IPFS Menckens Ghost

More About: Economy - Economics USA

Questions about Income Inequality

January 17, 2014

Once again we’re being drowned in inanities, banalities, sophistries, platitudes, nostrums, tropes, canards, lies, half-truths, statistical distortions, and propaganda.

Once again the effluent is being discharged by politicians, government apparatchiks, the intelligentsia, the professoriate, the media, and scholars; or I should say, phony scholars, because true scholars do not let their ideology influence their scholarship.

This time the effluent is about the purported growth in income inequality.   Raw sewage has more intellectual content than what is being spewed about this topic.

Yet the offal is being swallowed and then regurgitated by Americans of all socioeconomic classes, including by those of Ivy League pedigree who think of themselves as residing at the top of the intellectual pyramid.

A similar stench emanates from just about every story on every subject, although the odor becomes unbearable when the stories are about income, poverty, race, education, medical care, war, immigration, and economics.  For these topics in particular, the Left and Right retreat to their respective political camps, or echo chambers, where, in a display of confirmation bias, they only let in information that reinforces their established beliefs or nostrums.

We will return to the topic of income inequality momentarily, but first some questions:
How can so much sludge be swallowed in the Internet era?  Wasn’t the Internet supposed to make it easy for the masses to discover the truth by putting the world’s information at their fingertips?  And what about K-12 schools?  What are they teaching?  What is the point of wiring schools for the Internet if students can spend 13,000 hours or so at school over 12 years and graduate without a modicum of discernment—without the ability to find countervailing facts and to know when they are being snookered and manipulated for political or commercial purposes?  Isn’t such discernment one of the hallmarks of an educated citizenry?

The ratio of fact to claptrap probably hasn’t changed since mankind learned to write.  The ratio of 1:50 that seems to exist today also probably existed when words were chiseled on stone, when monks transcribed holy writings, when Guttenberg invented movable type, and when people typed on IBM Selectric typewriters.  Yes, the Internet makes it easier to find facts, but one has to wade through 50 sources that pop up from an Internet search to find one that is not claptrap.  Who has the time, perseverance, intellectual curiosity, and wisdom to do this in today’s era of tweets and 24/7 broadcast garbage?

Now let’s return to the topic of income inequality. 

What questions would have to be asked and answered for someone to have a basic understanding of the topic and to be an informed voter? 
Below is a partial list.

·         What is “income?” When the government or private party reports income statistics from one year to the next, what do they count as income?   Do they count cash compensation, non-cash compensation in the form of employee benefits, investment income, welfare payments, Social Security payments, Medicare payments, reported income, unreported income, pre-tax income, after-tax income, household income, or per-capita income? 

·        In comparing income today with yesteryear, what prior period should be selected?  Should today be compared to the 1950s, when much of the rest of the world was devastated by the Second World War and America had little global competition?  Or should the comparison be to the Robber Baron era?  And speaking of Robber Barons, what are the myths and realities of that era?

·        What is the best measure of how well-off people are?  Is it income, consumption, material goods, assets, longevity, health, or something else?  How has the quality of life changed over the years and how is it measured?

·        How does race affect income?  In comparing income inequality between the USA and other countries (the gini coefficient), is it appropriate to compare a racially diverse country with a homogenous one?  Should the racially diverse USA as a whole be compared to homogenous Sweden, or would Minnesota be a better comparison?

·        How does immigration affect income?  What is the effect on income of an influx of immigrants from countries with substandard education and skills?  Should the income of such recent immigrants be compared to the average income in their new country or their old country?  If a Mexican or Guatemalan increases his income fourfold by crossing the border but is in the bottom quintile of income in America, is he better off or worse off?  Is it fair or unfair for him to be in the bottom quintile?

·        What is the effect on both household income and per-capita income of the exponential increase in single-parent families over the last half-century?  What has caused this increase?  What should be done about it?  What are the politics of this issue?

·        Is there a cause-and-effect relationship between the growth of the regulatory state and the purported growth in income inequality?  How has the huge increase in the numbers of highly paid accountants, lawyers, risk managers, regulatory specialists, and lobbyists affected the incomes of working stiffs?  Why is metro Washington, D.C., so rich compared to most of the rest of the country?

·        Has capitalism failed?  Does it need to be tempered by socialism, collectivism and redistribution?  What is capitalism?  What is free-market capitalism?  Do we have free-market capitalism in the USA?  Have we ever had it?

·        How does the nation’s central bank, the Federal Reserve, affect both national income and personal income through its monetary policies?  Was it folly for Congress to give the Fed the dual mandate of maintaining a stable dollar and reducing unemployment? 


Again, this is only a partial list of the questions that would have to be answered for a citizen have an informed opinion on income inequality and to vote intelligently on the matter.

Unfortunately, an informed citizenry is the last thing that ideologues in government, media and academia want.



An author, questioner, and former columnist before the era of blogs, and he can be reached at ccan2@aol.com
Free Talk Live