Income “inequality” has become a rallying cry for leftists and progressives seeking to confiscate billions in other people’s money. The idea is that capitalism creates an unbreakable caste system that cements advantanged souls into lives of comfort and privilege while consigning the luckless to lifetimes of hardship and deprivation. This unjust disparity, the argument goes, must be remedied by government interventions promoting the redistribution of wealth.
But as Winston Churchill famously noted, “The inherent vice of capitalism is the unequal sharing of its blessings. The inherent virtue of socialism is the equal sharing of its miseries.” The obsession with equal outcomes is doomed to failure. Instead, fostering and expanding opportunity and freedom represents the best approach for promoting prosperity among the greatest number of people. And on that front, the United States and its market economy are doing far better than critics on the left let on.
Consider a recent study on American mobility.
“Over roughly 40 years,” Jo Craven McGinty reported last weekend in The Wall Street Journal, “70 percent of the population made it into the top 20 percent of earners for at least one year, according to researchers at Cornell University and Washington University in St. Louis.”
Mobility — not stagnation — is a key characteristic of America and capitalism. Of those wage earners who cracked the top quintile, only “about 21 percent remained there for 10 consecutive years.”
In other words, economic fortune is dynamic and ever-changing. Many of those at the top today are eventually churned downward — and vice versa. “On the lower rungs of the ladder, 79 percent of the population experienced at least one year of economic insecurity,” Ms. McGinty observed.
The comprehensive study, originally published four years ago in a peer-reviewed journal, was based on data from the Panel Study of Income Dynamics (PSID), which has tracked more than 18,000 individuals for almost 50 years. Its findings are based on wages, not wealth, “which could obscure income standing,” Ms. McGinty acknowledged. But the results track with other studies on economic mobility.
Earlier examinations of PSID data “found that 50 percent of earners fell out of the top quintile, while around 45 percent moved up from the lowest quintile,” Ms. McGinty reported. IRS data reveal similar trends. “Income groups are fluid, not fixed,” she writes.
It’s true, as one of the researchers put it, that a “small group of people persist at the high and low levels.” But that’s a far different picture than the dismal portrait painted by those seeking to overhaul the entire U.S. economic system under the guise of tackling “inequality.” The “blame America first” liberals can sneer all they want, but this country remains the greatest land of opportunity in the history of the world.