The Corner

Economy & Business

Kudlow on Wealth Gaps

Jonathan Swan writes in Axios that Trump economic adviser Larry Kudlow is “out of sync” with recent studies that show the black-white wealth gap is rising. A few thoughts:

1) A lot of the apparent disagreement amounts to talking about different time periods. The experts Swan is citing are talking about an increased wealth gap from 2007 to 2016, while Kudlow is speculating about a closing gap from 2017 through 2019.

2) Swan uses a measure of the wealth gap between rich and poor that obscures the issue. Kudlow had noted that from 2017 to 2019, wealth grew at a faster rate in the bottom half of the income distribution than in the top one percent. Swan cites his colleague Felix Salmon, who points out that a smaller percentage gain at the top is still a bigger absolute gain, since it’s from a higher base.

This is true, but not especially relevant to the question of the gap between the rich and poor. If A starts out with $100,000 and ends up with $300,000, while B starts with $1 million and ends up with $1.4 million, then A’s wealth as a percentage of B’s has more than doubled. It’s perverse to say that they have gotten less equal.

3) Wealth inequality looks smaller if we account for Social Security.

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.


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