In Jim Cook's Archive


Liberals constantly run off at the mouth about income inequality. So do all too many conservatives. The malls that were filled with people prior to COVID and the busy new internet retailers seem to reflect a healthy middle class and less financial inequality than claimed. Now comes an article in the Wall Street Journal that demolishes the case for income inequality. It reaffirms my personal belief that virtually everything that comes from the left is either misinformation or a fib.

Phil Gramm and John Early write, “The refrain is all too familiar: Widening income inequality is a fatal flaw in capitalism and an ‘existential’ threat to democracy. From 1967 to 2017, income inequality in the U.S. spiked 21.4%, and everyone from U.S. senators to the pope says it’s an urgent problem. Yet the data upon which claims about income inequality are based are profoundly flawed.

“Census Bureau income data fail to count two-thirds of all government transfer payments – including Medicare, Medicaid, food stamps and some 100 other government transfer payments – as income to the recipients. Furthermore, census data fail to count taxes paid as income lost to the taxpayer. When official government data are used to correct these deficiencies – when income is defined the way people actually define it – ‘income inequality’ is reduced dramatically.

“We can now show that if you count all government transfers as income to the recipient household and reduce household income by taxes paid, not only is income inequality in America not growing, it is lower today than it was 50 years ago. The raging debate over income inequality in America calls to mind the old Will Rogers adage: ‘It ain’t what you don’t know that gets you into trouble. It is what you do know that ain’t so.’ We are debating the alleged injustice of a supposedly growing social problem when that problem isn’t growing, it’s shrinking. Those who want to transform the greatest economic system in the history of the world ought to get their facts straight first.”

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