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Another Leftist Falsehood Exposed November 24, 2014 10:00 AM | Tagged as Piketty
WSJ Nov 12, 2014 “How to Distort Income Inequality” by Phil Gramm and Michael Solon
For too long, leftists have pounded us commoners with a narrative that only the rich have prospered during the economic boom started by Ronald Reagan. A book by French Economist Thomas Piketty, Capital in the Twenty-First Century, provides data to back up this narrative. The book was instantly popular among the elites and the media. It fits their narrative.
Now several economists are reviewing Piketty’s data. Peer reviews are troublesome things. Piketty’s data are flawed. It leaves out a few things that completely change the results.
A study by three other economists shows, from 1979 to 2007, the bottom quintile (20%) of the population experienced a 31% increase in wealth, not the 33% decline reported by Piketty. The second quintile’s wealth rose 32%, nowhere close to Piketty’s 0.7% . The middle quintile’s wealth rose 37%, not 2.2% as Piketty’s flawed numbers showed.
It is clear that all strata of American society benefitted by the lower taxes, lower spending, lower regulation initiated by Reagan. It yielded lower interest rates, lower inflation, and higher economic growth for everyone.
If you think the gap between middle income and the highest income is great in the US compared to other countries, you are right. But so what? False pride is tough to overcome. Wealth creation eventually helps us all. Do you begrudge Bill Gates for bringing us the personal computer? For Warren Buffett who taught us to use capital efficiently? For Wal-Mart who stretched our buying power and lifting many lower-income people’s well-being?
If you are still jealous of large wealth creators, maybe the words of Churchill will help:
"The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries." *
[Although opinion is included, The Biz Bucks Blog is primarily written to former students of Biz Bucks training courses to encourage their daily reading of the three opinion pages of the WSJ. This refreshes principles of Biz Bucks courses and improves business acumen on topics not discussed in Biz Bucks training.]
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