Wednesday, January 18, 2012

The Income-Inequality Myth

Reports of skyrocketing incomes for the wealthy and stagnating wages for the rest are unfounded. - Michael Tanner/National Review Online

As we listen to President Obama, Occupy Wall Street, and much of the mainstream media working themselves into a lather over inequality in America, one thinks of “Harrison Bergeron,” the 1961 short story by Kurt Vonnegut that posited a society based on perfect equality, “not only equal before God and the law . . . equal every which way.” The government employed a “Handicapper General” to ensure that no one was smarter, more athletic, or more productive than anyone else. Beautiful people were forced to wear masks, athletic people had to carry weights, and intelligent people wore radios in their ears to interrupt their thoughts with loud noises.

Yet for all the sound and fury — and beating drums in Zuccotti Park — almost everything that people presume about inequality in America is wrong.

For example, nearly all reporting on income inequality in America has suggested that the incomes of the rich have been rising, while incomes for the rest of us have been stagnant or even declining. But that may represent a significant misreading of the data....

Poverty, of course, is a bad thing. But is inequality? After all, if we doubled everyone’s income tomorrow, we would eliminate an enormous amount of economic hardship. Yet, inequality would actually increase. ... a must read at National Review Online.
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◼ Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservativism Brought Down the Republican Revolution