Why the Dominant Narrative on Income Inequality is All Wet

by Pejman Yousefzadeh on October 27, 2011

Via Ben Domenench comes two excellent links on the issue of income inequality. One is a very informative blog post by James Pethokoukis which demonstrates that the standard line we are hearing from the Obama Administration, the Democratic party, and the Occupy [INSERT NAME OF GEOGRAPHICAL LOCATION HERE] movement is nonsense. It should be noted–and I wouldn’t be surprised if Ben links to this tomorrow–that Pethokoukis follows up with another very informative post that features the following facts–facts that run counter to the emerging dominant (and ill-informed) narrative regarding income inequality:

The reality about “exploding income inequality” and wage stagnation is far different than what [Jonathan] Chait, the Obama White House, and Elizabeth Warren (D-Occupy Wall Street) contend. One example: Brand new research from the University of Chicago’s Bruce Meyer and Notre Dame’s James Sullivan finds “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009. … Our results provide strong evidence that the well-being of the middle class and the poor has improved considerably over the past thirty years.”

Those results aren’t above challenge. But there certainly seems to be legitimate counter-arguments and evidence to the “exploding income inequality” meme. Indeed, differing household demographics and differing inflation measures between incomes levels means the “rise in American inequality has been exaggerated both in magnitude and timing,” according to Northwestern University’s Robert Gordon. That and other studies undercut a new CBO analysis showing massive income gains for the “1 percent” at the expense of everyone else. But maybe Gordon is a denier, too; another guy on the Koch-RNC payroll. Except Gordon is an Obama supporter.

The second link Ben refers us to is this one. I don’t know what else to say, other than “Richard Epstein for President.”

Watch Does U.S. Economic Inequality Have a Good Side? on PBS. See more from PBS NewsHour.

Of course, when the so-called “reality-based community” gets its favored memes so thoroughly demolished, it collectively sputters in rage. I am sure that Professor Epstein takes the anger of his critics as a high compliment; it serves to confirm both that his comments were powerfully and cogently delivered, and it also confirms that a number of those who disagree with him are simply ill-informed and incoherent by comparison. I suppose that the rest of us ought to worry about that latter fact; a republic such as ours is not well-served when one side simply appears to be both utterly unable to present its case effectively during the course of a particular policy debate, and utterly unable to learn from people like Professor Epstein, whose statements on economics are constantly shown to be more valuable than those of his critics.

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