It seems as though everyone’s talking and writing about stagnant wages, growing income inequality, gender discrimination in pay, concentration of wealth, no/less/too-little upward mobility, shrinking middle class, foreclosure of opportunity, end of the American Dream, higher mortality rates (due to income inequality), and on and on and on. (Insert exclamation marks to heighten the sense of outrage.)
All of these complaints — which emanate from the left and resound loudly in the media — presuppose the existence of several Platonic ideals; for example: correct wage levels, correct degrees of income and wealth inequality, correct rates of upward (and downward) mobility, an actually identifiable and permanent middle class, a measurable and optimum amount of opportunity, a definition of the American Dream that is more than pablum, and on and on.
All such ideals, of course, exist only in the minds of those who complain about stagnant wages, etc. But no matter — any excuse for further government intervention in the economy will do. And further government intervention will only harm those persons whom it is meant to help, by further reducing the rate of economic growth.
But nothing daunts true believers — Paul Krugman, Brad DeLong, Joseph Stiglitz, and their ilk — who always want government to “do something.” Their preachings bolster the pro-government-spending biases of most pundits and a large fraction of politicians. One aim of the true believers is to shape the fickle mood of the general public and garner support for government action.
Anyway, the various manifestations of economic hysteria listed in the opening paragraph can be met with logic and facts — and often are. (See the list of readings at the bottom of this post.) It’s unlikely that logic and facts will sway those who are emotionally committed to the exaction of redistributive justice, and who have no interest in its infeasibility, high costs, and perverse consequences. But until that lucky day when legitimate government is restored to the United States, its defenders must rely on logic and facts.
Consider income inequality. Not only is there inequality — which should be unsurprising, given inequality of ability, ambition, etc. — but there is supposedly a growing gap between America’s “haves” and “have-nots.” A do-gooder would leave it at that. Not being one of them, I’ll ask the questions that they’re unwilling/afraid/too-jejune to ask:
- What is a have? Is it someone/a household whose income exceeds the median for all persons/households? Is in the top 20 percent of all such incomes? The top 5 percent? The top 1 percent? The top 0.1 percent? (Pick your favorite point along the continuous curves in the graphs here.)
- Or is a have defined by his/her/its wealth? And, if so, how? (See preceding bullet.)
- Do haves “rig the game” so that they are, in effect, stealing from have-nots?
- If haves are clever and determined enough to do that, isn’t it likely that they’d still be haves without “rigging the game”?
- Is one’s economic status a permanent thing, or do people in fact move up and down the economic ladder during their lifetimes?
- Are the have-nots of today — who, mostly, aren’t the have-nots of yesteryear — really worse off than their predecessors, or are they really better off?
- Are they worse off relatively?
- Will tomorrow’s have-nots be better off if the haves are deprived of income/wealth through redistributive actions taken by government?
- Or will redistributive actions simply make haves worse off and less likely to do the things that make have-nots better off (e.g., give huge sums to charity, invest in growth-producing investments)?
Questions 1 and 2 are unanswerable; the distinction between a have and a have-not is purely arbitrary. (It has been said, with some accuracy, that a rich person is someone who has more more money than you.) The answers to the other questions are: (3) only to the extent that some of them are aided by government through perverse regulations favored by do-gooders; (4) yes; (5) not permanent, plenty of movement; (6) better-off absolutely than earlier have-nots; (7) probably about the same, relatively, but they’re mostly different people; (8) worse off; (9) yes, redistributive actions make have-nots worse off by hindering economic growth. (For more, see the list of readings, below.)
Before signing off, I want to say a bit more about haves, have-nots, rigging the game, and hypocritical politicians:
Most of the haves — given their ambition, intelligence, and particular skills — would succeed famously, even without rigging the game in their favor. In any event, government does most of the rigging — mainly to “protect” the have-nots from “ruthless” operators. For example, there’s licensing and regulatory barriers to entry to high-paying professions, such as the creation and trading of financial instruments, doctoring, lawyering, and making licensed, patented drugs. The entire left-leaning entertainment industry thrives on government-granted copyrights
In free markets, there would be no rigging, or it wouldn’t last long because the high profits generated by rigging would entice competition. So, if you want to blame rigging for the advantages enjoyed by the haves, blame their cronies in government, many of whom make a career of crying (all the way to the bank) about inequality. (Relevant aside: It is no coincidence that in 2012, five of the top-six counties in median household income were in the D.C. area.)
Isn’t is strange that most of the pissing and moaning about inequality emanates from people who are either in high-income brackets or whose political rank enables them to live as if they were? (Obama, Biden, and members of Congress, I’m looking at you.) Isn’t it evident that the pissing and moaning results mainly from economic illiteracy, guilt, and political opportunism? It should be evident, unless you’re a complete naïf of the kind who still believes in the tooth fairy and free lunches.
I must add that I have yet to meet a pro-equality “liberal” who pays more taxes than demanded of him by the IRS, opens his house to the homeless, or associates with the unwashed masses. As Victor Davis Hanson observes, there are no (true) socialists among the powerful and affluent lefties who spout egalitarian slogans.
I’ve addressed income inequality and related matters in several posts, including “The Last(?) Word about Income Inequality,” “Taxing the Rich,” “More about Taxing the Rich,” “In Defense of the 1%,” and “Progressive Taxation Is Alive and Well in the U.S. of A,” “How High Should Taxes Be?,” and “Some Inconvenient Facts about Income Inequality.” (See also the links embedded in and appended to those posts.)
There’s much more on the web. The following is a small sample of the vast trove of reasoned, fact-filled writings that leftists ignore because they prefer myths to facts.
Income inequality, wealth inequality, and economic mobility
Diana Furchtgott-Roth, “The Myth of Increasing Income Inequality,” The Manhattan Institute, Issues 2012, March 2012
James Pethokoukis, “Obama’s Fact-Challenged Inequality Speech,” AEIdeas, July 26, 2013
James Pethokoukis, “3 Charts That Show What’s Really Going On with Economic Mobility in the U.S.,” AEIdeas, December 12, 2013
James Pethokoukis, “If All You Know about Income Inequality Is This Famous Chart, You Really Don’t Know Much,” AEIdeas, December 23, 2013
Don Boudreaux, “Questions about and for Those People Obsessed with Income Inequality,” Cafe Hayek, December 24, 2013
Raj Chetty, et al., “Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility,” Working Paper 19844, National Bureau of Economic Research, January 2014 (related: N. Gregory Mankiw, “How Much Income Inequality Is Explained by Varying Parental Resources?,” Greg Mankiw’s Blog, January 24, 2014)
John Goodman, “Myths about Inequality,” John Goodman’s Health Policy Blog, January 15, 2014
Thomas Sowell, “Fact-Free Liberals (parts I, II, and III),” creators.com, January 21, 2014
James Pethokoukis, “Does Obama Know That Wealth Inequality Is Lower Now Than 25 Years Ago?,” AEIdeas, January 21, 2014
Ironman, “Debunking Income Inequality Theory,” Political Calculations, January 23, 2014
David Harsanyi, “State of the Union: Maybe You’re Not As Screwed As They Think You Are,” The Federalist, January 27, 2014
David Henderson, “Why Income Mobility Is Larger in the Middle,” EconLog, February 10, 2014
Executive pay, the “undeserving” rich, and the “1%”
James Pethokoukis, “Stunning New Study Dismantles Obama’s ’1% vs. 99%’ Inequality Argument,” AEIdeas, August 16, 2013
James Pethokoukis, “Why Steven Kaplan Says Brad DeLong Is Wrong about CEO Pay, the Superstar Theory, and Income Inequality,” AEIdeas, August 19, 2013
James Pethokoukis, “Why the Much-Hyped Oxfam Study on Global Inequality Is Misleading,” AEIdeas, January 21, 2014
Don Boudreaux, “Deidre McClosky on Oxfam’s Calculation of World Wealth ‘Distribution’,” Cafe Hayek, January 27, 2014
Walter E. Williams, “Politics of Hate and Envy,” creators.com, January 29, 2014
Robert J. Samuelson, “Myth-Making about Economic Inequality,” RealClearPolitics, February 3, 2014
N. Gregory Mankiw, “Yes, the Wealthy Can Be Deserving,” The New York Times, February 15, 2014
N. Gregory Mankiw, “CEO’s Are Paid for Performance,” Greg Mankiw’s Blog, February 17, 2014
Mark J. Perry, “‘Rich America Is Not the ‘Idle Rich’, but rather a Working America, an Educated America, and a Married America,” Carpe Diem, February 19, 2014
Rigging the system: “our” government at work
Bruce Yandle, “Bootleggers and Baptists,” Regulation, May/June 1983
Bruce Yandle “Bootleggers and Baptists in Retrospect,” Regulation, Fall 1999
Richard K. Vedder, “Federal Government Has Declared War on Work,” Commentary Articles, The Independent Institute, January 20, 2014
The effect of assortative mating on household income
Henry Harpending, “Class, Caste, and Genes,” West Hunter, January 13, 2012
Henry Harpending and Gregory Cochran, “Assortative Mating, Class, and Caste,” manuscript, December 1, 2013
Jeremy Greenwood et al., “Marry Your Like: Assortative Mating and Income Inequality,” Population Studies Center, University of Pennsylvania, January 12, 2014
Ironman, “In Which We’re Vindicated. Again.,” Political Calculations, January 28, 2014
The non-war on the middle class, women, and blacks
Mark J. Perry, “Yes, the Middle Class Has Been Disappearing, but They Haven’t Fallen into the Lower Class, They’ve Risen into the Upper Class,” Carpe Diem, July 12, 2013
Steve Sailer, “Breakthrough Study: Poor Blacks Tend to Stay Poor, Black,” Vdare.com, July 24, 2013
John B. Taylor, “The Weak Recovery Explains Rising Inequality, Not Vice Versa,” WSJ.com, September 9, 2013
John B. Taylor, “My Take on the Middle-Out View,” Economics One, September 9, 2013
James Bessen, “No, Technology Isn’t Going to Destroy the Middle Class,” The Washington Post, October 21, 2013
Bryan Caplan, “Is Average Over? Two Equivocal Graphs,” EconLog, January 4, 2014
N. Gregory Mankiw, “Does Income Inequality Increase Mortality?,” Greg Mankiw’s Blog, January 29, 2014
Christina Hoff Sommers, “No, Women Don’t Make Less Money Than Men,” The Daily Beast, February 1, 2014