Opinion: The real story of income inequality

Jacob Tabler is a junior political science major and a member of the Kent State College Republicans. Contact him at [email protected]

Jacob Tabler

Editor’s Note: Per the author, data from the column is taken from Thomas Sowell’s “Intellectuals and Society.”

Income inequality began gaining traction as a legitimate political issue during the 2016 elections, specifically due to Bernie Sanders’ campaign.

Income inequality refers to the distribution of average income in a country. The argument presented by the left is that a plurality of the wealth is concentrated among the highest of income earners, and that this is unfair to the average worker. Many will say that this is a serious problem for the country, and cite the top 20 percent of income earners control nearly 80 percent of the nation’s wealth. However, this argument is misleading and does not tell the full story.

Thomas Sowell, an economist and former Stanford professor, argued that the full story is not being addressed and that income inequality is not a problem.

While it is true that the gap between income brackets is widening, there is no mention of how people move in and out of those brackets. When looking at the people over time as opposed to the statistical category, the story is much different.

According to data from the U.S. Department of the Treasury, those income earners in the bottom 20 percent bracket saw their incomes rise by 91 percent between 1996 and 2005, and — in the same timeframe — the top quintile saw their incomes rise by only 10 percent. Finally, those in the top 5 percent saw their incomes decline in this timeframe, and those in the top 0.1 percent saw their incomes fall by a staggering 50 percent.

These statistics show what happens to the category is not the same as what happens to real people.

What Sowell argues is the average income of a statistical category is irrelevant because people move in and out of these brackets constantly. Once again, according to Sowell, 56 percent of American households will be within the top 10 percent of earners in their lifetimes.

While only 13 percent of those in the top 1 percent of income earners will stay there for more than 2 years, three quarters of Americans in the bottom 20 percent of income earners in 1975 were in the top 40 percent of income earners by 1991.

Finally, from 1967 to 2000, median household income rose by 31 percent and rose 122 percent per capita. America does not have an inequality problem to address. Income mobility in the country is extraordinarily high, and how much more someone earns should not be concerning unless it is earned through illegal means.

However, we should be concerned with poverty in America and lifting people out of it, which is best done through the private market.

Over the last four decades, Americans in all income brackets have made tremendous strides. The private market produces more high quality goods at an affordable price, and that has transformed the living standards of all Americans.

Three-quarters of Americans living in poverty have air conditioning, while 97 percent have color television and 98 percent have a DVD player. All of these products were very scarce just four decades ago.

The reality is that Americans enjoy more freedom and more prosperity than any other nation on Earth. Income mobility is high for everyone, and even those at the bottom enjoy one of the highest living standards. The best way to continue to increase this prosperity is through limited government and private markets.

Jacob Tabler is a member of the College Republicans, contact him at [email protected]