Rising inequality in America? Time to say goodbye to a myth

“Perilous and growing inequality is the defining challenge of our time,” said former US President Barack Obama in 2013. For a good two decades, the dominant narrative has been that the gap between the rich and the poor is widening, and that the bottom half of society. is being pushed back. Through “Occupy Wall Street,” this narrative has inspired an entire movement that represents the bottom 99 percent and the increasingly wealthy 1 percent.

Frenchman Thomas Piketty provided the scientific basis for this story. His finding: The top one percent doubled their share of total income in the United States. Over the years, researchers have repeatedly criticized his work, but now a careful study by economists Gerald Auden and David Splinter offers an exclamation mark: it shows that Piketty's foundation is rotten.

According to Auten and Splinter, if redistribution through progressive taxation and transfers is taken into account, the share of the top 10 percent of total income has remained virtually unchanged over 50 years. This critical conclusion, in contrast to Piketty, leaves no room for outrage.

There should be enough for everyone

Determining inequality has always been wrong—and recent research supports this view. Rising inequality has so far been exploited by leftists and nationalists. The former called for higher taxes and more redistribution, while the latter wanted taxes on imports and stricter limits on immigration. The allegation is that the economy is being manipulated to the detriment of ordinary workers.

Everyday experience makes it clear: the life of the rich and the life of an ordinary citizen are now not as far apart as they were a hundred years ago. The middle class also enjoys good healthcare, can afford vacations and sometimes eat out. Inequality in everyday life has certainly declined in recent decades.

For the recently deceased Philosopher Harry Frankfurt Economic equality is not of particular moral importance: “From a moral point of view, what matters in the distribution of economic goods is not the same thing for all, but enough for all.”

The focus should not be whether those at the top outnumber those at the bottom, but whether poverty is disappearing. Philosopher John Rawls developed a concrete application of this idea: “If the entrepreneurship of a rich person improves the poor, the entrepreneur's higher income is justified,” he said. For example, the founders of Walmart and Amazon, who revolutionized retail and made life easier, fit into this picture as well as smartphone manufacturers.

Income has tripled

Auten and Splinter show that since 1960 the per capita income of the bottom, middle, and top quintiles in the United States has tripled. State transfers also helped the bottom fifth place. So, the left might say that redistribution in the US would definitely benefit the poor.

However, you cannot escape poverty by redistributing the existing cake as much as possible. More importantly, the inflation-adjusted US economy is now five times larger than it was in 1960. So it should be a matter of providing basic education and health to all. This means that everyone has a chance to climb the social ladder. As international comparisons show, the US certainly has some catching up to do here. Above is social mobility Coincidentally, Switzerland – thanks to its training system.