The august Hudson Institute of Indianapolis and Washington, the thinking man's think tank, is wild with activity this week. In Washington, it is celebrating the achievements of the omnitalented Caspar Weinberger. He was secretary of defense for President Reagan and remains one of the sharpest eyes among senior statesmen. Hudson's director of economic research, Alan Reynolds, has analyzed the burden of Gore-talk respecting rich and poor, and gives us, in National Review, illuminating insights.
For instance, did it ever occur to anyone that the abolition of the estate tax can't automatically be assumed to benefit the very rich testator? Guess why? Because he's dead! He can't take with him even a dispensation from the IRS.
The above may tempt you to scoff, but the figures are there. You become statistically very rich (top 1 percent) when, to round off the figure, you accumulate $300,000. When you or your wife writes a will, in the overwhelming number of cases you will name more than a single legatee. The fissiparous process begins, and of course everybody knows that the descendants of John D. Rockefeller are in the thousands.
But earthbound analysis is also worth attention, and it pays to force yourself to recall that families with two workers earn more than those with no workers. In 1999, median income among family heads who worked full time all year was $58,502. Among families with two earners, median income was $74,711. Now this development, which would appear innocuous in economic terms, has the effect of putting one-half of all two-earner families in the highest fifth of income distribution. When Mr. Gore goes about the country blasting the rich, he can be seen to be blasting one-half of two-earner families.
Much emphasis has recently been put, by critics of economic momentum, on the apparent stability of the lowest earners, the bottom one-fifth. It is said, as Mr. Reynolds points out, that the gaps between two-earner and zero-earner families have grown wider over time. But this is so because real wages climb. There are 2.2 workers per family among the top 20 percent earners. In the bottom fifth, you have a consolidated figure of 0.8. That means less than one earner working full time. If real wages rise, the two-earner families in the top fifth are mathematically certain to have faster income rises than families in the bottom fifth, where full-time workers are rare.