Rich vs Poor

I usually read Frank Rich's work in the New York Times every week. As a result I usually get frustrated that a writer with as much influence as this man can write materials like this that are just plain nonsense. His Op-Ed this week is no different, but slightly more irritating.

The first thing that hits me about this column, which is primarily about income inequality, is that the author makes no case for why differences in income are bad. He just frames up the issue that there are people that are have nots and other people that are haves. What exactly is wrong with this?

Mr. Rich wants higher taxes on the rich. Is it not enough that the top 10% of income earners pay 68% of the income tax in this country? Even worse, 47% of people pay nothing or get money back at tax time.

From the column...

the superrich who have gotten spectacularly richer over the last four decades while their fellow citizens either treaded water or lost ground. The top 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976.

Why did the top 1% of earners get 23.5% of the nation's income? Did they steal it? Did they cheat someone out of it in a game of poker? No, they got wealthy because the created value for people that bought their products and services. Bill Gates became a multi-billionaire because his software allowed millions of people to create even more wealth using his products.

I also have to argue that non-superrich lost ground. Relative to the top 1% maybe they did lose ground by comparing relative incomes by class (most like not the same people), but does that mean their standard of living fell? I doubt it. My guess is that most people in the bottom 20% of incomes enjoy a much higher standard of living today than people in the same economic class 40 years ago. I would bet that they enjoy things like color TV, cable, cell phones, microwave ovens, computers and many other things that only the superrich/rich had access to 40 years ago.

It is easy for newspapers to write articles that get the middle class fired up and play on the jealous attitudes of people that feel victimized. While this might be good for newspaper sales, it just makes it more apparent that people are more uninformed than ever about facts and have no basic understanding of economics. This is the real crisis, not income inequality.