income disparity

Middle Class America & The Government

It’s not uncommon to hear that “we are losing the America we used to be,” and that we are evolving into this socialist nanny state where hard work and innovation are punished and failure is rewarded.  That we are doing away with the ethic that made America the place of opportunity that it is/was/is ceasing to be.

The problem with this as that it ignores some glaring historical contradictions. The golden age many of these people refer to came about after the creation of a strong social safety net (which has slowly eroded and has become underfunded), a string labor union movement, and a tax increase on the rich that would sound Marxist in today’s political newspeak.  The late 1970’s and early 1980’s actually starts a trend away from this paradigm, and with it we see a period of union busting, lowered taxes on the top income earners, and slowly eroded social safety net.  There also appears to be a change in the American ethos.  What used to be understood as “there go I but by the grace of God” has become to seen as subsidies for “welfare queens” and the enabling of an “entitlement mentality.”

What does the data show?  It shows that a viable middle class makes its debut after the implementation of said nanny state.

Ron Paul - Middle Class - Wealth Disparity

income inequality us

Income Disparity and the Middle Class: A few Myths and Misconceptions

As noted countless times in this blog, the shift to a more supply-side (aka Reaganomics/trickle down economics) economy has not led to a stringer middle class. The disparity in wealth and income between the top 1% and everyone else (especially the bottom 4 quintiles) has only widened and left many of the lower quintiles barely able to afford the costs of living.  Nevertheless, apologists have used a few distortions to diffuse this inconvenient fact.

Wealth inequality - myth and misconception


income inequality us

Using average income gains instead of median
If Bill Gates walks into a bar, the average income of the people in the bar rises dramatically.  But it doesn’t mean anyone in the bar now actually makes more money.  Likewise, the last 30 years has seen a sharp rise in wealth for the very top earners, so indeed, the average has risen.

Focusing household income instead of individual income
Double income households are far more common than they were 30 years ago.  So while Continue reading