Editor's Note: A version of this column appeared originally in THE DAILY BEAST.
When the nation’s most prestigious newspaper runs a misleading headline proclaiming “IT’S OFFICIAL: THE RICH GET RICHER” why should ordinary Americans respond as if this amounted to bad news?
After all, consider the alternatives: wouldn’t stories suggesting “THE RICH GET POORER” or “THE RICH SEE THEIR INCOMES STALL” constitute far more discouraging reports?
Financial setbacks of the most privileged among us serve as indications of continued hard times, just as surging income for the wealthy generally constitutes a sign of recovery. No theoretical model can suggest a way that the overall economy would boom and grow while the rich somehow failed to “get richer.” If businesses were expanding (and hiring) even the most misguided, meddling government policies can’t stop the bosses who run these successful operations from making more money.
But unfortunately, growth remains fragile and anemic at the moment, which makes the New York Times headline of October 26th even more dubious and deceptive. The subhead announces “Top 1 Percent Doubled Share of Nation’s Income, Report Finds” but readers must make their way to the sixth paragraph to find that the referenced “report” is actually an historical analysis by the Congressional Budget Office, covering a 28-year span between 1979 and 2007, and pointedly concluding before the economic meltdown of 2008.
Figures from the IRS, however, demonstrate that since the recession began the rich hardly got richer: the number of Americans earning $1 million or more fell a staggering 40% between 2007 and 2009 (declining to 236,883), while their combined incomes fell by nearly 50% - a vastly greater loss than the 2% drop in total incomes of those making $50,000 or less. Could anyone make a plausible case for how a massive reduction in the number of top earners (with nearly 200,000 fewer million dollar incomes) could conceivably benefit the economy, or counts as good news for anyone?
Nevertheless, the New York Times chose to stress the inflammatory finding that in the 29 years preceding the Great Recession the top 1 percent of earners (those pesky millionaires and billionaires) boosted their average, inflation-adjusted, after tax income by 275 percent.