But even if they do, so what? First off, the “rich” is not a static category; secondly, the complaint, such as it is, should be that “the rich” are getting richer faster — not that they are getting rich at the expense of the (also not static) “poor”: standard of living has gone up considerably for nearly everyone, as anyone who lived through Carter will tell you; and thirdly, and most importantly, wealth itself is not drawn from some finite wealth well; any economic oligarchy, such as it is, is the product of a socialist co-opting of industry, revealing socialistic policy (pace Jack London and his Iron Heel) as the cause of corporatism and liberal fascism, and thus the least likely remedy to it.

James Pethokoukis: “7 reasons why Obama (and the new CBO report) is wrong on the 1% vs. the 99%”:

As if ordered up directly by the Obama White House and Occupy Wall Street, the Congressional Budget Office has produced a timely report looking at income inequality. The CBO found that between between 1979 and 2007, average real after-tax household income grew by 275 percent for the top 1 percent of households, 65 percent for the next 19 percent, just under 40 percent for the next 60 percent, and 18 percent for the bottom 20 percent.

[…]

My bottom line: a) income inequality has increased somewhat in recent decades, but not exploded; b) that increase is natural given technology and globalization; c) incomes could have risen faster with a better educated workforce (that also didn’t have to compete with an influx of workers from Asia), but did O.K.; d) we need to boost education to keep up with advancing technology and productivity; e) the past decade was one of slow growth followed by a nasty recession. No argument there. Looking forward, America will need a pro-growth tax system, smarter regulation and far better human capital (helped by higher teacher pay in exchange for eliminating tenure, more skilled immigration, etc.). That way, incomes won’t just be more equal, they’ll be growing.

As usual, Pethokoukis’ analysis is sober and detailed. Where I’d disagree with him slightly, however, would be with point d. If Occupy Wall Street has taught us anything, it’s that there is no shortage of over-credentialed people vying for ever-fewer jobs, and this will remain the case unless and until the economy begins growing extensively, or until we begin telling the truth about the sham of higher education — which has essentially become a kind of extended high school, completion of which is often used as an point of entry into the white collar portion of the work force. This social and cultural change — everyone should go to college! — has diluted the field of those with higher education credentials while simultaneously diluting the idea of higher education itself as a way to separate out accomplishment from mere willingness to pay tuition (or take out student loans). The higher education industry has clearly benefited; but it seems to me that what would be more beneficial, oftentimes, than a 4-year liberal arts college would be, say, directed vocational training and a library card.

But that aside, Mark Perry takes a closer look at the CBO report and seizes upon that area of the findings whose intentional bracketing will allow leftist politicians and journalists to demagogue the report while at the same time, hiding from the public an explanation for the numbers. From “Income inequality can be explained by household demographics”:

Most of the discussion on income inequality focuses on the relative differences over time between low-income and high-income American households, but it’s also instructive to analyze the demographic differences among income groups at a given point in time to answer the question: How are high-income households different from low-income households? Recently released data from the Census Bureau (available here, [doc link], and here) for American households by income quintiles in 2010 allows for such a comparison […]

[…]

Here is a summary of some of the key demographic differences between American households in the bottom and top income quintiles in 2010:

1. On average, there were significantly more income earners per household in the top income quintile households (1.97) than earners per household in the lowest-income households (0.43).

2. Married-couple households represented a much greater share of the top income quintile (78.4 percent) than for the bottom income quintile (17 percent), and single-parent or single households represented a much greater share of the bottom quintile (83 percent) than for the top quintile (21.6 percent).

3. Roughly 3 out of 4 households in the top income quintile included individuals in their prime earning years between the ages of 35-64, compared to only 43.6 percent of household members in the bottom fifth who were in that age group.

4. Compared to members of the top income quintile, household members in the bottom income quintile were 1.6 times more likely to be in the youngest age group (under 35 years), and three times more likely to be in the oldest age group (65 years and over).

5. More than four times as many top quintile households included at least one adult who was working full-time in 2010 (77.2 percent) compared to the bottom income quintile (only 17.4 percent), and more than five times as many households in the bottom quintile included adults who did not work at all (68.2 percent) compared to top quintile households whose family members did not work (13.3 percent).

6. Family members of households in the top income quintile were about five times more likely to have a college degree (60.3 percent) than members of households in the bottom income quintile (only 12.1 percent). In contrast, family members of the lowest income quintile were 12 times more likely than those in the top income quintile to have less than a high school degree in 2010 (26.7 percent vs. 2.2 percent).

Bottom Line: American households in the top income quintile have almost five times more family members working on average than the lowest quintile, and individuals in higher-income households are far more likely than lower-income households to be well-educated, married, and working full-time in their prime earning years. In contrast, individuals in low-income households are far more likely to be less-educated, working part-time, either very young or very old, and living in single-parent households.

The American economy and labor market are extremely dynamic, and evidence shows that individuals are not stuck forever in a single income quintile but instead move up and down the income quintiles over their lifetimes. It’s very likely that many high-income individuals who were in their peak earning years in 2010 were in a lower income quintile in prior years, before they acquired education and job experience, and they’ll move again to a lower quintile in the future when they retire.

[…]

Given the significant differences in household characteristics by income group, it shouldn’t be too stunning that there are huge differences in incomes among American households, and it has nothing to do with “rapaciousness.” Rather, it can be easily explained by household demographics.

What we see in a dynamic economy is what we would expect to see: income mobility over the course of a lifetime, with total income and percentile earnings affected by everything from family size and prime earning years to education and marital status.

Then there’s this, from Political Calculations: “The Real Story Behind “Rising” U.S. Income Inequality”:

[…] here’s the thing. We have already confirmed that there has been absolutely no meaningful change in the inequality of individual income earners in the years from 1994 through 2010. If income inequality in the U.S. was really driven by economic factors, this is where we would see it, because paychecks (or dividend checks, or checks for capital gains, etc.) are made out to individuals, not to families and not to households.

It would seem then that the real complaint of such people isn’t about rising income inequality, but rather, how people choose to group themselves together into their families and households.

[…]

Now for the bigger picture. Ivan Kitov has done an extended analysis [.pdf link available at site] of the U.S. Census’ income data back to 1947. He found the following related to the personal income distribution (PID) for the U.S. since 1960 (emphasis ours):

In fact, the Gini curve associated with the fine PIDs is a constant near 0.51 between 1960 and 2005 despite a significant increase in the GPI/GDP ratio and the portion of people with income during this period (see Figure 1). This is a crucial observation because of the famous discussion on the increasing inequality in the USA as presented by the Gini coefficient for households (US CB, 2000). Obviously, the increasing G for households reflects some changes in their composition, i.e. social processes, but not economic processes as defined by distribution of personal incomes.

In short, it’s those social processes, which have driven demographic changes within U.S. households, that are almost exclusively behind the observed increase in family and household income inequality observed in the U.S. since the 1960s.

Surprisingly, many economists are still hypothesizing on what might be the cause of rising income inequality among families and households. From the discussion however, it’s pretty clear that just about all of them may not be aware of the Gini coefficient data that applies to the personal, or individual, income distribution data that makes it possible to eliminate the proposed alternatives as serious contenders for explaining what we observe.

We hate to be the ones to tell you guys, but the econophysicists have solved this puzzle […]

The left relies on the idea of “income disparity” to drive the narrative of an inherent “unfairness” to capitalism. But that narrative relies on several spurious suggestions — not the least of which is the idea that there is a limited pool of wealth, and that the wealthy hoard what it is they have.

Money is almost always working. And instead of looking at the differences between families — a kind of social covetousness — we should be concerned with overall economic growth and dynamism, all of which improves living standards by moving the categories of “poor” and “rich” ever more toward the “rich” spectrum. There’s a reason the “poor” in the US have the living standards of the “rich” in, eg., India.

Those who want you focused on “disparity” rather than the system that allows for mobility, have, as they’re ultimate end, a kind of leveling in which everyone is equally poor — and the government controls, and distributes, all the wealth.

Perhaps someone can teach the useful idiots that such a concentration of wealth and power in the hands of those who also write the laws and control the police and military, is the very blueprint of a police state. Otherwise, who is going to implement and enforce the transfer of wealth and this equal distribution — then act to protect it?

In their minds, these economic illiterates — dupes being marshaled by the socialists who want to entrench a system liberal fascism — envision a Utopia of egalitarianism; in practice, what they are asking for is an English-speaking iteration of North Korea.

I’ll pass, thanks.

****
update: See PBS’ interview with Richard Epstein, here, where he explains how, in a capitalist system, “inequality” is actually a good thing. (h/t serr8d and bh)