August 23, 1995|By Paul Krugman
Stanford, Calif. -- TEN YEARS AGO, a skeptic could still question whether America was becoming a radically less equal society.
But since then, the doubts of cautious economists have been swept away by an ever-growing torrent of evidence: census data, household studies, labor-market surveys and, of course, the startling contrasts of wealth and poverty obvious to anyone with open eyes.
The reality of widening disparities is no longer a hypothesis. It is simply a fact.
What, if anything, should we do about this surge in inequality?
Reasonable people can disagree about the solution, but they cannot disagree about the fact.
Yet in the last few months, there has been a sustained effort by conservatives to deny this uncomfortable reality.
The latest campaign was apparently initiated by anger over a new book, "Top Heavy: A Study of the Increasing Inequality of Wealth in America," by Edward N. Wolff of New York University.
How can one deny the obvious? Let us count the ways.
Do spurious calculations.
A favorite tactic of conservative writers is to produce data that purport to show that the wealth of the average rich family -- invariably defined as any family with an income exceeding $50,000 -- has not risen as fast as that of less affluent Americans.
But their calculations are entirely spurious, for two related reasons.
First, $50,000 a year does not make a family rich. More than one-third of American families can claim that income.
But "rich" means something else.
At the least, it means being part of the 10 percent of families who own 70 percent of the nation's wealth.
Those who think that statistics about people who make $50,000 or $60,000 a year are getting at the truth about how the upper class is doing have no idea how rich the rich really are.
Second, Federal Reserve statistics on average wealth by category of income cannot be used to measure trends.
The reason is that the categories mean different things in different years. Half a century ago, someone with a $50,000 income was upper class.
Today, he is middle class.
While Federal Reserve data that track the concentration of wealth are vulnerable to creative misinterpretation, the statistics showing a drastic increase in the inequality of income -- drawn from many different sources -- are completely unambiguous.
Whatever you think about the distribution of wealth, the inequality of income has increased.
Pretend that it's good news.
A recurrent theme among conservative apologists for growing inequality is that our society is not pulling apart but coming together. The upper class, they say, is not pulling away from the middle class. It is simply growing as more and more middle-class people gradually move upward. But the truth is the upper class is indeed pulling away from the middle class. In fact, income is becoming more concentrated all the way up the scale.
It's not just that the top 20 percent have gotten richer compared with the rest. The top 5 percent have gotten richer compared with the next 15 percent. The top 1 percent have gotten richer compared with the next 4 percent, and there is pretty good evidence that the top 0.25 percent has gotten richer compared with the next 0.75 percent.
The idea that wealth is spreading rather than becoming ever more narrowly concentrated is comforting, but utterly untrue.
Invoke Horatio Alger.
In his new book "The Freedom Revolution," House majority leader Dick Armey offers numbers that purport to show that there is so much upward mobility that the distribution of income doesn't matter -- that someone in the bottom 20 percent of the population is more likely to be in the top 20 percent after a decade than to remain in place.
Armey offers no source for his numbers, but they are familiar to researchers in the field. They come from a hastily concocted study done by Bush administration officials in 1992, a study that experts immediately ridiculed.
Some of the experts were reduced to helpless giggles when they realized that the median individual who moved from the bottom to the top 20 percent was only 22 years old at the beginning of the study period.
As one labor economist remarked scathingly: "This isn't your classic income mobility. This is the guy who works in the college bookstore and has a real job by his early 30s."
Blame the messengers.
Many of the recent conservative tracts on income inequality attack those who bear the bad news as politically motivated. The targets include not only the economists who want to do something about it but the researchers who carefully construct the data -- and even the reporters who write about the research.
The news about growing inequality comes not only from the Census Bureau -- hardly a leftist clique -- but also from studies published in such places as the Journal of Political Economy, a highly respected and often inscrutably technical publication of the University of Chicago, which has rarely been accused of fomenting class warfare.
The widening of inequality is beyond doubt. It has been as firmly established by evidence as the fact that smoking causes cancer. But many influential conservatives cannot bring themselves to acknowledge inconvenient facts.
Is their doctrine so fragile that they fear it cannot survive the truth?
Paul Krugman, an economist, is author of "Peddling Prosperity" and "The Age of Diminished Expectations." This piece originally appeared in the New York Times.