The income inequality lie  

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While income inequality is commonly discussed in politics today, the economic reality is more complicated.  Photo by    Public Domain Pictures    via Pexels

While income inequality is commonly discussed in politics today, the economic reality is more complicated. Photo by Public Domain Pictures via Pexels

There are many misconceptions regarding the state of economic affairs in the U.S. Perhaps the most trumpeted and least scrutinized of all is the issue of income inequality. Sunday morning, on NBC’s “Meet the Press,” Chuck Todd made light of the September jobs report, which showed a drop in unemployment to a 50-year low of 3.5% and an addition of 136,000 jobs. He then complained, “But at the same time that the economy is doing pretty well, income inequality is actually growing in this country, reaching a new high in 2018,” a trend he warned is problematic.  

The immediate assumption made by Todd and many on the left that income inequality is an inherent injustice—this notion that disparity automatically means discrimination—is the essence of the income inequality lie.  

The first thing which must be discerned when examining economic inequality is whether or not the disparity is the result of malfeasance. In other words, are the rich actually stealing from the poor or is the inequality a result of any combination of factors such as geography, personal decision-making or voluntary transactions? Certain cultures value education more highly than others. Would the disproportionate representation of those particular groups in academic institutions and lucrative career positions be a matter of discrimination or perhaps the result of them placing a higher emphasis on academic achievement than their competition for admission and jobs? Two parent families are generally less impoverished than single parent families. Is this some form of injustice or simply because children are expensive and more difficult to raise on one income than to two?  

The second matter which must be considered is that of economic mobility within the given society. Has the rising tide lifted all boats? In the United States, earners move with tremendous frequency through the income brackets. Many within the top 1% will not be there 10 years from now. Most toward the bottom will have risen in that time period as well. The income brackets may have remained unchanged, but the people who comprise them have not.  

One of the worst and most prevalent complaints with regard to this issue is that injustice exists because the income of those in the bottom percentile of earners has not risen, and the income gap between the top and bottom percentile of earners has not decreased. Economic mobility is not measured by comparing the incomes of the top 25% with the bottom 25%, but by discerning whether or not people are stagnating within the income brackets or moving up and down with regularity.  

Further, this data does not usually account for capital gains. Let’s say that one individual’s annual income is $75,000 and this salary places him somewhere within the 50th percentile of earners. One year, this person decides to sell his real estate investment property worth $200,000. Now his income for the year is $275,000, which places him within the top 10%. Next year, his income will again be $75,000 and he’ll move back down the income ladder. This is the manner in which many Americans rise and fall among the income brackets, rarely stagnating in poverty or affluence for long. However, some of this can be more lasting. Consider the fact that most Americans begin their lives poorer in relation to others, but gradually accrue wealth over time as they gain experience, promotions, investments and savings.  

When asked how much income equality is optimal, many on the left struggle to answer, cautious not to advocate such wealth redistribution that all incomes would be perfectly equal, an idea as communist as it is unrealistic. Similarly, many on the right struggle to answer the question as to how much income inequality would be unacceptable. The answer is relatively simple, yet truly unpopular: Only that inequity which exists as a direct result of theft or proved, illicit discrimination. On the other hand, the appropriate amount of income equality which results from wealth redistribution, is none.  

It is wholly insufficient to point toward income disparities as evidence of economic failure without bothering to discern the catalyst for such inequity or whether the “victims” of the inequity have actually suffered any form of discrimination or wrongdoing. The disparities themselves do not justify confiscatory policy. And politicians and the media do not get to claim the moral high ground, smugly patting themselves on the back for “fighting inequality” while supporting the seizure of hard-earned dollars and lying to the American people about their financial prospects in the land of opportunity.  


Kevin Catapano is a weekly columnist for The Daily Campus. He can be reached via email at kevin.catapano@uconn.edu.

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