Who are the rich? By Bradley Gitz A reasonable case could be made that the current debate over inequality has less to do with bringing up the bottom (as it should) than bringing down the top. Implicit in most media coverage is the idea that the “undeserving rich” have rigged the system through various forms of crony capitalism and influence-buying at the expense of the “deserving poor.” As such, it is hard to avoid the conclusion that, after 50 years of a failed “war on poverty,” the left is now content to simply stoke class resentments and expand the ranks of those dependent upon welfare-state largess as a means of securing their votes. It is, after all, much easier to demonize the successful among us than it is to lift people out of dependency, after which they would only move to the suburbs and become Republicans anyway. All of which behooves us to look at the data on the greedy plutocrats being blamed for poverty, inequality and declining mobility. Two recent articles, one by Kevin D. Williamson in National Review, the other by James Piereson in the Wall Street Journal, prove useful on this score. And what they tell us is that the facts don’t fit well with leftist claims. In his essay, “The Truth About the One Percent, ”Piereson notes that “the top 1 percent consists primarily of salaried executives at nonfinancial businesses (30 percent), and secondarily of doctors (14 percent), people working in finance (13 percent), and lawyers (8 percent).” Even among the “super-rich” (those in the top 0.1 percent), business executives still outnumber financiers by more than two to one (41 percent to 18 percent). Going further, the top 1 percent earned 36 percent of their income from salaries and wages and 22 percent from businesses, farms and partnerships, as opposed to just 19 percent from capital gains, suggesting that it has been hard work rather than a rigged tax code favoring capital gains that has made the top 1 percent or even the top 0.1 percent wealthy. In short, the vast majority of the wealthy are not Wall Street fixers reaping ill-gotten gains through Washington lobbyists but entrepreneurs, executives at small and medium-sized companies, doctors, lawyers and other professionals (not to forget writers, professional athletes and entertainers). In most cases, the wealth of those groups has been earned wealth and the overwhelming bulk is taxed at the top marginal rate rather than the lower 23.8 percent capital gains rate (which is also why the share of the total income tax paid by the top 1 percent has risen from 17 percent to 39 percent since 1980). The data and arguments put forth by Piereson are supported by Williamson in his piece on “The Hard-Working Rich.” Among his more interesting observations: that inherited wealth now accounts for only 15 percent of the holdings of the top 1 percent (down by almost half compared to just a few decades ago); that the proportion of assets flowing from inheritance is actually higher for those in poor and middle-class households than in wealthy ones; and that the wealth of the wealthy is augmented by marriage to highly educated spouses with professional careers of their own (reflecting the increasingly noted tendency in post-industrial society toward “assortative mating,” in which the educated marry those they met in law school or that prestigious MBA program). Those in the bottom quintile tend, in contrast, to work little (if at all), have low levels of education (in a post-industrial marketplace that increasingly requires it), and are much less likely to be married-just 17 percent of the poorest households consisted of married couples, compared to 78 percent of the wealthiest. Unlike in the Snidely Whiplash cartoon world of the left, that those at the bottom of the economic ladder are finding it difficult to climb higher is not necessarily the fault of those at the top. Indeed, the evidence put forth by Williamson and Piereson suggests that the much-despised 1 percent is mostly made up of people who have done well in school, worked hard to get where they are, saved their money, and played by the rules along the way. There is nothing “unfair” or “unjust” about their success, and nothing preventing the poor from emulating it, either. Thus, in the end we continue to look in the wrong place when we discuss growing income inequality and declining social mobility. By illogically attributing those problems to the alleged greed of the 1 percent we do nothing to help the bottom 30 percent study harder, get and keep jobs, and postpone having children until after marriage. Indeed, we could go as far as to wipe the top 1 percent off the face of the earth and it would have no beneficial impact on the prospects of the poor (if anything, the opposite). It is human nature to seek out scapegoats, and there has never been a shortage of demagogues seeking to profit by telling the poor that the “rich” (or the “1 percent,” or the “robber barons” or the “kulaks” or the “great malefactors of wealth”) are to blame for their condition. And the only sure thing in all of this is that, after the rich have been appropriately soaked (or expropriated or sent to the camps), there will be even more poor than before. Freelance columnist Bradley R. Gitz, who lives and teaches in Batesville, received his Ph.D. in political science from the University of Illinois.
Posted on: Wed, 12 Mar 2014 13:48:59 +0000
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