We’re told that “economic inequality” is on the rise.
Ronald Bailey, at Reason’s site, does a pretty good job of setting the record straight. The rich may be getting richer, but the poor aren’t getting poorer.
Further, “the rich” aren’t the same folks one year to the next. There is still income mobility in America. Some poor folks become super-rich; a majority of super-rich “1-percent-ers” will fall out of that 1-percent category. Over time, most folks move from one quintile to at least the next.
What prevents widespread understanding of this? Intellectual muddles. The difference between income and wealth often get fuzzed up, for example. Take two high-income workers, earning the same pay: The one who saves will wind up with much more wealth than the other who spends it all. And rates of savings vary radically from person to person.
As does everything else.
Making things more complicated? Government policy. Bailouts are now an integral feature to aid some of the rich, to prevent their losses (we’re told) from spreading “financial contagion.”
Considering the moral hazard involved, I’d say “financial contagion” is endemic . . . on a whole different level.
And the same President Obama today decrying income inequality was yesterday bailing out rich folks.
A question for the inequality obsessed: Since the War on Poverty really set in, poverty rates have leveled off and even worsened (that is, the numbers of the officially impoverished have increased, despite increases in after-tax/after-subsidy incomes) — could you be missing the moral hazard that any sort of bailout portends?
Real economic justice, as I suggested in my most recent weekend column, is just that, justice. Establishment of good rules, no special privileges.
This is Common Sense. I’m Paul Jacob.
Graph on this page shows income per household, courtesy Cafe Hayek. Caution: Households changed complexion radically in the 1960s-1980s.