May 30, 2016 0
Inequality in American Life is not as easy to measure as you would think and probably even more difficult to make relevant. The common solutions from the left point more to reducing the wealthy than raising the poor, as if the results will be the same.
While there is a point where inequality can affect social stability it is less relevant than economic growth and income mobility. I contend that the current obsession with inequality is a by product of lousy growth and ineffective growth policies
The big flaw in studying inequality is that it measures groups, not individuals: individuals rise and fall and display more mobility than groups. America more than any other country celebrates the individuals. How it is measured is also critically important. What years you start and end, what is included in income, whether it is measured pre or after tax, whether transfer payments are included, whether it is adjusted for hours worked, and whether it measures individual or household income can greatly affect the measure of inequality. Not surprising many sources chose a measurement that exaggerates it.
Jeff Jacoby addresses inequality in Up and down — but mostly up — the income ladder
The 25th great-grandsons of medieval Florentine shoemakers and wool merchants may still be riding high, but things don’t work that way in America. Here, riches-to-rags stories are not uncommon. When Bhashkar Mazumder, an economist at the Federal Reserve Bank of Chicago, examined the earnings of thousands of men born between 1963 and 1968, he discovered that 17 percent of those whose fathers were in the top tenth of the income scale had dropped to the bottom third by the time they were in their late 20s or early 30s. Movement between income groups over the course of a lifetime is the norm for most Americans. The rich often get richer, but plenty of them get poorer, too. Though the top 1 percent makes a popular target, it’s actually a group no one stays in for very long. On the other hand, it’s a group that 11 percent of Americans will reach at some point during their working lives.
Affluence in America is dynamic, and our economic system is biased toward success. But bias isn’t a guarantee. Mobility — up and down — depends to a great degree on the choices that people make for themselves. Individuals who finish high school, marry before having children, don’t engage in criminal activity, and work diligently have a very high likelihood of achieving success. Those who don’t, don’t.
Of course, there are impediments to mobility that are beyond the control of any individual, and that are most likely to hurt those who start out in America’s poorest precincts. Broken public schools, for example. The normalization of single-parent households. Too-easy access to welfare benefits. Counterproductive mandates, like minimum-wage laws and stifling licensing rules. Would that our political demagogues and professional populists put as much effort into dismantling those barriers as they do into demonizing the rich and yapping about inequality.
Yappers notwithstanding, the American Dream is far from dead. This isn’t Florence. No one is locked out of economic success today because of their ancestors’ status long ago. America remains the land of opportunity. Make the most of it.