172 Responses

  1. While this may sound like something from OWS, those with ears to hear will understand the difference …

    I once listened to people who said to me
    that livin’ large would be so easy
    Go buy that McMansion with zero down
    Grab that credit card and burn up the town
    But when bills came due, and ’twas time to sell
    Them bums had led me to financial Hell
    They got bailed out, but left me in the red
    Misleading me about my ri–ii–ight …
    To get ahead.

    Now I’m led by experts who’d “guarantee”
    My “right” to get by irresponsibly
    Get drunk get stoned get high on crack
    And jump with anyone into the sack
    And then go see the doc for “free”
    Cure that hangover and STD
    Pick up my check and go back to bed
    All they ask is my ri–ii–ight …
    To get ahead.

    But wisdom’s led me to a better view
    Responsibility starts with me and you
    No one but you can take your place
    in solving most of the problems that you will face
    Now if we need to, we can help each other
    But we don’t need Big Gov. acting like our mother
    Government’s best when it’s limited
    So it respects our ri–ii–ight …
    To get ahead.

    This is why I’m here, you see
    It’s about a lot more than dumpin’ tea
    It’s about the lie that’s led to hurt
    That life should be left to only trained experts
    Instead of pourin’ money down’ their ratholes
    The ordinary people now will take control
    Everything is better, the truth be said
    When WE protect our ri–ii–ight …
    To get ahead.

  2. Brock says:

    In addition to, or to reiterate some, the items addressed in the column I present my five reasons:
    1. The reason that the household income has appeared to have stagnated is predominately do to the increase in single parent households. Thus the household of the 1970s had more people in the home and more workers. As indicated income per person is a far better measurement.
    2. While mentioned, I think it needs to be emphasized more that the numbers fail to look at after tax income. When the bottom 50% pay almost no income taxes while the ‘rich’ pony up about 24% (effective tax) the disparity in income is drastically reduced.
    3. Nondirect cash subsidies are also not included so the “poor’s”, who receive housing subsidies, utility subsidies, food stamps, EITC (earned income tax credit), etc., income figures do not include their full income. Certainly that is not fair.
    4. The numbers fail to include benefits such as insurance, etc. Given the rising cost of healthcare and insurance and the growth of employer provided insurance since the 1970s, the disparity is not as large.
    5. Finally and perhaps most importantly; on average a “rich” household is a household working about 80 hours per week (either a workaholic husband or two income household), while the average “poor” household works about 16 hours per week. Based on that alone I would expect the average “rich” household to have about 5 times more income than that of the “poor.” Wouldn’t you?

    By the way do not forget about the effects of age and education. Even the OWS would agree that a doctor should be paid more than a 7-Eleven cashier.

  3. dw says:

    But let’s also not forget, as we’re pointing out the tax disparity, that the top 3% “earn” over 22% of ALL income in the US (IIRC). You know, for the über-rich, losing $500,00 has a far less significant impact than someone earning $20,000 losing $500. Let’s not forget the magnitudes involved please. For one, they might not be able to afford the second Bentley and a “small cottage on the beach” while for the latter, they might not be able to replace a water heater. I’m not saying soak the rich, but really folks, let’s keep some perspective, OK?

  4. 99% says:

    A reasonably bright 3rd-grader could point out the glaring prejudice in your propaganda here. We especially like the part where you theorize that an “80 hour workweek” household must have a workaholic husband OR two working parents. You must comb your hair straight down the right side, we imagine. Do you do that before or after you make the leap to get to your conclusions?

    Whoever hurt you and gave you this Napoleon complex, just let it go and forgive yourself for your shortcomings. Publicly pursuing the fantasy that you are knowledgeable and capable of deductive reasoning is just going to make it worse for you. You’re compensating, and it’s pitiable.

    Be smart. Help yourself. Try researching the ideas to which you’ve been previously hostile rather than seeking out unverifiable substantiation for your own or your idolized peer group’s opinion. Narcissism is just not attractive, and assuredly error-prone.

    Hang in there. We’re sure there’ll be help for your condition soon. We imagine that rash must itch; it certainly explains why you’re so irritable.

    <3 99%

    • James Strong says:

      The irony of this post.

      • GoCapitalism says:

        Haha, so true. Almost as ironic as trying to solve your problems with government and governmental decisions by ADDING MORE GOVERNMENT and allowing them to make more of those decisions for everyone.

        As we like to say, Mr. Strong, those who get it get it, and those who don’t, never will.

        #occupyreality

        • Government is not a spice says:

          Yeah, because adding more government is a sentence that makes sense. Also, the government should make some decisions for everyone, like that we all have to stop at a traffic light (which they put up for us, very nicely). The government is controlling you to make everyone else safer and happier, and this is what they should do to the rich.

  5. Dan Farfan says:

    Brilliant, Mr. P. :-)
    I can think of no finer example use of the web that honors its original intent!

    Here’s another study I’d love to read… (don’t know if it’s ever been done).

    The whole faux conversation about “top x%” and the “bottom y%” treats each group as if it is static. Of course that’s false. I’d love to read a study that focused on *movement* in and out of the many economic groups. It would have to adjust for many factors such as inherited wealth. Not much chance the Johnson family or the Walton family are exiting their economic group — so they are outliers. We all know the anecdotes but how common is the rags to riches or vice versa happening ( per capita ) throughout the decades?

    Movement is one way opportunity can be characterized.

    One final observation socialists get wrong with the “income inequality” mantra.
    Nothing would destroy the US’s capacity to be the “land of opportunity” faster than dishonoring opportunity itself if the government attempted to artificially force financial results.

  6. Jay-Mo says:

    The brilliant art of the strawman argument has been perfected by conservatives over the past decades. Just throw out a bunch of nonsense to argue against, ignore all of the substance of the issue, and at the end no one can deny that you have won the argument! Of course in the end you were only arguing with yourself, but congratulations! It was all so convincing that I dont even care anymore that reason number 5 that all the numbers that point to income inequality growing to the highest its ever been in the past 100 years (aka “the facts”) are actually a myth is because we forgot to ignore those pesky numbers and just go with our guts on this one. Its sooo true, as long as you ignore the fact that its false!

  7. mjl52 says:

    Something peculiar about this argument?

    “Really? Just think for a second: If inequality had really exploded during the past 30 to 40 years, why did American politics simultaneously move rightward toward a greater embrace of free-market capitalism? Shouldn’t just the opposite have happened as beleaguered workers united and demanded a vastly expanded social safety net and sharply higher taxes on the rich?”

    This is what OWS is all about: awakening to reality and showing up to protest.

    Nor do I believe there has been a rightward shift across the board. That is Fox News mythology. The appearance of right wing nuts on the Supreme Court and in the tea party congress does not reflect the public. That is why OWS has begun and will persist.

  8. axt113 says:

    Your entire argument doesn’t disregard that there is income inequality, in fact all your sources support that income inequality exists (and you ignore investment income of which the rich have taken the lion’s share with low taxes).

    Your argument also covers that the poor don’t have the wealth to afford the stuff that the rich can and so they have less inflation.

    Hello, that indicates inequality, if the poor and middle class lack the ability to afford luxury items, that shows that there is a large gap between them and the rich.

    Good job blowing out your own argument

    • NoVaDad says:

      Your foundational premise, that his argument “doesn’t disregard that there is income inequality” and that “all your sources support that income inequality exists” are the only things here that lack in sound logic. This article routinely concedes that there are differences in income among various population segments. You conflate that to assert that all of same prove “income inequality.” Thus, under your reasoning income differences mean income inequality. Of course there are differences in income distributions. No one is ultimately claiming to the contrary. Indeed, absent living in a wholly communist setting, there will always be discrepancies in income distribution. Is that what you are advocating for here? Is your non-proposed remedy that everyone make the same regardless of ability? In that sense, this columnist is certainly disagreeing with you as his overall conclusions here (based on provided data sources) are: (i) that the differences in income distributions (i.e. the purported income inequalities) have not grown at the magnitude (or often at all) as being routinely claimed by the OWS crowd; and (ii) nor have those differences been qualitatively as prejudicial (also if often at all), as likewise otherwise claimed. Do you disagree with those assertions, and if so what actual data supports your views?

  9. atlasfugged says:

    If Pethokoukis had any shame, he’d be embarrassed by this post. See here:

    http://www.cjr.org/the_audit/aeis_myth_of_equality.php?page=all&print=true

  10. stump knocker says:

    There is nothing in here about the easy credit that has been extended (it used to be called loan sharking) as opposed to increasing wages that resulted from the wealthy paying to change the laws, and has made necessary consumption for things like technology possible. To maintain middle class life styles first women went to work, then people leveraged homes, then amassed credit card debt. The debt accrued through those last two were unsustainable, and they are at the center of many economic crises we face now. That is very possibly the reason we are just now tilting away from the rightward shift. That shift was also assisted by policies that have kept particular groups away from polls. But if the point is that figures can be misleading and are never as cut and dry as they may appear, sure I can go with that.

  11. ottovbvs says:

    Keep up the good work Pethokoukis, a few more like this and what’s left of AEI’s cred is going to disappear down the drain. I see this is already being torn apart all over the blogosphere so there’s no need to pile on. This may impress some of the faithful who believe the point of reference is 100,000 years ago or don’t know the difference between nominal and constant dollars but it’s not going to impress anyone else least of all the vast majority who perhaps inchoately perceive the income and wealth shifts that have occurred over the last 30 years. What you’re producing is a self reinforcing narrative of idiocy for an ever narrowing constituency that is ultimately going to be destructive to the cause of free enterprise. Mark my words.

  12. Claire Solt PhD says:

    In my family, my children in their thirties have a higher standard of living than w3e did in the 70′s.
    They have more cars and bigger houses. My 26″Sony Trinatron was puny to those big TV’s on their walls. In fact, we had more advantages than they had. WE were elite college grads from intact fam ilies. They were children of single parents who went to staqe universities. So, based on what I see, this line of thinking seems wrong.

    From another side, now I am retired on $15,000/yr,average for seniors. It is the same ampount of money I made in 1980 as a college professor. It was enough then and is enough now, except then I was keeping a biggger house and raising two children.

    I have no sympathy for the whiney so-called middle class who make 3,4,or five times what I get, and I often wonder how this all sounds to others in the world, say China and India where middle class means $3-6,000/yr. I lived on that when I graduated college in the mid sixties. I did well.

    • Deadzone says:

      Stuff costs a lot more than it did back then. Carry on, I will get off of your lawn now.

    • Johnny Fever says:

      omg… you think $15,000 in the 80′s is the same as $15,000 today! I call b.s…. there’s no way you were a college professor with that level of thinking
      Guess what, your grandparents make $1 a week back in the day and managed to “get by”. By your logic that’d be a fair wage today.
      Bigger tv’s, cars and houses means better standard of living!? Good grief.

      you’re a conservative idealogues wet dream.

    • LSK1000 says:

      Bull Professor. I made more as a high school teacher in 1980 than you made as professor? Bull again. Wont comment any more as your cedability is blown.

      • matt says:

        You were a high school teacher and you can’t even spell credibility correctly? I don’t think so. I would say your credibility is blown also.

  13. LSK1000 says:

    Everything you need to know about income disparity. Charts, Graphs & more… http://bit.ly/gxmcXO

  14. invest says:

    The OWS (Old Worried Socialist) gana don’t know what equality truly is..Is it fair to tax one sector of America this amount then then let others be taxed nothing? i DON’T THINK SO…

    tHESE IDIOTS PROTESTING AGINST BUSINESSES DON’T HAVE A CLUE….It’s the business that pays the employees taxes for them and not the other way around… Employees don’t don’t pay taxes people..The business they work for pays them on the employees behalf..

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  16. Oikonomikos Logismos says:

    >”When various statistical quirks are harmonized between the two economic measures, Gordon found middle-class income growth to be much faster”

    Well, if that doesn’t sound like a biased, normative economist playing around with parameters and weights to realize his desired outcome, I don’t know what does.

    >”This means that real inequality in America, if you measure it correctly, has been roughly unchanged.” And why is that? China and Wal-Mart. Lower-income families spend a larger share of income than wealthier families on goods whose prices are more directly affected by trade. Higher income folks, by contrast, spend more on services which are less subject to foreign competition.”

    This just doesn’t square with economic theory, though. What a curious notion, that the rich experience more inflation than the poor? The wealthy derive muchmuch more of their income from capital assets like stocks, bonds, options, etc. which are essentially immune to inflation because the increase in prices that happens gets fed into the revenues of the companies they have stock in. First red flag. Second is the last part, which implies that- contrary to the common economic-modelling assumption of “perfect rationality” (all economic agents have all available information and use it to make precise, optimal decisions) on the part of consumers; “the rich” would spend more money in uncompetitive markets, where not only is there no incentive to cost-cut, but quality is always presumably lower due to the fact that there is no competitive incentive to develop that new innovation. So my argument here is essentially immune to a “Veblen-goods” rebut. Besides, even if you want to use Veblen goods, and other “effects,” you are actually moving further and further away from “free-market economics” or at least economics which supports free market ideology, and moving toward economics whose hypothetical economies are filled with agents who suffer so many sorts of effects and delusions that its any wonder they can accomplish the mental task of consumption to begin with. This principally implies that ***the government*** or some ***central authority*** could impose some form of behavioral modifications through taxes or other incentives. That doesn’t sit well with yourself, I am sure.

    >”But Meyer and Sullivan point out that income statistics miss a lot, such as the value of government programs and the impact of taxes. The latter, especially, is a biggie. The researchers find that “accounting for taxes considerably reduces the rise in income inequality” over the past 45 years. In addition, “consumption inequality is less pronounced than income inequality.””

    This is either intellectual dishonesty, or just plain economic incompetence and sheer foolishness. The rich experience more income taxes, however once again, the rich derive a formidable part of their income from capital assets, which are subject to only the Capital Gains Tax– and that tax is only applicable to *realized* gains, which means income resulting from **selling** whatever financial contract is in question. Furthermore, for at least a decade financial institutions and services have been increasingly coming up with innovative ways to sell capital assets in order to bypass the Gains Tax. What this means is that your source, either purposefully in an obfuscation, or just out of sheer ineptitude, made some big novice and sophomoric mistakes in his analysis, nullifying your conclusions drawn from this study.

    >”5. [...]”

    This obviously was not meant to be a piece of intellect, and it succeeded at that. The author wrote this with zeal and haste, and obviously did not stop to consider that the reason prices on all of those things mentioned has fallen so much, a mere few of them because of innovations-yes, but mostly prices dropped because of the classic reasoning that prices are related to quantity, and if demand falls and quantity drops, businesses will always cut prices to stay ahead on the profit margins.

    I’ll end with this; you’re wrong. You the derelict author who penned this, you the sheep who just comes to the trough to gorge yourself on this food day after day. I am certain you won’t think so, no matter how much logic and reasoning I deliver to you here. So I’ll deliver one last strike here and say; I don’t come to websites, which make erroneous articles such as this, basically ever- and I will never be back to read whatever frothing, psychotic frenzy this post has whipped you up into. Never.

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  18. “If inequality had really exploded during the past 30 to 40 years, why did American politics simultaneously move rightward toward a greater embrace of free-market capitalism?”

    You’ve already answered the question. The rich are getting richer therefore they have more money = more power. More power means greater influence in Washington DC. Naturally, they will support an economic system that will maintain the status quo so they can protect their wealth. They 1% do not want a level playing field because if that were the case they wouldn’t be lavishing in their jet planes any longer.

    What good is capitalism is only a tiny tiny minority of the population holds nearly all the wealth and the rest of the population lives paycheck to paycheck? This is very much the antithesis of what economic freedom is about. It’s economic slavery. How’s this a good thing… ever? If there are not safeguards to prevent it capitalism will devolve into a form of despotism. When a small minority control the market, and use the government machine to stifle all competition then it’s not really living the American dream anymore is it.

  19. Dominion says:

    This article is full of BS.

    http://www.cjr.org/the_audit/aeis_myth_of_equality.php?page=1

    You should be ashamed of yourself.

  20. Dominion says:

    You’re chocked full of BS

    http://www.cjr.org/the_audit/aeis_myth_of_equality.php?page=1

    You should be ashamed of such a display of intellectual dishonesty!

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