Here is a common economic fallacy: the rich are getting richer and the poor are getting poorer.
It is a standard trope used in politics, particularly those of the leftist persuasion. And now one prominent Wall Street titan is regurgitating it.
Jamie Dimon, the CEO of JPMorgan and Chase, who is worth $1.3 billion, recently wrote:
“It is true that too many people are not getting a fair opportunity to get ahead. We must find ways to help them move up the economic ladder, and everyone — business, government and nonprofits — needs to play a role.”
But is this even remotely correct?
Here are a few things to consider:
– Median household income is at an all-time high ($61,372).
– There is little evidence income inequality has grown since the 1990s.
– 73 percent of American adults will spend at least one year in the top 20 percent.
– The U.S. middle class is shrinking, but that’s because more households are moving up.
And, to top it off, here is a quote from legendary economist Thomas Sowell:
1. Most people are not even surprised any more when they hear about someone who came here from Korea or Vietnam with very little money, and very little knowledge of English, who nevertheless persevered and rose in American society. Nor are we surprised when their children excel in school and go on to professional careers. Yet, in utter disregard of such plain facts, so-called “social scientists” do studies which conclude that America is no longer a land of opportunity, and that upward mobility is a “myth.”
2. Ironically, many of the very people who are promoting the idea that the “unfairness” of American society is the reason why some individuals and groups are not advancing are themselves a big part of the reason for the stagnation that occurs. The welfare state promoted by those who insist that it is society that is keeping some people down makes it unnecessary for many low-income people to exert themselves — and therefore makes it unnecessary for them to develop their own potential to the fullest.
3. Most working Americans who were initially in the bottom 20 percent of income-earners, rise out of that bottom 20 percent. More of them end up in the top 20 percent than remain in the bottom 20 percent. People who were initially in the bottom 20 percent in income have had the highest rate of increase in their incomes, while those who were initially in the top 20 percent have had the lowest. This is the direct opposite of the pattern found when following income brackets over time, rather than following individual people.
Most of the media publicize what is happening to the statistical brackets — especially that “top one percent” — rather than what is happening to individual people.
So, yes, the rich are getting richer – but so is everyone else.
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