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Tag Archives: Income Distribution

The Truth About Income Inequality

On a global scale, inequality is declining. While it has increased within the United States, it has not grown nearly as much as people often claim. The American poor and middle class have been gaining ground, and the much-touted disappearance of the middle class has happened mainly because the ranks of the people above the middle class have swollen. And while substantially raising tax rates on higher-income people is often touted as a fix for inequality, it would...

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You can’t have it both ways

Progressives often cite median income data when trying to show that average Americans do not benefit from rising productivity. Real median income (by some measures) has been fairly flat since 1973. I’ve done numerous posts pointing out that this income data is extremely misleading, indeed almost useless. In material terms, living standards are obviously much higher than in 1973 (a period I can recall.)  Scott Winship has also exposed a number of flaws in the...

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Second Richest Man Spouts Nonsense

In a New Year’s Eve blog post, multi-billionaire Bill Gates Jr. called for raising taxes even higher on rich people like himself. Here are some relevant parts of his post (in boxes) along with my comments. Although I’m not an expert on the tax code, here are some steps I think America should take to make its tax system more fair. We should shift more of the tax burden onto capital, including by raising the capital gains tax, probably to the same level as taxes on...

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My Hayek Memorial Lecture

Though I’m not a big fan of Hayek, the UK-based Institute of Economic Affairs asked me to deliver the 2019 Hayek Memorial Lecture.  It’s a preview of my book-in-progress, Poverty: Who To Blame.  It’s also an attempt to get people to pay comparable attention to all three parts of my book.  At least until my IEA talk, almost all critics focused entirely on book’s final third, when I explore the extent to which the poor are to blame for their own poverty.  So I rewrote...

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Another reason why income is misleading

I often argue that income is a very misleading measure of economic well being. In many cases, I am pushing back against claims made by progressives regarding economic inequality. But I don’t have any ax to grind on the inequality issue, and today I’ll use the same argument in support of a “progressive” argument. Bloomberg recently presented this graph, showing the average amount of consumption by people in each income decile: I do not know if this graph is accurate—it...

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Income tax rates are a misleading indicator

The Wall Street Journal discusses Elizabeth Warren’s tax plan: Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%. The rate would vary...

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Abstract for My IEA Talk

I’m giving the Institute of Economic Affairs‘ 2019 Hayek Memorial Lecture on December 3 in London.  The title: “Poverty: Who’s To Blame?”  And unlike in the U.S., lectures in the U.K. have abstracts!  Here’s mine: Abstract: Who, if anyone, is morally to blame for the continued existence of severe poverty? I argue that governments in both poor and rich countries bear primary responsibility. Governments in poor countries are blameworthy for stifling development with...

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Rod Long on the Plight of the Worker

In response to my Nickel and Dimed posts, my old friend Roderick Long referred me to his original review of the book.  Highlights of Rod’s review: Ehrenreich went “undercover” to document the lives of the working poor and the Kafkaesque maze of obstacles they face: the grindingly low wages; the desperate scramble to make ends meet; the perpetual uncertainty; the surreal, pseudo-scientific job application process; the arbitrary and humiliating petty chickenshit tyrannies of employers; the...

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The Roots of Inertia

Why don’t low-skilled workers try harder to better their condition?  While this might seem a neoliberal question, it weighs on Barbara Ehrenreich’s mind: I was baffled, initially, by what seemed like a certain lack of get-up-and-go on the part of my fellow workers. Why didn’t they just leave for a better-paying job, as I did when I moved from the Hearthside to Jerry’s? She starts with some textbook economic answers.  There’s transaction costs: Part of the answer is...

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