Poverty in America?

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Income measures fail to capture important components of economic well-being, such as wealth and the ownership of durables, e.g., houses and cars. For example, official measures would consider a retired couple who owned their car and mortgage-free $700,000 home and lived on $20,000 savings to be poor. Clearly, their income does not reflect their material well-being.

“Income Mobility in the U.S. from 1996 to 2005″ (11/13/2007) is a report by the U.S. Department of the Treasury that shows considerable income mobility of individuals in the U.S. economy. “Roughly half of taxpayers who began in the bottom income quintile in 1996 moved up to a higher income group by 2005. Among those with the very highest incomes in 1996 — the top 1/100 of 1 percent — only 25 percent remained in this group in 2005. Moreover, the median real income of these top taxpayers declined over the study period.” These findings confirm previous studies dating back to the 1960s reaching the same conclusion, namely: At different periods of time, different people occupy different income groups, but the overall trend is upward.

What about the concentration of wealth? In 1918, John D. Rockefeller’s fortune accounted for more than half of 1 percent of total private wealth. To compile the same half of 1 percent of the total private wealth in the United States today, you’d have to combine the fortunes of Microsoft’s Bill Gates ($59 billion) and New York Mayor Michael Bloomberg ($19 billion), but with 10 other multibillionaires in between.

Our congressionally caused recession has indeed caused needless hardship for many Americans, but the big poverty and income stagnation hype is part and parcel of an agenda to make us more accepting of politicians getting their hands deeper into our pocketbooks in the name of helping the poor.

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