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By Pejman Yousefzadeh Posted in Class Warfare | Economic Demagoguery | Economy | Inequality — Comments (2) / Email this page » / Leave a comment »

RedState's own Jeff Emanuel sends word that perhaps--just perhaps--there is finally a pushback against populist demagoguery. It could not have come too soon (read on for more below the fold):

Class warfare is once again a campaign theme. The Democratic candidates are railing against the "tax cuts for the rich," lamenting the stagnation of middle-class incomes, and decrying the deepening woes of the poor. In her January response to President Bush's State of the Union address, Hillary Clinton cited "seven years of stagnant wages, declining incomes and increasing inequality." Barack Obama echoes this theme by referring repeatedly to the "middle-class squeeze."

Both candidates portray America as a nation where the fruits of economic progress have been usurped by corporate CEOs, equity-fund managers, inside traders and international speculators. Main Street has floundered, while Wall Street has flourished.

The annual release of census data on household incomes provides the foundation for the "two Americas" thesis. The latest figures tracked changes in incomes all the way back to 1967. Two observations grabbed the headlines. First, the data indicate that the top-earning 20% of households get half of all the income generated in the country, while the lowest-earning 20% of households get a meager 3.4%. That disparity has widened over time: In 1970, their respective shares were 43.3% and 4.1%. These income-share numbers buttress the popular notion that the "rich are getting richer while the poor are getting poorer."

The second observation in the Census reports relates to the well-being of the middle class. The median household income in 2006 was $48,201, just a trifle ahead of its 1998 level ($48,034). That seems to confirm middle-class stagnation.

While there is some substance to these fears of widening inequality and middle-class stagnation, the situation is not nearly as clear-cut. Demographic changes in the size and composition of U.S. households have distorted the statistics in important ways.

First, we can easily dismiss the notion that the poor are getting poorer. All the Census Bureau tells us is that the share of the pie consumed by the poor has been shrinking (to 3.4% in 2006 from 4.1% in 1970). But the "pie" has grown enormously. This year's real GDP of $14 trillion is three times that of 1970. So the absolute size of the slice received by the bottom 20% has increased to $476 billion from $181 billion. Allowing for population growth shows that the average income of people at the bottom of the income distribution has risen 36%.

They're not rich, but they're certainly not poorer. In reality, economic growth has raised incomes across the board.

That's just a taste of the myth demolition found in the article. There is, of course, a whole lot more. Unless you are a class warrior who does not want your preconceptions to be severely upset, you would do well to read it.

And come to think of it, if you are a class warrior who does not want your preconceptions to be severely upset, the article is meant especially for you.