Tags: Irwin | income | inequality | wealth

NYT's Irwin: While Income Inequality Rises, Wealth Envy Apparently Doesn't

By    |   Tuesday, 21 April 2015 06:40 AM

Americans might be concerned with the growth of income inequality, but they aren't blaming it on the wealthy.

"You might expect more and more people to conclude that it's time to soak the rich," writes New York Times columnist Neil Irwin.

"Here's a puzzle, though: over the last several decades, close to the opposite has happened. . . . Americans' desire to soak the rich has diminished even as the rich have more wealth available that could, theoretically, be soaked."

So how do you explain the conundrum?

Conservatives may answer, "Americans are seeking less redistribution because they have come to their senses," Irwin says.

"They realized the very high tax rates and generous social spending that prevailed in the middle decades of the 20th century came at a high economic cost, and that low taxes on the rich encouraged greater investment and entrepreneurship, spurring faster economic growth that ultimately made everybody better off."

Then there's the liberal view: "Americans have been hoodwinked by conservative politicians and media outlets, and have come to view redistribution as a dirty word because they don't recognize the ways it benefits them."

As you might guess, Irwin opts for none of the above. "New research offers a bit more evidence on what may be occurring," he writes.

"It doesn't disprove either the conventional liberal or conservative argument. But it does show some of the ways that Americans' attitudes toward redistribution are more complex than either would suggest," Irwin notes

"Our views on proper tax levels and redistribution may be shaped by seemingly extraneous factors, like whether we believe the rich are already used to being rich, and whether we are already getting government benefits. In other words, the question isn't, Why don't Americans want to soak the rich more? It may be, who exactly is being counted as rich and who is perceived to be benefiting from the soaking?"

Meanwhile, Paul Roderick Gregory, professor of economics at the University of Houston, has a bone to pick with former Labor Secretary Robert Reich.

Reich, now a professor at the University of California, Berkeley, wrote on The Huffington Post: "America's legendary 'self-made' men and women are being fast replaced by wealthy heirs. . . . The nation's assets (are being put) into the hands of people who have never worked."

Gregory's response on Forbes.com: "Reich should do his homework. His only offered evidence is that 'six of today's 10 wealthiest Americans [most notably the Wal-Mart Waltons] are heirs to prominent fortunes.'"

But a 2013 study in the American Economic Review showed that only 32 percent of the Forbes 400 in 2011 were members of extremely wealthy families, down from 60 percent in 1982, Gregory explains.

A total of 69 percent on the Forbes list started their own business, compared with just 40 percent in 1982.

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Americans might be concerned with the growth of income inequality, but they aren't blaming it on the wealthy.
Irwin, income, inequality, wealth
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2015-40-21
Tuesday, 21 April 2015 06:40 AM
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