Income Inequality

Thursday 3 November 2011 - Filed under Uncategorized

I’m not one of those who would agree that “income inequality”, the difference in the amount of income between the rich and the poor, is a problem. In fact, I would argue that it’s no more than an empty academic trope used by people who have no real economic argument other than “TEH RITCH R TEH BAD GUYZ”. Firstly, the acquiring of wealth in NOT a zero sum game in which there is a fixed amount of wealth in the world. Wealth is created out of nothing all of the time, and by different people doing things that are valuable to other people. There is no fixed amount of money that needs to be equitably distributed because there is no fixed amount of money. Secondly, so long as the living conditions of everyone continue to rise, which they surely have (and any argument that might state that living conditions have fallen are purely fantasy), even if some perceived gap between high and low income people is moot. If the quality of life continues to rise for the poor, it isn’t a problem that those of rich people also continue to rise. The fantasy that the rich get richer off of the back of the poor is little more than pure bullshit, as shown by the FACT the quality of life for lower income peoples has continued to rise.

But even if we were to stipulate for the sake of argument that income inequality is the scourge that the left wants it so badly to be, it would seem that it is THEIR OWN POLICIES which have fostered and encouraged income inequality the most.

During the 2008 campaign, Obama said, “The project of the next president is figuring out how do you create bottom-up economic growth, as opposed to the trickle-down economic growth that George Bush has been so enamored with.”

But it turns out that the rich actually got poorer under President Bush, and the income gap has been climbing under Obama.

What’s more, the biggest increase in income inequality over the past three decades took place when Democrat Bill Clinton was in the White House.

The wealthiest 5% of U.S. households saw incomes fall 7% after inflation in Bush’s eight years in office, according to an IBD analysis of Census Bureau data. A widely used household income inequality measure, the Gini index, was essentially flat over that span. Another inequality gauge, the Theil index, showed a decline.

In contrast, the Gini index rose — slightly — in Obama’s first two years. Another Census measure of inequality shows it’s climbed 5.7% since he took office.

Meanwhile, during Clinton’s eight years, the wealthiest 5% of American households saw their incomes jump 45% vs. 26% under Reagan. The Gini index shot up 6.7% under Clinton, more than any other president since 1980.

And what’s more, as Merline points out, income inequality isn’t the correct metric to observe, but income mobility. It isn’t nearly as important that there is some perceived gap in how much money the rich and not rich pull in on an annual basis as it is that those lower on the income scale are able to move between brackets and overcome their lower income.

Others argue that income mobility matters more than equality.

One study found that more than half of the families who started in the lowest income bracket in 1996 had moved to a higher one by 2005. At the other end of the spectrum, more than 57% of families fell out of the top 1%.

A survey by the Economic Mobility Project found 71% said it’s more important for the country to focus on improving upward mobility. Just 21% prioritized reducing inequality.

Those in lower income brackets have had the economic mobility to move UP. And 57% of the top 1% have been displaced by those who are, one would presume, NOT the top 1%. That is the metric that matters; the metric that shows that people have the ability to continuously move up, not some made up trope that attempts to show just how “unfair” the system is.

2011-11-03  »  madlibertarianguy