That's nothing but a bunch of hocum. There has never been an enduring society that boasted such egalitarianism. Even the Union of Soviet Socialist Republics and Maoist China had income gaps and income inequality, despite the belief that everyone was paid equally and no one was left behind. Guess who lived in those dachas? It sure wasn't the proletariat.
As history attests, "The rich you will have with you always."
A University of Chicago professor, Bruce Meyer, believes that using income and earnings as the standard measures of inequality misses the mark because consumption--not income and earnings--paints the most accurate picture of inequality among the economic strata of society.
Comparing incomes among various groups is faulty because:
- Income fluctuates over time.
- Income doesn't necessarily depict an individual's financial well-being because income doesn't include all resources and wealth. Consider Americans 65+ years of age: 80%+ own a home and either paid it off or make very small payments. However, that asset is not considered "income."
- Income also doesn't reflect changes in the price of assets, such as homes and other investments, like stocks, bonds, and gold coins.
- Income doesn't indicate an individual's access to credit.
- Income doesn't include the value of government transfer payments or the impact of taxes.
Measures of consumption--what individuals actually spend (e.g., reports of an individual's rent, utilities, groceries, cars, and gasoline)--tend to be highly accurate, especially for those at the bottom of the income distribution. Measured consumption is also more durable and permanent than measured income, which can change annually. According to Meyer, measures of consumption--though not perfect--also better reflect an individual's typical income.
For the past 5 decades, income and consumption inequality have risen and that's the "news" the liberal chattering class is touting. However, consumption inequality is much lower than income inequality and has risen significantly less than has income inequality. Moreover, since 2006, consumption inequality has been decreasing.
What that means for those who aren't ideologues is that even though there is some income inequality, Americans of all economic strata are consuming more of what they need and want, enjoying a better quality of life. Income inequality is largely due to education and ambition, not the greedy wealthy freezing fellow citizens out of earning a decent wage.
It's about time the liberal chattering class realizes that there never has been and never will be a society with no income inequality. Promoting one is to promote a mirage. The rich you will always have with you.
Let the discussion begin...
To read Dr. Bruce Meyer's study, click on the following link:
"The Importance of Consumption for Measuring Inequality."