As part of its widely publicized series entitled "America: Who
Stole the Dream," written earlier this fall by reporters Donald L.
Barlett and James B. Steele, the Philadelphia Inquirer
prepared an "Economic I.Q. Test" for its Web site.
The 31-question true-false test has one not-so-subtle theme: the
rich are making out like bandits in the economy of the 1990s while
the rest of us struggle from paycheck to paycheck. The results of
the "I.Q. Test," like the series itself, paint a bleak picture of
America by suggesting that:
1) The rich are hoarding America's wealth at a record pace.
2) The U.S. has the most unequal distribution of income of any
3) "Mass immigration" and free trade are pushing down the wages
of low-income Americans. (Why immigrants would even want to come to
such an awful country in the first place is never explained.)
4) The super-rich don't pay much in taxes at all.
And on and on. The very first question sets the tone. "True or
false. The richest Americans are accumulating more wealth these days
at the fastest rate since the robber-baron era?" Answer: "True."
The quiz fits neatly with the overriding thesis of the entire
series: that the poor are poor because the rich are rich. The
implicit remedy: class warfare legislation.
But it turns out that the 31-question "test" is filled with far
more damn lies (or at least distortions) than statistics. So before
journalists jump on the populist "greed and envy" bandwagon, they
may want to at least consider some of the countervailing (and often
very surprising) facts about income distribution, wages, and who
pays the taxes in the contemporary American economy.
Fact #1: The wealthiest five percent of Americans earn a
smaller share of the nation's total income today than they did in
1960, 1950, 1940, and 1930. Today, the top five percent have 19
percent of total income. That percentage ranged from 20 to 26
percent between 1930 and 1960.
Fact #2: Despite some minor fluctuations up and down, the
income share of the middle class (those with incomes in the middle
60 percent of the distribution) has held remarkably steady at
between 47 and 53 percent of the total income since the mid-1930s.
America's great middle class is not disappearing.
Fact #3: As a share of total national income, the richest
one percent of Americans earn 15 percent of the total. But they pay
fully 28 percent of the total income taxes collected.
Fact #4: Even if the government confiscated every penny
earned by Michael Jordan, Madonna, Bill Gates, and every other
millionaire in the United States, this would only raise enough
revenue to keep the federal government operating for six weeks.
Fact #5: The average hourly manufacturing wage in America
today is $12.50. Including benefits, total hourly compensation
exceeds $18 an hour. Adjusted for inflation, that is at or near an
all-time high. It is true that compensation for European
manufacturing workers is higher, but those jobs are rapidly
disappearing in Europe and unemployment rates are in double digits
Fact #6: A family that was in the poorest 20 percent of
income in 1979 was more likely to have moved all the way up to the
richest 20 percent by 1988 than to still be poor. The United States
is not a caste society. The poor today are not typically the poor
None of this is to claim that the American economy always
produces "fair" outcomes. It is true that over the past 20 years,
the disparity in income between rich and poor has widened somewhat
-- but not greatly.
It is also true that as we move toward an ever-more-globalized
economy, wealth distribution can be expected to grow somewhat more
unequal -- even as the nation as a whole grows more prosperous.
Capitalist economies -- today, as always -- create winners and
losers. But we are far from a "winner-take-all" society. Economic
winners like Bill Gates, Andrew Grove, or the Sam Walton family have
created vast wealth for themselves, but also for untold thousands of
other Americans, while creating good jobs for thousands of others.
If this is what the Inquirer has in mind when it refers to
the robber barons, America needs more of them, not fewer.
To help the poor succeed in our new-age economy, we need more
wealth and opportunity, not more of the greed and envy promoted by
the Philadelphia Inquirer.
Stephen Moore is director of fiscal policy studies at the
Cato Institute in Washington, D.C.