New York magazine writer Jonathan Chait, always a good read, apparently believes a) income inequality is exploding like a supernova, and b) the American middle-class is no better off today than it was 30 years ago.
In fact, he believes the evidence for those beliefs so incontrovertible/bullet-proof/ironclad, that anyone challenging them is a “denier” and should be shunned like someone contesting the Holocaust—or even global warming. In other words, you should pay absolutely no attention to the following uncomfortable evidence:
1. Research by Northwestern University professor Robert Gordon, generally a liberal fave, finds that “not only has the increase of inequality been exaggerated, but it has ceased. The excess growth of mean relative to median income reversed itself after 2000.” But maybe he is somehow saying just the opposite, that it has actually not ceased. Weird, that.
2. And Gordon—who, in all fairness, does think incomes are more unequal today than a generation ago—has this to say about supposedly stagnant middle-class wages: “Correcting the upward bias of the official [consumer price index] adds more than 1 percent per year to official estimates of the growth in median and mean wages. Cumulatively since 1977, my best estimate of the upward bias in the CPI cumulates to 38 percent between 1977 and 2006.”
3. In a blockbuster, the blog Political Calculations finds that “there has been absolutely no meaningful change in the inequality of individual income earners in the years from 1994 through 2010. … It would seem then that the real complaint of such people isn’t about rising income inequality, but rather, how people choose to group themselves together into their families and households.”
4. Brand-new research from University of Chicago’s Bruce Meyer and Notre Dame’s James Sullivan, who find that “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009.”
5. A 2008 paper by Christian Broda and John Romalis from the University of Chicago documents how traditional measures of inequality ignore how inflation affects the rich and poor differently: “Inflation of the richest 10 percent of American households has been 6 percentage points higher than that of the poorest 10 percent over the period 1994–2005. This means that real inequality in America, if you measure it correctly, has been roughly unchanged.”
Now that is a lot of information. Economics is hard! So much easier to lackadaisically regurgitate the findings of economists like Thomas Piketty and Emmanuel Saez or the Congressional Budget Office with absolutely no context, qualification, or nuance.
Yes, regurgitating information without comprehending it is much easier.
Let’s take item 3 on your list.
The Ginni coefficients computed in that post (which purports to show that they haven’t risen over recent decades) were computed by binning the US population into income ranges, and treating the lower-end of the income range as the income for everyone in that bin.
The top bin, however, is “$100,000 and over”. So the Ginni coefficient was computed by assuming that all those folks income was fixed at $100,000.
Now, it’s no surprise that you:
1) drastically underestimate income inequality if you pretend that everyone making over $100,000 (including the top 1%) makes only $100,000.
2) completely miss any change in the share of income going to the top 1% by pretending that their income has stayed fixed (at $100,000).
The question is: why would anyone who bothered to think about the graph, and how it was obtained, for more than 30 seconds, tout it in not one, but two blog posts?
Wow. what a takedown that first comment is.
James is used to it. He’s not trying to win an argument; he’s trying to earn a grossly inflated salary for gently reassuring the rich and powerful.
That awkward moment when the entire post is demolished in the first comment.
AEI needs to call the bullpen.
“median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009.”
And GDP has grown 85% in that same time span, indicating that income was distributed disproportionately to the top half of the income distribution. It’s like you don’t even understand the statistics you cite.
It’s not “like” that. He just does not understand numbers
Oh snap. And there you have it ladies and gentlemen. This is how lies, damned lies, and statistics works.
“Now that is a lot of information. Economics is hard! So much easier to lackadaisically regurgitate the findings of economists”
Did you really write that after your 200 word post. I think that irony is not your strong suit.
Yup, I’m with physguy on this – either you were taken in by the “Blockbuster” graph that binned the data to fit the desired outcome, or you understood that it was hiding a huge growth in income inequality at the very top but cited it anyway, hoping misinform even more people.
Either you made a mistake, or you’re a real douchebag.
One might think James is missing the neo-Gilded Age forest for the trees, but, much like his climate research, James is not interested in the truth. He’s interest in participating in some of that Gilded Age forest. I wonder if “propagandist for Coal financed think thank” can get one that sweet, sweet candy?