My last two posts, here and here, demonstrate that income inequality in the U.S. is really fairly mild, after taxes (state, local and federal) and government transfers are taken into account. In fact, the average disposable household income of the bottom quintile is a surprisingly high $50,901.
I also discuss several ideas for helping those in the lower echelons increase their chances of moving up to a higher level. Equality of opportunity is an important American ideal and we can certainly do a lot better in trying to meet that ideal.
- Innovators such as Jeff Bezos, Bill Gates or J.K. Rowling capture only about 2% of the economic value they create. The rest of it accrues to consumers.
- The U.S. ranks 13th in the so-called Human Development Index which measures qualities of life such as longevity, amount of education and income levels for 189 different countries around the world.
- The countries ranking ahead of the U.S. for HDI are mostly European and especially Scandinavian.
- Believe it or not, ten of these high HDI countries have more billionaires per capita than the U.S! including the supposedly socialistic Sweden which ranks 6th in billionaires per capita.
- The high ranking HDI “liberal-democratic welfare-state capitalist” countries are the most desirable countries in which to live and they all have lots of billionaires.
Conclusion. Income inequality is simply not a significant problem in the U.S. and is blown way out of proportion by the media. Even though billionaires are sometimes viewed as the public image of rampant inequality, in reality they are the highly visible sign of a successful society.