The picture becomes even prettier when one considers that high-income households generally have more members than low-income households. In particular, households in the highest income quintile currently have an average of 3.10 members, while households in the lowest income quintile have an average of only 1.69 members. [quoting Gramm, Ekelund, and Early (GEE)]:
Per capita, the top quintile has only 2.2 times the income per person in a household compared to the bottom quintile, a difference that is 4.0 times smaller without adjusting for household size. But the blockbuster find receives more than 10 percent of the average bottom quintile household per capita. More The second quintile of the average family and more than 3 percent More than a middle income family!
In what they call a “blockbuster finding,” GEE rightly argues that it’s evidence that government transfer payments are undermining the incentive to work for many Americans — an erosion that will eventually make these household income figures less encouraging than they already are.
What about absolute poverty? GEE has made it clear that everything has been removed in the US:
Among families defined as poor, hunger has virtually disappeared, inadequate housing has disappeared, and daily living has expanded. These data independently prove that the war on poverty started in 2017 at only 2.5 percent of the total poverty rate of 17.3 percent of our population.
These positive facts about the American economy, as I will present in the next column, are not accepted by professors, scholars, and politicians who want to subject the economy to greater government control. If the economy is doing well for nearly all Americans—if income inequality is not too high or growing—close to overcoming absolute poverty—it is a matter of redistribution of income, industrial policy, and broader interventions. The welfare state has collapsed. So the facts widely reported by Phil Gramm, Bob Ekelud and John Torter should be dismissed or ignored. It is impossible to dismiss these facts, because these intellectual creds have assembled a compelling picture of America’s economic success. The only option left is to ignore them – an option I believe readers of this column will not choose.
