L.A. Liberty

laliberty:

Obama recently claimed: “Nearly a decade of tax breaks for millionaires and billionaires led to little more than sluggish growth [and] a shrinking middle class. Your paychecks flatlined. Wages and incomes did not go up. Even when the economy was growing, it wasn’t growing for you.”

Reality illustrates otherwise: ”In the seven years from 2001-2007 (inclusive), not only did the middle class get at least its fair share of overall income growth, the income gap between the rich and the middle class actually got smaller.”

The Myth of Middle-Class Stagnation

This is complete and utter bullshit.

Firstly, measuring growth in terms of total income/FTE has been debunked. You are presenting the data in a misleading way. The reason this is a problem is because middle class families do not have access to overtime hours because of the recession. Businesses are not hiring people for as long periods/for the same length of work. This is a basic economic concept. You do not measure income in terms of total income/FTE. (for those who don’t know, FTE = full time equivalent, and is used to compare people who work different number of hours)

Also:

shows that income inequality is rising.

But, for the sake of argument, let’s pretend that your claim is true, and that the income inequality is shrinking. During that period, the government increased it’s involvement in economic matters (funding 2 wars greatly impacts the economy). Thus, according to your logic, big government isn’t too bad after all, because the income gap did decrease when the government impacted the economy. At least if I follow though on your logic, that is what you are saying.

First, because Obama was discussing a “decade of tax breaks” and “even when the economy was growing,” this is data from before the recession during the time of a growing economy, so your initial technical objection does not apply. Of course things are bad during a recession. This is not obvious? (Though, as more than one link below illustrates, it seems that the recession itself seemed to narrow income inequality.)

Now, your point about FTE may be a fair one since it is true that depending on which data you look at and how it is parsed, inequality may seem to be expanding. In fact, much of the rising inequality that is charted by macroeconomists comes from the distorting effects of changing demographics, namely the expanding number of divorces and singles have diluted what used to be a multiple-earner “household” income (which is the most common way inequality data is presented). And, indeed, the growth of the number of “households” has exceeded population growth. Also, a crucial factor to understand when looking at income brackets is the mobility between brackets - the actual individuals who compose a certain quintile rarely remain in that quintile. Further, Gini coefficients, an oft-used metric for noting gaps in income, overstates inequality by ignoring taxes, welfare, and other transfer payments in its calculations. Also, average or median income can be seen to stagnate or fall even if everyone’s income rises. But given your objection about misleading data, to then use a chart of real dollars and no labels or legends confuses things for the same reason that looking at, for example, tax cuts by income bracket using real dollars is misleading.

Here are a few pieces on income inequality I believe are worth reading:

I’m sure you’ll find ideological reasons to disagree, but I would hope you’d acknowledge they are still earnest, thoughtful assessments not so easily dismissed.

Of course, I see “income inequality” as, at most, a secondary concern. Affording all individuals their birthright of self-ownership - allowing all consensual interactions and being free from agressive force - should be the primary object. There is nothing just about engineering false equality of outcomes if individual autonomy (liberty) is compromised. Furthermore, the free and mutually beneficial exchange of individuals tends to lead to a much more fair and productive redistribution of wealth (also, here).

As to your final contention: if the only variable in contributing to economic growth was government, you’d have a point. That state impediments on economic activity can be somewhat mitigated does not prove anything.

Posted December 17, 2011 at 5:15pm in ∆ riposte anticapitalist | comments || home