Sunday, September 03, 2006

Incomes Unequal, but much higher

The hand wringing about income inequality in the United States is a red herring in the truest sense. It is a false issue intended to divert attention. The poorer people in the United States are at the same level as those in the egalitarian paradise of Finland, which has the lowest income inequality. Tim Worstall at TCSDaily shows us:
In the USA the poor get 39% of the US median income and in Finland (and Sweden) the poor get 38% of the US median income. It's not worth quibbling over 1% so let's take it as read that the poor in America have exactly the same standard of living as the poor in Finland (and Sweden). Which is really a rather revealing number don't you think? All those punitive tax rates, all that redistribution, that blessed egalitarianism, the flatter distribution of income, leads to a change in the living standards of the poor of precisely ... nothing. Such may lead us to a conclusion that the EPI probably wouldn't like: If we accept (as I do) that we do, indeed, need to have a social safety net, and that we have a duty to provide for those incapable or unlucky enough to be unable to do so for themselves, we need to set some level at which such help is offered. The standard of living of the poor in a redistributionist paradise like Finland (or Sweden) seems a fair enough number to use and the USA provides exactly that. Good, the problem's solved. We've provided -- both through the structure of the economy and the various forms of taxation and benefits precisely what we should be -- an acceptable baseline income for the poor. No further redistribution is necessary and we can carry on with the current tax rates and policies which seem, as this report shows, to be increasing US incomes faster than those in other countries and boosting productivity faster as well.
So the poorer people in the US are at the same level as Finland, but everyone else is higher - much higher! So take your choice: move to Finland and be lower income but equal or to the US and have the chance to get ahead - way ahead. Worstall also shows that the data from the liberal Progressive Policy Institute show that the US, as well as being ahead, is moving faster:
Things are actually looking pretty good for the US economy, then -- wealthier to start with, getting richer faster and productivity growth is also highest in the USA, meaning that this trend is only likely to continue.
Via Michael Barone. Follow that link and have your screen filled with pop-ups. Don't.

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