Income Inequality, Round Two

David Weinberger / April 02, 2011

This is part two in a debate with liberal blogger Tim Mitchell on whether income inequality is a problem. In part one I laid out why income inequality isn’t a problem. In this post I refute arguments made in part one  by Mr. Mitchell. For part two from Mr. Mitchell, click here. 

In a recent post arguing that income inequality is a problem, Mr. Mitchell charges that “most American households have seen little gain in income in the last three decades despite rising productivity growth.”

He contends that from 1947-1973 there was “broad-based prosperity” because “incomes of virtually all Americans grew at around 2.5% annually.” Furthermore, he asserts, “income growth in the 1970s and 1980s was hardly noticeable and was actually negative for 60% of the population during the Bush years.”

He provides statistics from the Census Bureau and from the Piketty-Saez study to conclude that low- and middle-income earners have been left behind by the rising tide the rich have experienced over the past few decades

In his first few paragraphs, the income figures provided from the Census Bureau lead one to believe that lower- and middle-income earners have indeed been stagnant or even losing. However, as I pointed out in my original post, those income statistics don’t include benefits: pension, health insurance or subsidies (food stamps, the Earned Income Tax Credit (EITC), public housing, school lunch programs, Medicare, Medicaid, etc.). (more…)