By Thomas Sowell on 7.31.12
The Nazi philosophy of lying to the public prevails in the
It was either Adolf Hitler or his propaganda minister, Joseph
Goebbels, who said that the people will believe any lie, if it is
big enough and told often enough, loud enough. Although the Nazis
were defeated in World War II, this part of their philosophy
survives triumphantly to this day among politicians, and nowhere
more so than during election years.
Perhaps the biggest lie of this election year, and the one
likely to be repeated the most often, is that the income of "the
rich" is going up, while other people's incomes are going down. If
you listen to Barack Obama, you are bound to hear this lie
But the government's own Congressional Budget Office has just
published a report whose statistics flatly contradict this claim.
The CBO report shows that, while the average household income fell
12 percent between 2007 and 2009, the average for the lower
four-fifths fell by 5 percent or less, while the average income for
households in the top fifth fell 18 percent. For households in the
"top one percent" that seems to fascinate so many people, income
fell by 36 percent in those same years.
Why are these data so different from other data that are widely
cited, showing the top brackets improving their positions more so
than anyone else?
The answer is that the data cited by the Congressional Budget
Office are based on Internal Revenue Service statistics for
specific individuals and specific households over time. The IRS can
follow individuals and households because it can identify the same
people over time from their Social Security numbers.
Most other data, including census data, are based on compiling
statistics in a succession of time periods, without the ability to
tell if the actual people in each income bracket are the same from
one time period to the next. The turnover of people is substantial
in all brackets -- and is huge in the top one percent. Most people
in that bracket are there for only one year in a decade.
All sorts of statements are made in politics and in the media as
if that "top one percent" is an enduring class of people, rather
than an ever-changing collection of individuals who have a spike in
their income in a particular year, for one reason or another.
Turnover in other income brackets is also substantial.
There is nothing mysterious about this. Most people start out at
the bottom, in entry-level jobs, and their incomes rise over time
as they acquire more skills and experience.
Politicians and media talking heads love to refer to people who
are in the bottom 20 percent in income in a given year as "the
poor." But, following the same individuals for 10 or 15 years
usually shows the great majority of those individuals moving into
higher income brackets.
The number who reach all the way to the top 20 percent greatly
exceeds the number still stuck in the bottom 20 percent over the
years. But such mundane facts cannot compete for attention with the
moral melodramas conjured up in politics and the media when they
discuss "the rich" and "the poor."
There are people who are genuinely rich and genuinely poor, in
the sense of having very high or very low incomes for most, if not
all, of their lives. But "the rich" and "the poor" in this sense
are unlikely to add up to even ten percent of the population.
Ironically, those who make the most noise about income
disparities or poverty contribute greatly to policies that promote
both. The welfare state enables millions of people to meet their
needs with little or no income-earning work on their part.
Most of the economic resources used by people in the bottom 20
percent come from sources other than their own incomes. There are
veritable armies of middle-class people who make their livings
transferring resources, in a variety of ways, from those who
created those resources to those who live off them.
These transferees are in both government and private social
welfare institutions. They have every incentive to promote
dependency, from which they benefit both professionally and
psychically, and to imagine that they are creating social
For different reasons, both politicians and the media have
incentives to spread misconceptions with statistics.
So long as we
keep buying it, they will keep selling it.
by Michael Patrick Leahy 30 Jul 2012