Wednesday, April 09, 2008

Income gap

The Nightly Build...

Trey Garrison Defends The Gilded Age

Frontburner's Trey Garrison dismisses recent studies that indicate that Texas has one of the largest income gaps in the US and it's getting larger.

Garrison cites a New York Times article to support his "What, me worry?" position. That article doesn't deny the growing income gap, only explain it away. The article cites demographic trends to explain some of the rising gap, but only some. It still lays some of the problem at the feet of "unfairness and bad public policy." Stuff Trey Garrison would rather pretend doesn't exist.

Garrison also cites a Cato Institute study that concludes, "Aside from stock option windfalls during the late-1990s stock-market boom, there is little evidence of a significant or sustained increase in inequality..." Sure, aside from those piddly little stock options.

Garrison then tries to slip some faulty logic past the reader dressed up as math. He says, "Gaps grow even if everyone's income increases by the exact same percentage." The flaw is in the implication in his premise. Everyone's income is NOT increasing by the exact same percentage. The rich are getting richer by an ever increasing percentage. The gap is growing, not just in absolute terms, but in percentage terms as well.

Finally, Garrison contends that a growing income gap is harmless as long as everybody's income is rising in absolute terms. First, the assumption that everyone's income is rising in absolute terms is debatable. Studies indicate that working class income has been stagnant for a decade or two. Second, there are negative consequences to a growing income gap even if we pretend that everyone's absolute income is rising. The attraction of enormous (and growing) financial returns for commercial enterprise deters people from entering professions that provide more social returns, like teaching and health care and government service. Also, the influence of money on politics is real and growing. A growing income gap leads to ever more influence by the wealthy. The long term stability of our democracy is put at risk.

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