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Day After Trump Said 'Inequality Is Down,' Federal Data Shows US Income Inequality Highest Since Census Began Measuring

This is a Pages document, I hope it works. Ben Leet

(Attachment Cherry Picking about Inequality, #1, 9.26.19.pages is missing)

Hello Webster, I re-wrote the essay, then reread it, and took out the minor errors.

I won’t send the attachment, just the document, seems the attachment did not work.

This is my last communication for about 5 days as I go on a short visit to the East Bay. Thank you. Ben Leet

This is a submission. Ben Leet ———

	Cherry Picking about Inequality

Cherry picking data is done to highlight one small positive fact in a sea of terrible facts. Recently the president claimed that inequality has declined. According to one report by the Census it did, but according to another Census report it didn’t. Guess which one he reported on. The page devoted to the Gini coefficient of the recent Poverty report, page 41, from the U.S. Census, shows inequality dropping 7 points in the past year, from 0.471 to 0.464, just one point higher than 2016. When it surged in 2017, Mr. Trump failed to report about it. If he had looked at the Census report on Household Income he would have drawn the opposite conclusion, that the Gini infact rose in 2018. Cherry picking is an art form; none of this qualifies as a lie, or a damn lie, just a slight difference in reporting. Statistics are full of opportunities.

Inequality is a big issue for everyone because a national economy driven by purchasing power of consumers, making approximately 70% of all spending, needs a healthy middle class to buy that which it produces. When consumers stop or slow buying, employers lose income and begin to layoff workers: a non-virtuous cycle. The Great Depression was primarily an event subsequent to declining income and rising inequality. Income fragility is a good way to conceptualize the inequality.

To appreciate the level of inequality one should compare the middle income with the average.

The average household income ($138,561 for 128 million households) is about double the income of the household middle income, the 2018 median ($63,179). The BEA.gov states that the total national income is $17.819 trillion, and divide that by 128 million households, yields $138,561 – the average for all. The average for the higher earning half is $278,421, believe or not! The average for the lower half, 64 million households, is about $22,273. The average for the lower half, 64 million households, is 6.2 times lower than the average for all households. And the differential between the two average incomes for the two halves is a multiple of 12.5. It is difficult to boast about inequality at this level of disparity, or even a slight dip in Gini numbers.

The gap between the average income of the lower-earning 20% and the top 1% was 140 times. The lower earners average $13,700 and the top 1% earned $1,914,500, that’s 140 times more. This claim about inequality should be called out. This comes from ITEP.org, “Who Pays Taxes in America? 2019”. (https://itep.org/who-pays-taxes-in-america-in-2019/) And the wealth inequality is really huge, the lower 20% owe more than they own, about 1.3% of all wealth they owe, the top 1% owe 40%, says the Credit Suisse bank Global Wealth Report, Databook.

The United Nations produces yearly an Index of Human Development, and second index more accurately adjusted for inequality. In 2017 the U.S. scored 11th among all 189 nations on the first, but when adjusted for inequality the U.S. placed 24th, between Estonia, Poland, Slovakia and Isreal. Yet the income and economic output per capita ranks the U.S. at the top among major nations. Other research comparing nations’ income Gini scores shows Norway at the most equal with 26.8%, Denmark with 28.5%, Germany at 31.4%, Japan at 32.1%, France with 32.3%, UK at 34.1%, U.S. at 41.5%, Brazil at 53.3%, Lesotho at 54.2%, Haiti at 60.8%.

Looking at the USCensus report on poverty, page 41, Trump is correct: in 2018 the Gini dropped from 0.471 in 2017 to 0.464 (see page 44 of the Poverty report), where it was in 2014. Unmentioned is the level of 1974 at 0.354. The Gini inequality is up 110 points in 44 years, it increases by a third. There is really nothing to brag about.

And the US Census report on income is badly flawed: It only reports on 77% of the total income or maybe 60% of all income. Total income according to the Census is $11.2 trillion, but the Congressional Joint Committee on Taxation (Overview 2018) reports $15.0 trillion, and the BEA.gov, Dept. of Commerce, Table 2.1, reports $17.819 trillion. The Census misses or loses between 23% to 40% of all income, and what it misses mostly goes to the top 20%, because it misses financial gains, capital gains, interest, rents, and business proprietor income that mostly goes to the wealthiest. So, Mr. Trump is correct, but he will only talk about what makes him look good, not the opposite, such as the tax give away of December, 2017, the Tax Cut and Jobs Act. To quote the ITEP report on the tax bill: "The top 5 percent receive half the total value of the tax cuts. The richest 1 percent receive an after-tax income boost of about $48,000 a year while the poorest 20 percent receive about $90 a year, or 25 cents a day.”

Since 1974 the median household has gained 19% more income, but the average income per capita has increased by 42% (see BEA.gov, Table 2.1, "disposable personal income in chained 2012 dollars). This same table says the average post-tax per person income for every citizen is $44,455 in 2012 dollars, and $48,075 in current dollars, which means the average income for a four person household is, officially, four times $48,075, or $192,300. That’s after tax income, so add another 20%, over $200,000 for all 4 person households. Do we have massive inequality? As you can see we have nothing to boast about inequality.

My blog, Economics Without Greed, Part Two – http://benL88.blogspot.com

I’ve written this blog for ten years.

Original Common Dreams article, Sept. 25, 2019

[https://www.commondreams.org/news/2019/09/26/day-after-trump-said-inequality-down-federal-data-shows-us-income-inequality-highest?cd-origin=rss&utm_term=AO&utm_campaign=Daily%20Newsletter&utm_content=email&utm_source=Daily%20Newsletter&utm_medium=Email](https://www.commondreams.org/news/2019/09/26/day-after-trump-said-inequality-down-federal-data-shows-us-income-inequality-highest?cd-origin=rss&utm_term=AO&utm_campaign=Daily Newsletter&utm_content=email&utm_source=Daily Newsletter&utm_medium=Email)

1 Like

…and conservatives/republicans are known to be extremely fearful creatures (thus their distaste for change) which is one reason they love their guns so much and want to carry them everywhere they go. I guess that also explains why conservatives and republicans tend to be so greedy and selfish, no?

Thanks for your work, clearer.

If Trump says something it is a virtual certainty that he is lying, or mistaken. Usually he’s lying.

Last time I checked, the USA was founded on the basis of capitalism. The problem stated when we started giving everyone a trophy. There are winners and losers in life. Unless you are a socialist, then nobody wins.