King for a Day

Over the past few months, David has posted several times on the topic of income inequality (for example, see here, here, and here), which he deems to be a non-issue. To support his case, a recurring point of his is that comparing percentiles of the income distribution—such as the ‘top one percent’ and the ‘bottom 99 percent’—is fallacious. In a recent column, David explains that

"The late economist Joseph Schumpeter compared income groups to hotel rooms: just as the former ranges from high to low, so the latter ranges from high-end to low-end. But the different categories fail to reflect who occupies them and whether occupants move to higher categories over time." 

In other words, if we have high income mobility—that is, lots of movement up and down the income distribution—then comparisons between different portions of the distribution are meaningless. But unfortunately, we don’t have high income mobility.

Inequality Fallacies

My op-ed on economic inequality is up at the Daily Caller. Some snippets:

Fallacies abound about economic inequality, but one of the worst is confusing income categories with human beings.

Presidential candidate Bernie Sanders recently perpetrated this confusion: 

“Our economic goals have to be redistributing a significant amount of [wealth] back from the top 1 percent … Unchecked growth – especially when 99 percent of all new income goes to the top 1 percent – is absurd,” he fulminated. 

But the “top one percent” and the “bottom 99 percent” are statistical categories — not living and breathing human beings. Confusing the one with the other encourages fallacious thinking.