In their regular swoons of late about “income inequality” it
appears that many editorial writers are only now discovering these two
facts about economies throughout history and throughout the world: (1) People
do not all make the same amount of money; (2) there are far fewer rich people
than not-rich people. I assume that
when they talk about income inequality, they understand that its opposite is
income equality – a state of affairs in
which all people make the same amount of money. How they think that would work,
and why they think it would be desirable, is anybody’s guess. (If that’s not what they mean by the term,
then they should let us know what they do mean. Please be specific.) *
Anyway, my suspicion is that in their finely
honed sense of moral superiority, what they’re really doing is conflating what
they call income inequality with unfairness in the tax code. And the latter
might well be a legitimate beef. We citizens pool our
money in the form of taxes to buy for ourselves collectively things we
want and need but which would be impractical to buy individually,
including national defense, schools, roads and bridges, police and fire
protection, libraries, parks, sewers, dog catchers, air traffic control
and much, much more. There’s a big difference between being skeptical
of big government, which is sensible, and being anti-government and inflexibly anti-tax, which
is childish.
When taxation is understood as a burden -- one that needs to be shared as equally as possible -- in the absence of a carefully graduated tax code, and one that’s free of the sorts of loopholes that only a certain segment of the population can take advantage of, the burden is impossibly heavy for some and nearly non-existent for others, even though everyone shares more or less equally in what those taxes buy. Understood that way, the fact that people who make above a certain income pay, in the aggregate, a certain percentage of the total tax bill has little meaning.
Net: Income inequality isn’t the problem and railing against it just muddies the waters. Fairness in taxation, on the other hand, is something that always needs scrutiny.
* While acknowledging that interest groups from all sides offer up opinions based on various sets of "facts," I would submit that it's sensible to at least examine the statistical evidence -- to rely on at least some semblance of a factual basis -- in discussing this issue. There is considerable evidence that the perception (and condemnation) of income inequality is driven by ideology and class resentment and operates in a fact-free zone. It is in this spirit that I offer the following article by Bill Knapp, a managing director at the political consulting firm SKDKnickerbocker:
As the presidential election heats up, we’re hearing a lot about what’s wrong in America. But the rhetoric doesn’t match reality. Amazingly good things are happening in our country. Let’s consider just a few of the topics that people typically point to as “problem areas” — jobs, inequality, education and poverty — and see why there is cause for hope.
First, America is a job-creation machine. From 1950 to 2010 the number of full- and part-time workers in the United States rose by 92 million. Over that period, while our population doubled, our workforce increased 2.47 times. Essentially, we are creating more jobs than people.
But here’s the amazing fact. Our job market has accommodated over 40 million more women in the workforce since 1960. The number of full-time, year-round women in the workforce has grown more than 350 percent, to 42.8 million workers, according to 2010 Census data. And the median income for year-round female workers has increased to $42,839, about $5,000 short of full-time, year-round male workers at $47,715. Since 1967, the year the Census Bureau started to report these data, women in the workforce have grown by 27.7 million jobs, men by 19.7 million. Women are the big winners in terms of job growth.
Yet we barely notice this remarkable job growth record and transformative social phenomenon.
When taxation is understood as a burden -- one that needs to be shared as equally as possible -- in the absence of a carefully graduated tax code, and one that’s free of the sorts of loopholes that only a certain segment of the population can take advantage of, the burden is impossibly heavy for some and nearly non-existent for others, even though everyone shares more or less equally in what those taxes buy. Understood that way, the fact that people who make above a certain income pay, in the aggregate, a certain percentage of the total tax bill has little meaning.
Net: Income inequality isn’t the problem and railing against it just muddies the waters. Fairness in taxation, on the other hand, is something that always needs scrutiny.
* While acknowledging that interest groups from all sides offer up opinions based on various sets of "facts," I would submit that it's sensible to at least examine the statistical evidence -- to rely on at least some semblance of a factual basis -- in discussing this issue. There is considerable evidence that the perception (and condemnation) of income inequality is driven by ideology and class resentment and operates in a fact-free zone. It is in this spirit that I offer the following article by Bill Knapp, a managing director at the political consulting firm SKDKnickerbocker:
Middle class is moving forward, not backward
By Bill Knapp,
Bill Knapp is a managing director at the political consulting firm SKDKnickerbocker and has been a media strategist to five presidential and numerous other political campaigns.As the presidential election heats up, we’re hearing a lot about what’s wrong in America. But the rhetoric doesn’t match reality. Amazingly good things are happening in our country. Let’s consider just a few of the topics that people typically point to as “problem areas” — jobs, inequality, education and poverty — and see why there is cause for hope.
First, America is a job-creation machine. From 1950 to 2010 the number of full- and part-time workers in the United States rose by 92 million. Over that period, while our population doubled, our workforce increased 2.47 times. Essentially, we are creating more jobs than people.
But here’s the amazing fact. Our job market has accommodated over 40 million more women in the workforce since 1960. The number of full-time, year-round women in the workforce has grown more than 350 percent, to 42.8 million workers, according to 2010 Census data. And the median income for year-round female workers has increased to $42,839, about $5,000 short of full-time, year-round male workers at $47,715. Since 1967, the year the Census Bureau started to report these data, women in the workforce have grown by 27.7 million jobs, men by 19.7 million. Women are the big winners in terms of job growth.
Yet we barely notice this remarkable job growth record and transformative social phenomenon.
There is a lot of talk about the “99 percent” vs. the “1 percent.” The rich
have always been disproportionate owners of the total wealth. But an entire
intellectual and political infrastructure is used to exaggerate and distort
income disparity. A fact from the 2010 Census: Since 1967, median household
income has grown in all income levels above $75,000 and has decreased in all
income levels below that threshold. The largest increase is among those making
$100,000 to $149,999 a year — a threefold increase. Those in the highest quintile
account for 50.2 percent of total U.S. household income, with a mean of
$169,633. That share of household income was 43.6 percent in 1967 and in 2001
broke the 50 percent mark. Should we be concerned by this consolidation of
wealth? Maybe. But we’re not quite in need of the French Revolution.
Another often-cited “proof” of inequality in America is the share of
national income earned by the top 1 percent. In 1968 it was 11 percent; in
1988, 15 percent; and, according to the IRS, in 2008 it was 21 percent.
As of 2009, it had fallen to 17 percent. There is widespread misunderstanding about whom the top 1 percent of earners really means. According to the Urban-Brookings Tax Policy Center, in 2011 the 1 percenter made $532,613 in annual cash income. In 2004, the 1 percent made $459,247 cash income. When you adjust for family size, the top 1 percent made, on average, $335,779 a year. This is not small change, but it’s a far cry from the Robber Barons and the inequality of the Gilded Age.
If there is an income divide in America it is over education, and this makes sense: People who are better educated should make more money. The 2010 Census shows that since 2002, among those 25 or older, the number of people with a bachelor’s degree rose 16 percent, to 47.7 million. The median income for a male with a bachelor’s degree or more is $63,265. That same cohort with full-time employment increases the median to $71,778.
Education pays. In 1979, the median income of college graduates was 36 percent more than high school graduates. In 2010, the median income for a college grad was over 79 percent more than his high school counterpart, according the Census Bureau. And here is the real, hidden optimistic point: As a nation we have never been better educated. In 1940, only a quarter of Americans 25 and older had achieved a high school degree or higher. In 2009, that number was close to 90 percent. The increase in the percentage of Americans who have had some college experience rose from 10 percent in 1940 to 56 percent in 2009.
College enrollment as a whole was projected to be 20.6 million in 2010, higher than any previous year. The real growth, however, is in online education, which has become an affordable alternative to typical brick-and-mortar colleges. According to a 2010 report by the Sloan Consortium, the number of students enrolled in online learning increased 21 percent from 2009 to 2010, compared to 2 percent growth of the overall higher education enrollment. The Western Governors University, a private, nonprofit online college based in Salt Lake City, is growing 20 percent every seven months. The University of Phoenix, a for-profit, open-admission online college, reached a peak enrollment of almost 500,000 students in 2009-10. This growth stems partly from the ease with which students can enroll and complete courses but is mostly due to price. Despite 30 percent annual growth in enrollment, Western Governors U. has increased its tuition only $200 over the past four years.
The pessimism industry is focused on inequality and poverty. Politically incorrect as it sounds, poverty is driven by a lack of education and by single-parent households. Married couples have a median income of $72,751. Female-headed households with no husband have a median income of $32,031. Some will say that the number of female-only households living in poverty has doubled since 1965, to more than 15 million Americans. But among this cohort, the raw numbers tell a different story: The population of this group of women increased from 16.4 million in 1965 to 46.4 million in 2010 — and the share in poverty decreased from 49 percent to 34.2. We’ve made some progress, though more needs to be done.
In an effort to find a more accurate and complete measure of poverty, the Census Bureau tried an experimental formula last year, in addition to its standard measure, that showed 1 million individuals had pushed up from extreme poverty into near poverty. The poverty rate for children declined from 22 percent to 18.2. That’s 3.2 million children who are no longer living in poverty, according to newer, more-inclusive standards.
Now, let’s look beyond IRS and Census data to other telling facts about our economic growth and future. According to Pew Research Center, 83 percent of American adults owned a cellphone last May, up from 66 percent in January 2005. In 2008, 71 percent of teenagers had cellphones, up from 45 percent in 2004. This is a telling statistic because when more teenagers own luxury electronics, it means there are more families with disposable income — indicating a stronger and wider middle class. In 2008, 77 percent of teens also owned a video-game system, 74 percent owned an iPod and 60 percent owned a computer.
The struggling middle class is getting their teenager cellphones, video-game systems and computers, and they’re going to schools in neighborhoods that have gotten safer in a world that is, broadly speaking, less violent. Steve Pinker’s “The Better Angels of Our Nature: Why Violence Has Declined” estimates that deaths caused by war, genocide, purges, war-caused famine and disease counted for only 3 percent of all deaths in the 20th century. The latest FBI national report showed that the estimated volume of violent crimes in 2010 fell 6 percent from 2009. Not bad.
Another sign of health is broadband Internet access. In 2000, shortly after broadband became available, about 4.7 million households had access. By 2009, about 75 million households had access. That’s an amazing accomplishment for the 1 percent and the 99 percent.
These positive trends are present across almost every indicator of a successful middle class. As persons per household is decreasing — from 3.16 in 1969 to 2.66 in 2009 — the number of vehicles per household is increasing, from 1.16 to 1.92, or 66 percent, across the same period. Even accounting for population increases, the growth in number of vehicles owned outstrips the growth in the amount of new drivers by 11 / 2 times. By 2009, there were 1.39 cars for every worker in America.
The bottom line: America’s middle class is still successful. More families own their homes than in any other decade and are by far the best-educated middle class in our history, with ever-expanding access to technology. They have the opportunity to educate their children and prepare them for a great life in a country with a great future. So take that, pessimists.
As of 2009, it had fallen to 17 percent. There is widespread misunderstanding about whom the top 1 percent of earners really means. According to the Urban-Brookings Tax Policy Center, in 2011 the 1 percenter made $532,613 in annual cash income. In 2004, the 1 percent made $459,247 cash income. When you adjust for family size, the top 1 percent made, on average, $335,779 a year. This is not small change, but it’s a far cry from the Robber Barons and the inequality of the Gilded Age.
If there is an income divide in America it is over education, and this makes sense: People who are better educated should make more money. The 2010 Census shows that since 2002, among those 25 or older, the number of people with a bachelor’s degree rose 16 percent, to 47.7 million. The median income for a male with a bachelor’s degree or more is $63,265. That same cohort with full-time employment increases the median to $71,778.
Education pays. In 1979, the median income of college graduates was 36 percent more than high school graduates. In 2010, the median income for a college grad was over 79 percent more than his high school counterpart, according the Census Bureau. And here is the real, hidden optimistic point: As a nation we have never been better educated. In 1940, only a quarter of Americans 25 and older had achieved a high school degree or higher. In 2009, that number was close to 90 percent. The increase in the percentage of Americans who have had some college experience rose from 10 percent in 1940 to 56 percent in 2009.
College enrollment as a whole was projected to be 20.6 million in 2010, higher than any previous year. The real growth, however, is in online education, which has become an affordable alternative to typical brick-and-mortar colleges. According to a 2010 report by the Sloan Consortium, the number of students enrolled in online learning increased 21 percent from 2009 to 2010, compared to 2 percent growth of the overall higher education enrollment. The Western Governors University, a private, nonprofit online college based in Salt Lake City, is growing 20 percent every seven months. The University of Phoenix, a for-profit, open-admission online college, reached a peak enrollment of almost 500,000 students in 2009-10. This growth stems partly from the ease with which students can enroll and complete courses but is mostly due to price. Despite 30 percent annual growth in enrollment, Western Governors U. has increased its tuition only $200 over the past four years.
The pessimism industry is focused on inequality and poverty. Politically incorrect as it sounds, poverty is driven by a lack of education and by single-parent households. Married couples have a median income of $72,751. Female-headed households with no husband have a median income of $32,031. Some will say that the number of female-only households living in poverty has doubled since 1965, to more than 15 million Americans. But among this cohort, the raw numbers tell a different story: The population of this group of women increased from 16.4 million in 1965 to 46.4 million in 2010 — and the share in poverty decreased from 49 percent to 34.2. We’ve made some progress, though more needs to be done.
In an effort to find a more accurate and complete measure of poverty, the Census Bureau tried an experimental formula last year, in addition to its standard measure, that showed 1 million individuals had pushed up from extreme poverty into near poverty. The poverty rate for children declined from 22 percent to 18.2. That’s 3.2 million children who are no longer living in poverty, according to newer, more-inclusive standards.
Now, let’s look beyond IRS and Census data to other telling facts about our economic growth and future. According to Pew Research Center, 83 percent of American adults owned a cellphone last May, up from 66 percent in January 2005. In 2008, 71 percent of teenagers had cellphones, up from 45 percent in 2004. This is a telling statistic because when more teenagers own luxury electronics, it means there are more families with disposable income — indicating a stronger and wider middle class. In 2008, 77 percent of teens also owned a video-game system, 74 percent owned an iPod and 60 percent owned a computer.
The struggling middle class is getting their teenager cellphones, video-game systems and computers, and they’re going to schools in neighborhoods that have gotten safer in a world that is, broadly speaking, less violent. Steve Pinker’s “The Better Angels of Our Nature: Why Violence Has Declined” estimates that deaths caused by war, genocide, purges, war-caused famine and disease counted for only 3 percent of all deaths in the 20th century. The latest FBI national report showed that the estimated volume of violent crimes in 2010 fell 6 percent from 2009. Not bad.
Another sign of health is broadband Internet access. In 2000, shortly after broadband became available, about 4.7 million households had access. By 2009, about 75 million households had access. That’s an amazing accomplishment for the 1 percent and the 99 percent.
These positive trends are present across almost every indicator of a successful middle class. As persons per household is decreasing — from 3.16 in 1969 to 2.66 in 2009 — the number of vehicles per household is increasing, from 1.16 to 1.92, or 66 percent, across the same period. Even accounting for population increases, the growth in number of vehicles owned outstrips the growth in the amount of new drivers by 11 / 2 times. By 2009, there were 1.39 cars for every worker in America.
The bottom line: America’s middle class is still successful. More families own their homes than in any other decade and are by far the best-educated middle class in our history, with ever-expanding access to technology. They have the opportunity to educate their children and prepare them for a great life in a country with a great future. So take that, pessimists.
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