Income Inequality

Elle's Economy ^ | June 2016

[george76]

The phrase Income Inequality has become a standard battle cry for politicians these days, with the implicit assumption that inequality is a bad thing, but is the basic concept of inequality truly a bad thing?

...

We hear a lot of lip service from various politicians about the ills of income inequality, so let’s look at actual recent track records. The U.S. Census Bureau uses four measures of income inequality, Gini, Theil, Mean Logarithmic Deviation of Income (MLD) and Atkinson Measure.

◾Since the financial crisis, income inequality (as measured by the US Census Bureau using 3 different types of metrics) has risen faster than during the prior ten years for all metrics. All three measures also rose faster under Clinton than Reagan, which illustrates that income inequality isn’t something improved by a democrat in the White House, despite convention wisdom.

◾In the first 6 years of Obama’s presidency the annual rate of transfer payments increased by $500 billion so that today roughly 18% of all personal income in the United States is a transfer. That means that roughly 1 out of every 5 people in the US is effectively living off the other 4.

...

For all the lip service about addressing the supposed ills of income inequality, it is the very controls placed by government on people trying to earn a living that are helping to increase inequality.

[Ray76]

It’s always the same with socialists.

[Buckeye McFrog]

Great point! Are there any recent studies on the dollar value of welfare benefits actually being claimed by the low-income individual?

I’ve seen good data that full-time panhandlers can earn upwards of $40K a year, tax-free.

[cherry]

look, its a myth that education and hard work and training and general superiority and a sound work ethic gets you a superior income....

fact is, you can be a dog catcher in Chicago and make more than almost all teachers or nurses or cops in other states...

truth is, all you need is to be a govt lackey...

[untenured]

I think you put your finger on it. The rise of the cronyist/special-privilege state has done more to cement inequality than any other trend, including immigration, of the last 50 years. The 18th and 19th centuries saw the tearing down of aristocratic, guild and other barriers to free competition in much of the Western world, with a resultant history-changing explosion of innovation and the first major decrease in the inequality that had been around forever.The one place where that innovation is most salient now is in high technology, where cronyism is still most distant.

All of the hands-out pleading and palm greasing of recent decades, yielding occupational licensing, subsidies and other state-mandated limits on competition and the division of labor, is in the process of undoing a lot of that progress. It is cronyism that unites the phenomena of Elizabeth Warren’s securing a tenured position at Harvard while flipping houses, and the bailouts of 2008-9.

[Renkluaf]

Try these:

https://www.aei.org/publication/adjusting-transfers-federal-taxes-reduces-income-inequality-50/

http://www.economics21.org/html/myth-increasing-income-inequality-65.html

Sorry but I lost the original reference. Keep in mind that the headline BS is speaking about quintiles of income distribution not individual persons. There's plenty of research showing that individuals are highly mobile among those quintiles with most of the lowest moving up over time and many in the highest falling after retirement.