Inequality Update from Phil Gramm
The Wall Street Journal ran a piece August 29 by Phil Gramm and John Early on inequality in the USA: “Income Equality, Not Equality, Is the Problem.”
Did you know that, if you include taxes and transfer payments, there is pretty well no inequality in the bottom 60 percent of the household in the USA? Oh, the middle quintile (i.e. 20%) household income actually gets less than the bottom quintile. The only thing is that the bottom quintile work a lot less than the top. And the middle. nd there are less people in the household.
Oh for sure, the top 20 percent of the middle class households earned a ton more than the bottom 20 percent. But that got pretty well canceled out by “taxes, transfer payments and household size.” And guess what: “the percentage of bottom quintile who actually worked plummeted from 68% in 1967 to 36% in 2017.”
Really, it should not be that surprising. The whole point of the educated class’s over/under political formula is to capture the lower-class vote with handouts. And it looks like the educated class has succeeded magnificently, if they have raised the income of the lower class so that it more or less equals the middle class.
You can see the “economic source of today’s American populism.
it was already building in the 1980s, with what were then called Reagan Democrats, and it was fullt manifestd in the Trump blue-collar political base. it is now driving political realignment among Hispanic voters, who are disproportionately middle-income earners.
The interesting thing to me is that this idea, that the bottom 60 percent of American households all get about the same income, isn’t talked about. In fact, I was surprised to read it. I assumed that there would be some inequality, and that the people that worked would do better than the people that don’t. But I was wrong.
And yet, as Gramm and Early write, ordinary Americans seem to get what is going on, instinctively, and they don’t like it.
Leaving aside the question of the injustice of households that don’t work having the same income as people that do, I have to say that my main reaction is sadness.
I think it is sad that only 36% percent of people in the bottom 20% work. Because I think that if you don’t work — says a retired guy that doesn’t work — then it corrodes your life. And that’s a shame.
The other problem is this: you just try taking any of that money away from the bottom 20% and make them work for a living.
There’s the old saying that the shortest measurable time interval in the universe is the time between getting a check from the government and deciding you deserve it. But I am sure that the interval between losing your government benefit and deciding to burn the place down is shorter.
But really, the whole thing just shows how well my Three Peoples theory works. The Subordinates just expect their political boss to provide; the Responsibles want to build a life on work and family and achievement; the Creatives want to think up creative ways to be Lady Bountiful.
And everybody lived happily ever after. Not.