Tuesday, December 6, 2011

What are the Wealth-Haters Going to Say Now?

Admittedly, there is a group of wealthy, who are so only because they play footsie with the government and gain special favors (if not cash itself), but there are other wealthy that gain their wealth by earning it. Wealth-haters don't separate the two groups and thus they recently went off on a statistic that showed that in 2007 the income of the super-wealthy climbed dramatically.

Alan Reynolds explains at WSJ the big problem with that statistic:
A recent report from the Congressional Budget Office (CB0) says, "The share of income received by the top 1% grew from about 8% in 1979 to over 17% in 2007."

This news caused quite a stir, feeding the left's obsession with inequality. Washington Post columnist Eugene Robinson, for example, said this "jaw-dropping report" shows "why the Occupy Wall Street protests have struck such a nerve." The New York Times opined that the study is "likely to have a major impact on the debate in Congress over the fairness of federal tax and spending policies."

But here's a question: Why did the report stop at 2007? The CBO didn't say, although its report briefly acknowledged—in a footnote—that "high income taxpayers had especially large declines in adjusted gross income between 2007 and 2009."

No kidding. Once these two years are brought into the picture, the share of after-tax income of the top 1% by my estimate fell to 11.3% in 2009 from the 17.3% that the CBO reported for 2007.


  1. http://whatreallyhappened.com/IMAGES/control.jpg

    The truth be told comically.

    For duty and humanity.

  2. This is a great article but it will be ignored since it doesn't play into the populist theme's that the media is trying to cater to these days. I wish the media would do real research on this top becuase they present this information in a very misleading manner. Here are some things people should know when considering this topic.

    Firstly all methods used to calculate income gain inequality are based on statistical models that require assumptions so there really is no way to compare the results from one study to another, even if they both use the same model. Thus, any results are not concrete facts like taxes paid, income earned, etc, yet the media presents it as though it were so.

    Secondly, the groups that provide the analysis love to use the CBO calculation which only started calculating this data in 1979. The Census Bureau has been calculating this same data yearly since 1947 but you will never see Census data used beyond 1978 in any of their analysis. The reason they don't use the Census data is that it would show that the widening trend actually started around 1972/73 which is when we went off the Gold standard and thus began the financialization of the economy.

    The CBO data of course feeds nicely into the left's theory that all this started as the result of supply side economics (of course they completely ignore that supply side economics came about as the result of the failure of demand side economics but that's another topic).

    None of this is to say that this isn't happening, which clearly both agencies show that it is, but its to point out the dishonesty in the conversation around income inequality that seems to be completely ignored by the media through either malicious intention or pure ignorance.

  3. Couple of points.

    1. You say the "wealth haters" - have I missed something and you have defined it somewhere, or just it just mean "commies, lefties, hippies" or whatever. As far as I can tell there is outrage from the right about crony capitalism, and they very much separate it.

    2. Even if your conclusion is true and this is propaganda.... Fine. The crony capitalists have propaganda factories controlling the BullSh*t flow from start to finish about how important and necessary they are, and hold the population to ransom daily with their "bail us out or we will trash your economy."

  4. There is another group of wealth haters. This group of comprised of those who acquire their wealth by "playing footsie with the government and gain special favors", whose consciences still have a twinge of sound judgment and morality, who then feel a sense of guilt and embarrassment, which they then deal with by hating their own wealth. They know at some positive conscious level that their wealth was ultimately acquired on the backs of the governments' victims. They may not lose sleep over it, but they nevertheless can't fully appreciate what they have. These are the wealthy people who tend to ask that the government tax them more, in order to find some feeling of forgiveness for their transgressions.

  5. People like Eugene Robinson make me laugh. They give government additional power to redistribute income and then are surprised when the rich, and government employees, get richer and the poor, and the middle class, get poorer. What's the matter Mr. Robinson, isn't Society Great enough for you yet? Want our friends in Washington D.C. to keep working on it until they get it right?

  6. The people who steal money from taxpayers start to feel awful about themselves and injure their own self-esteem. They then want to destroy everyone else around them so to make everyone else as miserable as they are. It is classic sociopathic behavior...they are the same as serial murderers. See George Soros.

  7. Another factor that affects income disparity are government policies. Liberal government policies have been killing good American middle class jobs for decades. When the cost of government, government regulations, bureaucratic delays, etc. make it impossible for businesses to operate profitably in this country, the jobs that those businesses provide go away.
    When you massively destroy middle class jobs, the incomes of middle class people go down. When you raise the costs of hiring people, then fewer people are hired.
    When government actions destroy good paying middle class jobs and interferes with the creation of new or better replacement jobs, then many previously middle income people now earn less money. The more effective government is in destroying middle class jobs, the more income disparity there will be.

    The solution? Cut the size of government so that it cannot interfere with job creation and the ability to operate a business that can compete in terms of price and the ability to provide an adequate return for the risk taken by its investors.

  8. When I was in Germany, I noticed many more churches that could ever be attended by the populace. My German acquaintance explained that the merchants in the 1800's made a lot of money through less than honest means. They funded the churches to reduce their time in Purgatory. It apears that history repeats itself through different venues in America.

  9. Robert....could you indicate what figures and their source you used to calculate your income numbers for 2008/09 for the top 1%? Using data from the Tax foundation I calculated a share of after-tax AGI for the top 1% of 14.4%. Also, the article would seem to reference pre-tax income as a % of total income so this may be a slight apples to oranges comparison. For example, with the same Tax Foundation numbers for 2009, the AGI of the top 1% as a % of the total AGI is 16.9% as opposed to the after-tax 14.4%.

  10. More statistics are not what we need. Real reporting is gone. The truth will still come out over time. Free enterprise is non-existent for anyone but big business and government...this is called fascism. Until we address real problems with open discussion and truth we are doomed and will doom the rest of the world with us. Who can stop the banksters when they control all the money....all 4 Presidents who were murdered in our country all had one thing in common....they made a stand against what has become the world banks!