Monday, June 11, 2007

Why oh Why Can’t We Have a Better Press Corps?

A recent article in the NY Times gave the statistic that the pretax income for the top 1 percent of American households rose 7 percent, to 16; while the income share to the bottom four quintiles fell 7 percent. And then this sentence:

It’s as if every household in that bottom 80 percent is writing a check for $7,000 every year and sending it to the top 1 percent.

That’s not even a remotely true statement. The first problem is the oft quoted “They aren’t the same people.” Those in the bottom quintile in 1979 are not the exact same people there today. I would be willing to bet that the majority of people in the bottom quintile today weren’t even in the labor force in 1979. Furthermore, all quintiles have gotten richer since 1979, but the rate of growth for the quintiles has been different. Just because the top 1 percent has risen faster, doesn’t imply that the bottom 80 percent are sending checks in the mail to them from their helpless exploited state. It could be (there’s really no way of knowing for sure one way or the other) that if the top 1 percent didn’t increase as much the bottom quintiles would have grown slower.

On a somewhat related note, Don Boudreaux directs us to Steve Landsburg.

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