Wednesday, June 04, 2014
Like Harry Binswanger last week, John Stossel comments on Thomas Picketty's Capital in the Twenty-First Century, which is being used to fan "income gap" hysteria. The following point is well worth keeping in mind:
But focusing on this disparity ignores the fact that over time, the rich and poor are not the same people. Oprah Winfrey once was on welfare. Wal-Mart founder Sam Walton was a farmhand. When markets are free, poor people can move out of their income group. In America, income mobility, which matters more than income inequality, has not really diminished.Stossel elaborates, noting that various government programs purporting to help the poor actually harm them. In particular, he notes that Barack Obama's decision to enforce rules against unpaid internships is helping those disappear. Many of "the poor" had been able to obtain skills vice money that way, enabling them to become better off later. (Two side notes: (1) We can see the Labor Theory of Value at work again, in terms of both a failure to appreciate the value of knowledge and in terms of a fixation on monetary rewards for work. (2) It's interesting to see which laws this Chief "Executive" selectively enforces.)
Economists at Harvard and Berkeley crunched the numbers on 40 million tax returns from 1971-2012 and discovered that mobility is pretty much what The Pew Charitable Trusts reported it was 30 years ago.
Today, 64 percent of the people born to the poorest fifth of society rise out of that quintile -- 11 percent rise all the way into the top quintile. Meanwhile, 8 percent born to the richest fifth fall all the way to the bottom fifth. Sometimes great wealth makes kids lazy and self-indulgent, and wrecks their lives. [bold added]
All I would add to this is that "the poor" also enjoy, thanks to the elements of capitalism in our economy, many things that had not been available at any price in our more ... level ... past. Televisions, smart phones, the Internet, and automobiles come to mind. This is not a criticism of Stossel's piece, which he has to delimit for the sake of readability, but one of the income gap jihadists, who are counting on (or sufficiently blinded by) envy to keep us from noticing what their reforms ultimately put at risk.