The income inequality crisis that wasn’t

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Socialist senior citizen Bernie Sanders has regularly characterized supposedly rampant income inequality as the “defining crisis of our time,” and lamented throughout his presidential campaign that “the middle class of this country, over the last forty years, has been disappearing.” Other liberal Democratic candidates, such as Elizabeth Warren, have similarly chided America over our supposedly worsening inequality crisis, with the pseudo-wonk candidate releasing numerous proposals specifically targeting inequality.

Yet new data show the liberal narrative surrounding income inequality has been exaggerated and is unfounded. The U.S. Census Bureau just released new statistics which show that the Gini coefficient, a common measure of income inequality, has hardly changed in the last 25 years.

What’s more, a 2018 academic paper sent shockwaves around the academic community when it showed that the gap in income equality has risen “nowhere near as much as alleged.”

So it’s clearer than ever that Sanders, Warren, and their socialist cohorts were always off-base in their griping about rising inequality as a major social problem. However, it’s seriously worth questioning the extent to which income inequality was ever even a crisis at all.

According to 2015 data, the income of a given household in the top 10% was, on average, nine times that of a household in the lower 90%. Other statistics make it clear that we do not live in an equal society. But we never thought we did, and frankly, why does it matter?

Wealth accumulation is not a zero-sum game. Poverty is best viewed as an absolute phenomenon, not a relative one. Your quality of life is not harmed at all by someone else’s great wealth, as their wealth was almost certainly not gathered at your expense.

Your cupboard is not any emptier because your neighbor comes home from work with a pay raise. Your iPhone is no less useful to you than it was before when your neighbor gets an upgrade. If you could not afford a car and your neighbor comes home with a new Mercedes, you are not any worse-off than you were before. Your situation has not changed.

Wealth and poverty are best measured by the resources and material goods you have or lack, regardless of what others have. Poverty requires an absolute measure, not a relative one. “Do you ever go hungry?” and “Does housing consume more than 30% of your income?” are far better measures than, say, “Do you make less than 2% of what the CEO of your company makes?”

Liberals like Sanders and Warren view economics as a zero-sum game in which the rich succeed only at the expense of the poor. As Ronald Reagan once put it, they “can’t see a fat man standing beside a thin one without coming to the conclusion the fat man got that way by taking advantage of the thin one.”

This view is fundamentally flawed. It ignores everything we know about modern economics, as well as the massive improvements in quality of life that Americans have experienced over the last several decades. These improvements are not necessarily reflected in the income growth measures or pre-tax income statistics that liberals use to advance their narrative.

From the invention of the iPhone to advances in AIDS treatment, from huge increases in non-wage benefits to massive decreases in the prices of consumers goods, such as televisions and household appliances, many advancements have left us all much better off without showing up at all in the narrow measures of income inequality.

Moreover, we shouldn’t even concede that income equality ought to be our goal. We should want people who create value — whether they drive Uber, tutor for the SAT, invent groundbreaking new technologies, or just put their capital at risk to make such endeavors possible — to enjoy the fruits of whatever their investment of time and money creates for those willing to pay.

The bottom line is that we ought not obsess over wealth comparisons when making policy. Rather, we should focus on improving the actual circumstances of our compatriots from an objective standard, measured not against our jealousy of others but by their actual quality of life. We must strive for economic opportunity and advancement for all — not fret about misleading and exaggerated claims of income inequality offered by dishonest Democrats in pursuit of a socialist policy agenda.

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