The Truth About Income Inequality in America
Commentary
Income and wealth inequality are contentious issues in the United States. The mainstream media often declares that millionaires, billionaires, and capitalists take more than their fair share of income and wealth, but this is highly inaccurate.
Income Inequality in America: A Closer Look
When we take into account the financial assistance and government policies available to the lower and middle class after taxes and transfers, income inequality in America is much lower than we are led to believe.
The collection of data that the mainstream media uses to depict inequality includes datasets manipulated to show higher poverty levels and higher incomes for top earners. They also tend to gravitate towards individual wealth gained from stock prices. You might have heard of this over the past few years when bleeding heart ideologists have referred to taxing “unrealized capital gains.”
It’s also important to note that commonly used methods to measure household net worth exclude the value of retirement funds, defined contribution plans, and social security, leading to a significant understatement of Americans’ aggregate wealth and an overstatement of wealth inequality.
Wealth Distribution in America
While income inequality is a reality in every country, wealth distribution in America is relatively equitable compared to other nations.
Pre-pandemic numbers showed that over 100 million Americans were in the top 10 percent, and over 19 million Americans were in the top 1 percent globally.
According to 2021 figures, the top 1 percent in the United States hold 35.1 percent of wealth, in contrast to Germany (31.7 percent) and Canada (25.1 percent). More extreme disparities exist in Russia (58.6 percent), Brazil (49.3 percent), and India (40.6 percent).
The Impact of Government Policies
When you consider government policies and financial resources available to the poor and middle class after taxes and transfers, income inequality in America significantly diminishes.
Under the Biden administration, monopolists have continued to gain influence, with solid support for mega-corps, monopolies, and oligopolies on the left, contrasting historical norms. Favorable views of banks and big corporations have increased among Democrats, while support among Republicans has waned.
Concerned leftists obsessing over inequality should tackle rampant inflation and stop supporting the destruction of our local economies and regional small businesses. If they really care about average Americans, robust tax incentives for working married couples with children could be a valuable step. Furthermore, why don’t they work on a robust home-buying and affordable mortgage program for working families with children instead of allowing crony corporations to purchase all the single-family homes and shock the system by gobbling up the housing supply and jacking up rental prices?
The Magic of a Market-Based Economy
Inequality exists even in socialist and communist countries, making it impossible to eliminate all forms of inequality worldwide. According to Edward Paul Lazear of the Hoover Institute, China’s shift from a communist system to a market-oriented economy between 1985 and 2010 led to an annual income growth of 9.6 percent.
The fact stated above is one of the best examples of the magic of a market-based economy over the false promise of socialism. China’s transition from a communist economy to a hybrid (state-supported) market-based economy proves that what Adam Smith, Hayek, and dozens of other free market economists have been saying for hundreds of years is irrefutable. The free market works.
Leftists, Marxists, and socialists will undoubtedly try to argue down that point, but they can be discredited by stating simple historical facts.
The Land of Endless Possibilities
Income inequality in America is exaggerated by many media outlets, creating a distorted picture of reality. The truth is that the U.S. still offers unparalleled opportunities for individuals to achieve success. Compared to other countries, the United States remains a land of endless possibilities.
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