Wednesday, January 23, 2008

About that "widening gap between rich and poor"

Professor Sowell tells us why that favorite agenda talking point of the Dems/Lefties/"Progressives" is nothing more than classic class warfare misrepresentation


"Among the intelligentsia, it is fashionable to sneer at income mobility as a "Horatio Alger myth" -- and, as someone once said, you cannot refute a sneer. But, among people who have not yet abandoned facts for rhetoric, it is worth stopping to consider whether they are being played for fools by politicians and much of the media."


He nails usual.


  1. He usually dopes "nail it". I have of course been reading him for years and have never disagreed with his analysis that I can remember. I really must get one of his books someday as it would probably be a good read. Don't kjnow why I haven't yet. BB

  2. Sowell clearly hasn't read any recent or comparative studies of income mobility. These studies show that the contrary to the Horatio Alger story, intergenerational income mobility is lower in the U.S. than in other developed countries (see, e.g., this study and this study). There is also evidence that intergenerational and intragenerational income mobility in the U.S. have fallen over time.

  3. This is the study that Sowell is referring to. A glaring weakness in the study is that it only covers taxpayers who could be followed from 1996 to 2005. People whose income is so low that they don't file are not tracked. Also, people who had to double up on housing (e.g., kids who move in with their parents or siblings) are not followed.

  4. The fact is that the "poor" have gotten richer in comparison.

    The destitute have remained pretty much destitute.

    Would you agree?

    By the way, I am going to email this thread to him and see if he cares to comment.

  5. The Treasury study uses a problematic statistic--percentage growth--to look at income growth among people in the lowest quintile.

    What makes this statistic problematic is that it begins with a small base, so almost any income growth is going to look large in percentage terms. There is also a problem called the "regression to the mean" problem.

  6. From the information Dr. Sowell discussed, it's hard to say the "poor" are not better off today than they were in the past.

    It's also hard to say that American "poor" are not middle class or better in comparison to poor in other nations.

  7. Bubba:

    That's a good point. There have been studies of the material possessions of the poor in the U.S. Poor people in the U.S. today are much more likely to have things like air conditioning, TVs, phones, etc. than their counterparts 30 years ago.

    The poor in the U.S. also enjoy a higher standard of living than the poor in many parts of the world, though they fall behind the poor in some other industrialized economies.

    Note, however, that the Treasury study and Sowell are not making the same comparison that you are making. Their comparison is based on following a particular cohort of people over time. For example, their analysis does not include the "new cohort" of 25-34 year-olds who are poor in 2005 (the Treasury study is limited to taxpayers who were 25 or older in 1996).

    Except for a brief period during the late 1990s, the income distribution has grown more unequal over this period. Also there has been stagnation in mean and median household incomes since 2000. This implies that things are growing worse (on average) in absolute terms for people in the lower half of the income distribution. One indication of this is poverty rates, which are higher now than they were in 2000.