Latest Class Warrior

Step right up, Alan Reynolds!

According to Alan Reynolds in the WSJ, those drawing attention to heartbreaking income-inequality statistics should be in favor of recessions. Why might this be? Take it away, Mr Reynolds:

But here's a question: Why did the report stop at 2007? The CBO didn't say, although its report briefly acknowledged—in a footnote—that "high income taxpayers had especially large declines in adjusted gross income between 2007 and 2009."

No kidding. Once these two years are brought into the picture, the share of after-tax income of the top 1% by my estimate fell to 11.3% in 2009 from the 17.3% that the CBO reported for 2007.

The larger truth is that recessions always destroy wealth and small business incomes at the top. Perhaps those who obsess over income shares should welcome stock market crashes and deep recessions because such calamities invariably reduce "inequality." [emphasis added]

So the lesson is that rational poor people would rather go hungry, and rational middle-income earners would rather join the rational poor, so long as they can shaft the saintly Job Creators™. Just to make sure the lucky-duckies know who is really hurting right now, Mr Reynolds tells readers that, "The latest cyclical destruction of top incomes has been unusually deep and persistent..." Rumors indicating that hordes of hungry millionaires are emerging angrily from gated hilltop communities in order to establish posh gated shantytowns cannot be confirmed at this time.

In all seriousness, the households we're talking about here earn north of $150,000/year. While it is true that reductions in income and wealth are relative, and a 30% reduction in income or wealth for a millionaire is far larger in absolute terms than a 30% reduction for a household earning less than $30,000, only one of those households is likely to go hungry in that situation, however. Not to mention the reduction in consumption by poorer households has a measurably significant impact on the economy, while the corresponding reduction in saving by wealthy households has very little relative impact in a downturn.

There was once a time in this country when the well-off observed a duty to contribute a fair share to the common good, and would be ashamed to be caught in open defiance of their responsibility. It should be no surprise to learn that Alan Reynolds is a senior fellow with the Cato Institute, an organization of ill repute committed to the notion that there is no common good, and the goal of making that so.