June 11, 2007
There’s a lot of hoopla about income inequality in America. Apparently, the rich are getting much, much richer than the rest of us. The NYTimes had a bunch of stories about inequality (here’s one) and it’s a big issue in economics and politics. I’ve read zillions of articles and papers on the subject and I can’t figure out why anyone is troubled by this. The top 1% is making gobs of money. The bottom 20% is keeping up with inflation. Each quintile above that is making more real money than 1979: 11%, 15%, 23% and 63%. In the article I linked to, the writer says that if the top 1% were removed from the data, then America would be fairly egalitarian. So how does a CEO’s (or celebrity’s) giant paycheck effect anyone else? Everyone else is making more money in real terms, except the bottom 20% who have no skills anyway. This is not an economic problem, but a social problem. Americans are envious of the rich, and politicians are preying on this envy by pretending to be populists (John Edwards).