Google+
Close
Wealth and Inequality on YouTube
A dozen reasons why that viral video on America’s wealth “inequality” misses the mark.

Image from "Wealth Inequality in America"

Text  


7. Speaking of income inequality, the implication that the wealthy earn unbearably more than non-wealthy Americans is rebutted by a Congressional Budget Office (CBO) report in July 2012 showing how government transfer payments increase the income of non-wealthy Americans. Because of that pattern, before-tax income is more evenly distributed than market income alone. Households in the lowest quintile of the before-tax income distribution received 5.1 percent of income, the middle quintile received 14.7 percent, and the top quintile received 50.8 percent.

8. The video’s definition of income does not include these transfer payments from government programs, whose total of means-tested welfare was over $1 trillion in 2011. That’s without including Social Security and Medicare.

Advertisement
9. The video’s next point is that while many wealthy people work hard, “Do you really believe that the CEO is working 380 times harder than his average employee?” Maybe not, but:

—• CEOs are paid for their added value. Example: A popcorn vendor is important to an NBA game. But LeBron James adds far, far more value.

—• CEOs are paid for the quality, not the quantity, of their work. Would the video’s creators prefer to pay for the relatively modest profit advantage of a popcorn vendor or the much larger profit advantage of LeBron James?

—• Finally, most CEOs aren’t making millions to sit around. Many are small businessmen who own LLCs and similar modest-sized corporations.

The average pay of all CEOs might be 380 times that of average employees, but it’s certainly not accurate for every CEO. According to this October 2012 analysis of census and Forbes data, there are over 2 million CEOs in America. Half of them make $250,000 or less.

10. In complaining about income inequality, the video never describes the full reality of income differences. According to the tables below this chart, all of which are based on CBO data, the top 1 percent earned at least $1.219 million in 2009. The middle 20 percent of earners averaged $64,300.  A lot of income, yes — but Donald Trump these people are not.

An additional fact: Using the data in the aforementioned tables, the average one-percenter makes 19 times as much as the average person in the middle quintile of earners — and pays over 49 times as much in taxes.

11. Switching back to wealth, the narrator never asks why the wealthy have their money. The basic assumption throughout is that the top 1 percent are evil, corrupt, uncaring, or outright thieves, and it is the place of government to step in. Yet if it weren’t for government giving $100 billion annually to corporate welfare, government collusion with big business on regulations that hurt smaller competitors, and tax loopholes benefiting the wealthy (including $67 billion in the fiscal-cliff law signed by President Obama), those who are indeed corrupt would not have so much more wealth than honest workers. Nor would the wealth difference be so high if major banks and other corporations hadn’t gotten trillions in bailout money from Congress and the Federal Reserve after the financial crash.

Obviously, most wealthy people are regular and decent. But if the video’s creators really want more “equality,” government intervention is the last place they should look.

12. How do the wealthy live? The video insinuates they are dishonest, evil people putting the screws to the rest of us. According to a New York Times article in January 2012, however, the full story is more telling. While “most 1 percenters were born with socioeconomic advantages, which helps explain why the 1 percent is more likely than other Americans to have jobs, according to census data,” the following is also true:

They work longer hours, being three times as likely as the 99 percent to work more than 50 hours a week, and are more likely to be self-employed. Married one-percenters are just as likely as other couples to have two incomes, but men are the big breadwinners, earning 75 percent of the money in one-percenter households, compared with 64 percent of the income in other households.

The top 1 percent of earners in a given year receives about 17 percent of the country’s pre-tax income, about double their share 30 years ago. They pay more than 25 percent of all federal taxes, according to the Tax Policy Center. In 2007, they accounted for about 30 percent of philanthropic giving, according to Federal Reserve data. They received 22 percent of their income from capital gains, compared with 2 percent for everybody else.

In other words, yes, the top 1 percent make a lot of money. They also pay a lot in taxes and make up a vastly disproportional share of charitable giving. They work long hours and are entrepreneurial risk-takers.

It has been claimed by the Left for some time now that inequality is bad in and of itself. The real question remains unanswered, however: Is inequality permissible if all people’s lives are improving? If all people are making economic gains, would liberals destroy that progress in the name of equality?

— Dustin Siggins is the primary blogger for the Tea Party Patriots, a national grassroots coalition with more than 3,500 local chapters.



Text