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Brad Schiller had a well-reasoned piece in the WSJ on the “Inequality Myth“. It’s a good read, but I’m going to pick a nit or two.

Schiller hints at the rhetorical sleight-of-hand that politicians use to stir the class-warfare pot:

Both candidates portray America as a nation where the fruits of economic progress have been usurped by corporate CEOs, equity-fund managers, inside traders and international speculators.

The underlying assertion in the politicians’ portrayal is that the “fruits” are somehow just out there, waiting for somebody to walk up and pick them. No production — planning, risk-taking, or investment — required. This sort of conflation of production and consumption has become so common that vigilance is required to keep it from slipping into one’s reasoning. Later in the same article, Schiller writes:

Two observations grabbed the headlines. First, the data indicate that the top-earning 20% of households get half of all the income generated in the country, while the lowest-earning 20% of households get a meager 3.4%.

This seems to concede, at least weakly, the demagogues’ point: The income was out there, and some people were able to “get” more of it. Putting aside the judgments of how reasonable the pay is for any given occupation (say, $55K honorariums for a hedge fund consultant to discuss poverty with a bunch of college kids), in a free society one produces income. One does not simply “get” it.

A similar problem pops up a little later:

All the Census Bureau tells us is that the share of the pie consumed by the poor has been shrinking (to 3.4% in 2006 from 4.1% in 1970). But the “pie” has grown enormously. This year’s real GDP of $14 trillion is three times that of 1970. So the absolute size of the slice received by the bottom 20% has increased to $476 billion from $181 billion.

The Census data under discussion, of course, tell us little about what is “consumed” or even, one could argue, “received”. At best it paints, with a broad statistical brush, what is produced.

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