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Wednesday, June 22, 2005

Luskin Takes On MSM Class Envy

Donald Luskin of www.poorandstupid.com has provided a preview of his National Review article analyzing the MSM's coincidental series of stories on INCOME INEQUALITY. Somehow, NYT, WSJ, LAT and Business Week thought up the topic at the same time and found the data to prove that the rich have been getting richer and everyone else has remained in the same income quintile since GW passed those preferential tax cuts.

However, says Luskin:

But none of this is exactly man-bites-dog material. What the Times reports as news is a pattern that should be familiar to economic historians: Times of great prosperity have been associated with greater income inequality (for example, the 1920s), and conversely times of economic decline have been associated with greater equality (the 1930s). The lines of causality here are complex, and no doubt run in both directions: Prosperity is both the cause and the effect of inequality, and decline is both the cause and the effect of equality. So ideological advocates of income equality for its own sake ought to be careful what they wish for.

That some people used sweat, investment and innovations to become super-rich should be championed. And, I am convenced that if we all were given say $100,000 today, within 5-10 years the same people who become super-rich would have turned that money into great wealth while others would have spent it all on comic books and DVDs.

Luskin says:

Each of us would choose freely whether to work hard or take it easy; to marry a working spouse or a stay-at-home; to educate ourselves for a better job, or settle for less; to invest in income-producing securities, or just spend our money. All these things would determine our unequal incomes, just as they do today. To be sure, in the real world we don’t make those choices from an initial position of equality. Some of us are born rich, others poor, most in between. Nevertheless it’s choices like these that determine whether we will rise or fall within the class in which we are born, or move upward or downward to another class. So we shouldn’t fear income inequality: We should celebrate it as “income diversity.”

By the way, the super-rich are not all born into money. And for some reason about half of the world's billionaires are American (341 of 691). Could that have something to do with the free market system we have in the United States? I get it. That is why people risk their lives to immigrate here. There's opportunity here unlike in the state-controlled economies elsewhere! I get it now!

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