay the taxes that allow the lowest 20% to receive government benefits that keep them out of dire poverty while the 60% in the middle struggle and the taxes of that top 20% are kept low by issuing ourselves credit, you’re in the right country. That is a country of profound economic and ultimately social and political inequality. Since it’s a positive feedback system, it also cannot work.
That such a large percent of those in that top 20% of income earners are government employees of one form or another makes it just all that much less workable. So, for example, a police officer or fire fighter married to a teacher may well be in that top 20% of income earners. Remember, too, that about half of all healthcare spending comes from government spending. It’s just not a workable system and it would collapse entirely without the ever-rising public debt that keeps it afloat.
I also know that it’s a lot harder for ordinary, hard-working people in the private sector to own houses, buy cars, or send their kids to college than it used to be. Where we’re headed is not really the United States as it has been and an increasing number of Americans don’t like the direction in which we’re heading.
“I don’t believe that the question of income inequality can be discussed intelligently without considering what sort of country we want.”
Indeed.
“What has happened over the last 50 years is that the aggregate income of people in the top quintile of income earners has risen while those of other quintiles has fallen. If you want a country in which 20% of the people pay the taxes that allow the lowest 20% to receive government benefits that keep them out of dire poverty while the 60% in the middle struggle and the taxes of that top 20% are kept low by issuing ourselves credit, you’re in the right country.”
Heh. Let me take the liberty of modifying your initial statement.
“I don’t believe that the question of income inequality can be discussed intelligently without considering how it came about.”
Despite your oft written admonition about: “governmental anarchists,” I don’t believe your assertion is correct. Few people really believe in a Charles Dickens world. A safety net is warranted.
But some of us recognize that camel’s noses first enter the tent…….the camel owns the tent later. Combine that with the human condition, especially applied to politicians and promises of free beer, and you have our current situation.
The expansion of government, all of course (of course) under noble desires, results in tyranny. Its not exactly a novel concept.
So. We institute intrusive government, with the best of intentions (snicker), and we end up with an entity that rewards some, and ignores or punishes others. Who’d a thunk it? And so separate and apart from the realities of economics, economic change, and economic darwinism – we introduced an overlord. Income distribution becomes, in a material degreee, a byproduct of the state.
Don’t believe me? Why does anyone associated with solar or EV’s have a nickle? They rape the taxpayer. The common Joe is hosed. I could write for 15 minutes.
How’s it all workin’ out? You critics of income inequality? Look in the mirror.
Nice work at changing the topic, moving the goalposts, etc. The question is are we better off living in this world with the increase in income inequality. We have as a mater of policy made a few wealthy people even wealthier. Has it made everyone else better off? Did we have that rising tide? (Let’s also note that if you are going to give the wealthy all of the money then if you want to fund stuff the money is going to have to come from those same people.)
So the country we have is one where policy is made by the wealthy for the benefit of the wealthy. Remember that most of the growth in that top quintile actually goes to the top 0.1%.
Steve
Lets not forget that inequality begets more inequality.
https://nymag.com/intelligencer/article/college-admissions-educational-consultants-command-education.html
Steve