Minneapolis Star Tribune: Rich are getting richer? Exactly right

There's a noisy band of American inequality deniers who are trying to convince us otherwise.

March 29, 2011- Steven Cunningham ("The rich are getting richer — right?" March 25) tells us that the rich in America aren't getting richer.

To paraphrase Artemus Ward, a 19th-century humorist: It ain't so much the things he don't know that get him into trouble. It's the things he does know that just ain't so.

Economists, a famously contentious bunch, disagree about many things. On the question of economic inequality, though, they disagree hardly at all: American inequality is high and rising.

Economists use three main tools to study inequality. They measure poverty.

They compute the Gini coefficient. And they compare the income or wealth of the rich (or the very rich) to that of the rest of us.

On all of these counts the U.S. record since 1970 is grim for all but those at the top.

The Census Bureau's 2009 poverty threshold for a family of two adults with two children was $21,756; for a single adult aged less than 65, it was $11,161.

The poverty rate, giving the percentage of Americans living below this threshold, varies over time as the economy waxes and wanes.

Lately it's been rising. In 2009, 43 million Americans, one of every seven (14.3 percent), lived in poverty. That's up from 25.5 million (12.6 percent) in 1970.

The Gini coefficient measures inequality for all of us, not just the poor. It can be zero (if income is distributed equally); it can be 100 (if, impossibly, a single family captures the entire national income), or anything in between.

A higher Gini means more inequality.

The Census Bureau tells us the U.S. Gini has risen from 39.4 in 1970 to 46.2 in 2000, and to 46.8 in 2009.

Government programs and taxes can and do reduce inequality, though. After accounting for their effects, the U.S. Gini coefficient falls to 38.

How does this compare to Ginis for other rich countries? We take the top prize. Our 38 leaves us tied with Portugal atop the rankings of the richest countries. American exceptionalism indeed.

Not since the Roaring Twenties have the richest in America had it so good.


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