The People Have Spoken (and They Are Wrong) by David Harsanyi

Author:David Harsanyi [Harsanyi, David]
Language: eng
Format: epub
Publisher: Regnery Publishing

Despite the economic stagnation of the Obama years, American workers and consumers are better off than they were in 1980 thanks to advances in technology and productivity. But there is one characteristic of capitalism that will never change, even after we have shaken off the Great Recession: some of us will always have more than others.

Economic inequality is a valid concern (even if pundits and politicians overplay the gap between rich and poor). But you can’t go anywhere on the internet these days without tripping over a fevered denunciation of the “explosion” of inequality, the dark smog of capitalistic excess that is choking the life out of this unjust nation. Populism distorts our understanding of the problem and how we try to deal with it.

Yet wealthy people—at least in a free-market society like ours—are not usually wealthy because they took something from the poor or from government. Their wealth doesn’t keep anyone else from being wealthy. And the wealthy did not create our debt; government did. Government is immune from the consequences of its failed “investments.” Not so you or I. Moreover, if the rich get richer, no one has to become one penny poorer. The childish idea that the economy is a zero-sum game might appeal to the populist sentiments of the so-called “99 percent,” to the envy of some others, or to the emotions of many who are struggling through this terrible economy, but in the end, it doesn’t stand up to the most rudimentary inspection.

The notion that runaway income disparity is destroying the American middle class has been repeatedly debunked. Yes, some are getting super rich, but many others are getting richer as well, just at a slower pace. James Pethokoukis of the American Enterprise Institute points out that even Congressional Budget Office “data show real median after-tax household income (half of all households have income below the median, and half have income above it) grew by 35 percent over the past three decades.” Over the past half-century, in fact, the wages of the middle class have constituted a remarkably consistent share of gross domestic product. And the most important contradiction of the protesters and progressives is that the poorest 5 percent of Americans are still richer than nearly 70 percent of the rest of the world. And they enjoy far greater opportunity to improve their situation.

A 2007 Treasury Department study showed that 58 percent of households that were in the bottom quintile in 1996 had moved to a higher level by 2005, and of households in the top 1 percent during the same period, more than 57 percent dropped to a lower income group. As Reason Foundation’s Shikha Dalmia explains, “New data from the University of Chicago’s Steven Kaplan shows that, despite government bailouts, in 2008 and 2009 the adjusted gross income of the top 1 percent—a disproportionate number of whom work in the financial industry—fell to 1997 levels.” These numbers show great mobility, upward and downward, and it’s why “class” as a political wedge issue hasn’t typically held as much traction in the United States as it has elsewhere.

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