From: sa114984@longs.LANCE.ColoState.Edu (Steven Arnold)
Newsgroups: alt.philosophy.objectivism
Subject: Rich getting richer?  The facts....
Date: 8 Jan 93 21:10:44 GMT
Organization: Colorado State U. Engineering College

[What follows is the text of a column by Paul Craig Roberts.  This column may not
be distributed for profit.]

	Economists grinding ideological axes and their media shills have
portrayed the U.S. economy as a caste system where people are locked firmly in
place.  They have used income averages, derived from Congressional budget Office
data designed to overestimate the income of the rich and to underestimate the
income of the poor, to claim that the rich are getting richer while the poor are
getting poorer.  Once this phoney portrait of the 1980's is drawn, it is blamed
on "Reagan-era greed."
	In recent columns I have reported the flaws in the CBO's data and its
dubious manipulation by others.  Now the U.S. Treasury Department has weighed in
against the disinformation.
	The Treasury's Office of Tax Analysis has released its study of income
mobility, showing that even if the claims of these economists were true, the
claims would be meaningless.  The reason is the extremely high rate of income
mobility in the U.S.  The poor and the rich will always be with us, but they are
not the same people from year to year.  The poor move up over time, and the rich
fall off their high peaks.
	The Treasury study tracked the incomes of 14,351 taxpayers distributed
between the five income quintiles and the top 1% of income earners for the years
1979-1988.  The study found dramatic upward mobility in the lower-income
quintiles and downward mobility at the top.
	For example, by 1988 85.8% of the people who comprised the poorest 20% of
taxpayers in 1979 had moved up.  Of these people, 20.7% had moved up one
quintile, 25% had moved up two quintiles to the middle 20% of taxpayers, 25.3%
had moved up three quintiles to the second richest category, and 14.4% had moved
to the top, or richest, quintile.  A few -- 0.3% -- had even managed to climb
from the bottom 20% to the top 1%.
	The same upward ladder characterizes the progress of the second poorest
quintile, with onlt 29% of the individuals in this category staying in place over
the 10 years.  The majority -- 60.2% -- of those who began in this category moved
up.  Only 10.9% experienced downward mobility to the bottom quintile.
	Of the middle 20%, 33% stayed in place, 47.3% moved up,, again with some
reaching the top 1%, while 14% dropped one quintile and 5.7% fell to the bottom
quintile.  Of those who began in the fourth quintile, 37.5% remained in place,
while 35.4% moved up and 27.2% moved down.
	While the preponderance of those in the bottom income quintiles gained
ground over the decade, many of those who started at the top lost ground.  Of
those who began in the top 20%, 59.4% remained in place, while 5.3% moved into
the top 1% and 35.2% fell into the lower quintiles -- some all the way to the
bottom 20%.
	Those in the top 1% had even less success maintaining their position. 
Only 47.3% remained in place over the decade, with 52.7% losing ground.
	As unbelievable as it may seem, 2.2% of the income elite fell all the way
to the poorest 20%.
	American liberals, left-wing ideologues and misinformed journalists have
long pretended that tax policy is the major factor determining the distribution
of income.  They have justified high progressive tax rates in order to equalize
the income distribution.  The Treasury study shows this belief to be pure
poppycock.
	The Reagan tax rate reductions, like the Kennedy tax reductions 20 years
before, engineered a long economic expansion that created new opportunities for
people to improve their position.  Simultaneously, the more dynamic economy
increased the challenge to those at the top and made it harder to hold
established ground.
	A dynamic economy works to the disadvantage of vested interests -- which
is why special interests have worked overtime to discredit the Reagan era with
such disinformations as "the rich got richer and the poor got poorer" when, in
fact, the exact opposite happened.
Newsgroups: alt.philosophy.objectivism