It is true: The more the people hear those fictions, the more they're inclined to believe those fictions are fact. However, thanks to Michael Tanner of the Cato Institute, it's possible to debunks those myths for the "artful deceptions" they are.
Myth 1: Inequality has never been worse.
- Over the past several decades, the distribution of wealth in the U.S. has been relatively stable. In 1965, the top 1% of Americans held 34.4% of the country's wealth. In 2010, the top 1% of Americans held 35.4% held. So, it's accurate to state that the gap has increased, but only insignificantly.
- Many of the statistics the President promotes in speeches to "prove" income inequality don't account for welfare transfer payments. Accounting for those, income inequality decreased between 2000 and 2010. And the President knows it.
So, the statement that the income gap has increased is accurate. But, it's based on a less-than-complete report of the data. An artful deception.
Myth 2: Wealth is transferred across the generations because most wealthy people inherit their money.
- The idea the President is touting is that only the wealthy are becoming wealthier, building up capital that increases over the generations. However, 80% of American millionaires today are the first in their families to become millionaires.
- For the richest 1% of Americans, only 15% of their wealth is inherited. Wage income is what has built net worth for the majority of wealthy Americans.
In short, hard work and an industrious attitude combined with, yes, a little luck, a few breaks, and saving money is how most Americans enter the top %'ages of wealth. Another artful deception.
Myth 3: The rich stay rich, while the poor remain poor.
- 70% of successful entrepreneurs' wealth dissipates within two generations.
- ~56% of Americans in the top income quintile will drop out of it within 2 decades.
- 50% of Americans who begin in the bottom quintile move up to a higher quintile within 1 decade.
Wow, that's a whopper! There's a lot of mobility for Americans who put their nose to the grindstone. But, for a variety of reasons, the fruits of all that labor get diluted for most wealthy Americans before their great-grandchildren inherit it. Yet another artful deception.
Myth 4: An increase in inequality means an increase in poverty.
- The premise upon which the President has constructed this myth is that the economy is a "fixed pie." In plain English, "a gain by one person means that another incurs losses." Yet, the research is pretty clear: Poverty rates and inequality have very low and statistically insignificant correlations. The pie expands and contracts, but isn't fixed.
- An individual's choices and resulting poverty have high, statistically significant correlations. To wit: High-school dropouts are 350% more likely to end up in poverty than those with a high-school education. Similarly, < 3% of full-time workers live in poverty.
The take away? Education is the pathway out of poverty. And yes, it is true that individuals who live in poverty will be starting at the bottom rung of the economic ladder. But, that doesn't necessarily lock those individuals into minimum-wage job prospects for the remainder of their working lives. Attitude, optimism, and a strong work ethic--built upon the foundation of a solid education--enables those individuals to take advantage of opportunities that crop up along the way and to move up the economic latter. A particularly pessimistic, yet artful deception.
It's really too bad so many people believe President Obama's artful deceptions. When examined alongside the data that the President has conveniently forgot to include in his pronouncements, it is clear the pessimistic narrative he has constructed is intended to motivate the people in his audiences to put their trust in the government to save them from the rich American elite whose sole desire is to keep them mired in poverty. It would be more honest for the President simply to proclaim his ideology and forget the artful deceptions.
Let the discussion begin...
To read Michael D. Tanner's data and analysis, click on the following link: