THE MYTH OF AMERICAN INEQUALITY: How Government Biases Policy Debate | Phil Gramm, Robert Ekelund & John Early Roman & Litfield (2022) 264p.
It takes three economists (one a former U.S. Senator) to write an entire book exploiting the Government’s failure to count two-thirds of its subsidies to households - transfer payments - thereby dramatically overstating income inequality and poverty.
But government mistakes and the public's lack of literacy fueling policymakers have consequences. These false narratives have pushed the government into higher transfer payments, which appear to have caused twice as many work-age adults in lower-income households to disengage from employment. Facts are influential, but a lie masquerading as a fact seems more powerful.
Conversely, the government then needs to discount the income it takes from citizens in the form of taxes - an average of 35% for the top quartile - thereby distorting the resources of top earners.
Worse, these false narratives contribute to a chorus undermining our nation's confidence in itself, a dynamic few countries have found as a pathway to thriving.
This trio of data geeks outlines unassailable plinths that, for the past 70 years, income inequality has been falling in America. The government’s rigged accounting overstates inequality by 90%.
When properly constructed, from 1967 to 1917, American Median household income was up 93%, Average Hourly earning was up 74%, and real GDP was up 445%. Most people are not just making more than their parents - regardless of the income quartile - they are making substantially more.
America can always do better - and must - but we should be able to agree upon the remarkable better it has already achieved.
Doom scrolling in the basement might be a comfortable pastime, and for Bernie Bros, it has fostered the growth of a cult with its attendant meaning and identity. But ignoring facts is no way forward for individuals, communities, or a country.