Tuesday, November 13, 2007

Destroying Myths

GMU's Liberty & Power Blog has one hell of a post about the myth that the poor are getting poorer (which is usually used to prove that capitalism is evil and exploitative). I don't see how anyone can read this post and come away holding on to the notion that the statement "the poor are getting poorer" is actually true in any meaningful sense.

UPDATE: WSJ's Opinion Journal has much more on this here. (via memeorandum)

I honestly don't understand why this myth that only the rich are better off under capitalism and free markets continues to persist. Time and again, this myth is exploded, but the focus continues to be on comparing the mean earnings of the bottom x percent of wage-earners with the top x percent of wage earners. Rarely does anyone bother to ask if there is more to the numbers than meets the eye, or if it really means what people say it means.

When people do go beyond this one statistic, they usually find mostly legitimate reasons for it, as in (unabashedly left-of-center) Gregg Easterbrook's Progress Paradox, which pointed out that much of the basis for rising "income inequality" in the US was just simply an increase in immigration from countries with far lower wages. In other words, much of the income inequality in the US was just a result of people deciding they'd rather be in the bottom rung of the wealth ladder in the US than in the middle rung of the wealth ladder in their home country. He also cites to some very similar statistics as this new report when it comes to quality of life issues like TVs, home appliances, etc. Yet, the myth persists.

Part of the reason for this persistence- though by no means all- is that the myth is terrific when it comes to advancing the cause of a certain politically power interest group that has seen its membership dwindle steadily over the years. Advancing the notion that so-called "working families" are getting worse off at the same time as membership in this interest group has been declining is a valuable asset if you want to argue that membership in said interest group is a critical means of improving the lifestyle of "working families."