by Kathryn M. Shelton, Richard B. McKenzie
National Center for Policy Analysis
July 11, 2014
The relative growth in the income (and wealth) of America’s rich is practically inevitable – at least as officially measured. While income inequality receives extensive national attention, many factors explaining the gap between rich and poor go virtually unmentioned in the popular discourse. For one thing, measuring “income distribution” with stratified “fifths of households” (quintiles) or “tenths” (deciles) produces the illusion that individuals in the bottom brackets are not making gains. Furthermore, the rich have more opportunities to diversify their investment portfolios and to soften the economic consequences of risk taking – the fact that they can afford to invest more money in more areas almost guarantees that “the rich” will get richer. Preventing the rich from getting richer will not help the poor – what will help is education reform, the removal of policies that offer disincentives for advancement among the least advantaged, and the promotion of charity.