What do you think?
Rate this book
The Myth of American Inequality: How Government Biases Policy Debate
A Powerful Corrective to the Debate on Inequalty in America
Hailed by the Wall Street Journal as one of the best books of 2022, The Myth of American Inequality demonstrates that the federal government egregiously overstates the degree of inequality and poverty in the world’s wealthiest nation. In doing so, the authors--a former United States senator, eminent economist, and a former senior leader at the Bureau of Labor Statistics-- challenge the prevailing consensus that income inequality is a growing threat to American society. Getting the facts straight reveals that the key measures of well-being are greater than the official statistics of the country would lead us to believe. Income inequality is lower today than at any time in post- World War II America. The facts reveal a very different and better America than the one that is currently described by policy advocates across much of the political spectrum. The updated edition brings will challenge political debate throughout the 2024 election season and provide clear and convincing evidence that the American Dream is alive and well.
Hailed by the Wall Street Journal as one of the best books of 2022, The Myth of American Inequality demonstrates that the federal government egregiously overstates the degree of inequality and poverty in the world’s wealthiest nation. In doing so, the authors--a former United States senator, eminent economist, and a former senior leader at the Bureau of Labor Statistics-- challenge the prevailing consensus that income inequality is a growing threat to American society. Getting the facts straight reveals that the key measures of well-being are greater than the official statistics of the country would lead us to believe. Income inequality is lower today than at any time in post- World War II America. The facts reveal a very different and better America than the one that is currently described by policy advocates across much of the political spectrum. The updated edition brings will challenge political debate throughout the 2024 election season and provide clear and convincing evidence that the American Dream is alive and well.
265 pages, Kindle Edition
First published January 1, 2022
182 people are currently reading
765 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 30 of 40 reviews
August 12, 2023
How often do you hear from pundits and politicians that wages have barely budged and that American mobility is declining? The authors of this book challenge this and similar claims with data directly from the government and careful studies. So far, this is the best economics book I’ve read in 2023!
November 11, 2024
If you bought into the nonsense of Thomas Piketty - this book is for you. Before he was in Congress Phil Gramm was a first rate economist. He tries to bust up some of the myths created by all the jabbering about income inequality. Trigger Warning - if you do not like careful analysis and tons of data - this book is not for you.
Gramm goes through some conceptual issues first - understanding income is not a simple prospect. One of the most interesting ideas is to understand how to relate income in society to what most economists call income quintiles (1/5 of the wages is a quintile). But we are not helped by many of the ways that government counts things. Gramm argues that most of the income statistics do not include a vast majority of transfer payments. And those can be important - in the lowest quintile the AVERAGE household receives more than $45,000 in transfers. Piketty and those on the left ignore that fact. For higher income quintiles there is no recognition that a gross salary is reduced by taxes paid. So a proper assessment of the distribution of income would deduct taxes paid AND add back in transfers received. IF you do that the apparent income disparities narrow significantly.
One other issue raised by Gramm which is absolutely correct Piketty and others have created a fiction in explaining income for the highest quintiles by claiming unrealized capital gains as income. That artificially inflates their income in the same way that not properly accounting for transfer payments artificially reduces income for the lower quintiles.
In successive chapters Gramm shows a couple of things. First, when rates were much higher very few (during the 91% rates pre JFK) taxpayers paid at the highest rate. In the 2017 tax bill the number of taxpayers hitting and paying at the highest rate is pretty large. That makes the system more progressive. Some on the left argue that the State and Local deduction should be restored to unlimited value - but that benefits only a very small number of very wealthy taxpayers in very high states. Second, the myth of the end of mobility among the quintiles (the rich stay rich and the poor stay poor) is pure bunk. He points out that when Vanderbilt died he had an immense fortune - when his great grand-daughter Gloria died her estate was $1.5 million a very modest number indeed. Third, he presents some interesting data about income mobility by race and ethnic characteristics. And despite claims of the left we have made some real progress in generating economic opportunity for all races.
If you want to buy the pandering that the left has tried to foist on us about how income distribution in the US is horrible - don't read this book. But if you want to develop a more sophisticated understanding of the complexities of understanding income distribution - this short book is well worth the time.
Gramm goes through some conceptual issues first - understanding income is not a simple prospect. One of the most interesting ideas is to understand how to relate income in society to what most economists call income quintiles (1/5 of the wages is a quintile). But we are not helped by many of the ways that government counts things. Gramm argues that most of the income statistics do not include a vast majority of transfer payments. And those can be important - in the lowest quintile the AVERAGE household receives more than $45,000 in transfers. Piketty and those on the left ignore that fact. For higher income quintiles there is no recognition that a gross salary is reduced by taxes paid. So a proper assessment of the distribution of income would deduct taxes paid AND add back in transfers received. IF you do that the apparent income disparities narrow significantly.
One other issue raised by Gramm which is absolutely correct Piketty and others have created a fiction in explaining income for the highest quintiles by claiming unrealized capital gains as income. That artificially inflates their income in the same way that not properly accounting for transfer payments artificially reduces income for the lower quintiles.
In successive chapters Gramm shows a couple of things. First, when rates were much higher very few (during the 91% rates pre JFK) taxpayers paid at the highest rate. In the 2017 tax bill the number of taxpayers hitting and paying at the highest rate is pretty large. That makes the system more progressive. Some on the left argue that the State and Local deduction should be restored to unlimited value - but that benefits only a very small number of very wealthy taxpayers in very high states. Second, the myth of the end of mobility among the quintiles (the rich stay rich and the poor stay poor) is pure bunk. He points out that when Vanderbilt died he had an immense fortune - when his great grand-daughter Gloria died her estate was $1.5 million a very modest number indeed. Third, he presents some interesting data about income mobility by race and ethnic characteristics. And despite claims of the left we have made some real progress in generating economic opportunity for all races.
If you want to buy the pandering that the left has tried to foist on us about how income distribution in the US is horrible - don't read this book. But if you want to develop a more sophisticated understanding of the complexities of understanding income distribution - this short book is well worth the time.
November 12, 2022
The Myth of American Inequality by Phil Gramm
https://www.amazon.com/gp/customer-re...
America has spent trillions of dollars on fighting poverty. If you believe government statistics or the evening news, poverty has won the war. We are constantly hearing that the poor are getting poorer and the rich are getting richer.
The good news is that it may be the case that those trillions have not been wasted. Phil Gramm, who had been a professor of economics before becoming a Republican senator from Texas. Gramm and other economists have recrunched the numbers used by the Census Bureau and come up with some surprising information.
Basically, Gramm discovered that the census numbers do not account for transfer payments and services provided to the poorest quintile of the population. This is not an insignificant detail. While those in the poorest quintile only earn about $3,000 in income, they receive more than $41,000 in transfer payments.
Moreover, the census bureau did not account for the money taken from the richest quintiles in taxes. When these corrections are made, the four lowest quintiles - or 80% of the population - make pretty much the same amount of money, which means that the narratives of economic inequality and growing inequality are without substance.
Gramm's group analysis also concludes that inflation has not been as high as economic calculations have held. Part of this is from systemic problems in the calculation of inflation. Another is from not picking up the tremendous price declines when innovative products hit the market. Another is the practice of product substitution as consumers buy the cheaper product.
The effect of all this is to provide a more optimistic conclusion about poverty than we get from official statistics:
"The more accurate measures show that only 1.3 percent of children and less than 0.4 percent of seniors live in poverty. For children living with married relatives, the poverty rate is a mere 0.2 percent. Poverty affects 1.7 percent of Blacks, about 92 percent fewer than shown by the Census counts. While the improved measures show that poverty among Blacks is still somewhat higher than for Whites, the difference is only 0.6 percentage points, versus the 11.5 percent difference in the Census numbers. With the improved estimates, poverty affects 1.3 percent of women and 1.0 percent of men.
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (p. 97). Rowman & Littlefield Publishers. Kindle Edition.
The actual problem is that the inequality is so slight that the second lowest tier makes only a small incremental amount compared to the lowest quintile, notwithstanding spending more than 30 hours a week more in labor.
"Also note the stunning fact that the second quintile of households has an average net income after transfers and taxes that is only 8.6 percent above the average income of the bottom quintile. This means the second quintile is only slightly better off than the bottom quintile despite the fact that the second quintile earned more than six times as much, it had more than twice the proportion of its prime work-aged adults working, and they worked, on average, 1.8 times as many hours per week.
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (pp. 31-32). Rowman & Littlefield Publishers. Kindle Edition.
The apparent absence of absolute poverty is something we could have inferred from observations about how people live:
"Compared to 1972, our homes today are much more spacious and modern. The proportion of homes with two or more rooms per person is 33.5 percent greater today. The proportion with two or more bathrooms has grown by 200.5 percent; 313.1 percent more have central air conditioning; and 68.3 percent more have dishwashers.3 Most homes in 1972 had televisions, but only about half were color. Today they are all color, and most are high-definition, flat-screen TVs connected to cable or satellites.4 Most homes in 1972 had at least one phone, but none had cell phones or internet access.
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (pp. 84-85). Rowman & Littlefield Publishers. Kindle Edition.
And:
"Our cars last more than twice as long,6 they are almost four times safer,7 and many have GPS navigation and premium sound systems. No standard model lacks air conditioning or power steering. Today almost three times as many of us are college graduates.8 Americans live 7.8 years longer,9 partly because the death rates from cancer declined by 31 percent from 1991 to 2018.10 Our median age is almost ten years older, and yet the proportion of people reporting poor health is 20.3 percent smaller.11 Real median household net worth is up 172.2 percent.12 In short, by virtually any physical definition of economic well-being, working Americans across all income levels, racial classifications, education levels, and other commonly used statistical classifications are substantially better off today than they were in 1972. So how did we obtain this massive cornucopia of prosperity without a pay raise since 1972?
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (p. 85). Rowman & Littlefield Publishers. Kindle Edition.
Other myths exploded by Gramm's team include alleged pay differentials between men and women and between the races. The answer can usually be traced to the number of hours worked or to the nature of the work done. Transfer payments and taxes also reduce the differentials.
"On average, Black households received $2,212 more in transfer payments than White households, and White households paid $14,482 more in taxes than Black households. As a result, the overall gap between Black and White household incomes after transfers and taxes was more than one-third smaller than the gap for earned income (23.4 percent versus 36.4 percent). Hispanic incomes after transfers and taxes also showed about the same difference—a 39.3 percent smaller gap with White income than existed between the earned incomes of the two.
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (p. 159). Rowman & Littlefield Publishers. Kindle Edition.
This book is heavy on the details. Gramm throws a lot of numbers at the reader. Surf along though and you can follow the argument and be surprised by how we've been swindled by uncritically trusting what we are told.
https://www.amazon.com/gp/customer-re...
America has spent trillions of dollars on fighting poverty. If you believe government statistics or the evening news, poverty has won the war. We are constantly hearing that the poor are getting poorer and the rich are getting richer.
The good news is that it may be the case that those trillions have not been wasted. Phil Gramm, who had been a professor of economics before becoming a Republican senator from Texas. Gramm and other economists have recrunched the numbers used by the Census Bureau and come up with some surprising information.
Basically, Gramm discovered that the census numbers do not account for transfer payments and services provided to the poorest quintile of the population. This is not an insignificant detail. While those in the poorest quintile only earn about $3,000 in income, they receive more than $41,000 in transfer payments.
Moreover, the census bureau did not account for the money taken from the richest quintiles in taxes. When these corrections are made, the four lowest quintiles - or 80% of the population - make pretty much the same amount of money, which means that the narratives of economic inequality and growing inequality are without substance.
Gramm's group analysis also concludes that inflation has not been as high as economic calculations have held. Part of this is from systemic problems in the calculation of inflation. Another is from not picking up the tremendous price declines when innovative products hit the market. Another is the practice of product substitution as consumers buy the cheaper product.
The effect of all this is to provide a more optimistic conclusion about poverty than we get from official statistics:
"The more accurate measures show that only 1.3 percent of children and less than 0.4 percent of seniors live in poverty. For children living with married relatives, the poverty rate is a mere 0.2 percent. Poverty affects 1.7 percent of Blacks, about 92 percent fewer than shown by the Census counts. While the improved measures show that poverty among Blacks is still somewhat higher than for Whites, the difference is only 0.6 percentage points, versus the 11.5 percent difference in the Census numbers. With the improved estimates, poverty affects 1.3 percent of women and 1.0 percent of men.
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (p. 97). Rowman & Littlefield Publishers. Kindle Edition.
The actual problem is that the inequality is so slight that the second lowest tier makes only a small incremental amount compared to the lowest quintile, notwithstanding spending more than 30 hours a week more in labor.
"Also note the stunning fact that the second quintile of households has an average net income after transfers and taxes that is only 8.6 percent above the average income of the bottom quintile. This means the second quintile is only slightly better off than the bottom quintile despite the fact that the second quintile earned more than six times as much, it had more than twice the proportion of its prime work-aged adults working, and they worked, on average, 1.8 times as many hours per week.
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (pp. 31-32). Rowman & Littlefield Publishers. Kindle Edition.
The apparent absence of absolute poverty is something we could have inferred from observations about how people live:
"Compared to 1972, our homes today are much more spacious and modern. The proportion of homes with two or more rooms per person is 33.5 percent greater today. The proportion with two or more bathrooms has grown by 200.5 percent; 313.1 percent more have central air conditioning; and 68.3 percent more have dishwashers.3 Most homes in 1972 had televisions, but only about half were color. Today they are all color, and most are high-definition, flat-screen TVs connected to cable or satellites.4 Most homes in 1972 had at least one phone, but none had cell phones or internet access.
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (pp. 84-85). Rowman & Littlefield Publishers. Kindle Edition.
And:
"Our cars last more than twice as long,6 they are almost four times safer,7 and many have GPS navigation and premium sound systems. No standard model lacks air conditioning or power steering. Today almost three times as many of us are college graduates.8 Americans live 7.8 years longer,9 partly because the death rates from cancer declined by 31 percent from 1991 to 2018.10 Our median age is almost ten years older, and yet the proportion of people reporting poor health is 20.3 percent smaller.11 Real median household net worth is up 172.2 percent.12 In short, by virtually any physical definition of economic well-being, working Americans across all income levels, racial classifications, education levels, and other commonly used statistical classifications are substantially better off today than they were in 1972. So how did we obtain this massive cornucopia of prosperity without a pay raise since 1972?
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (p. 85). Rowman & Littlefield Publishers. Kindle Edition.
Other myths exploded by Gramm's team include alleged pay differentials between men and women and between the races. The answer can usually be traced to the number of hours worked or to the nature of the work done. Transfer payments and taxes also reduce the differentials.
"On average, Black households received $2,212 more in transfer payments than White households, and White households paid $14,482 more in taxes than Black households. As a result, the overall gap between Black and White household incomes after transfers and taxes was more than one-third smaller than the gap for earned income (23.4 percent versus 36.4 percent). Hispanic incomes after transfers and taxes also showed about the same difference—a 39.3 percent smaller gap with White income than existed between the earned incomes of the two.
Gramm, Phil; Ekelund, Robert; Early, John. The Myth of American Inequality (p. 159). Rowman & Littlefield Publishers. Kindle Edition.
This book is heavy on the details. Gramm throws a lot of numbers at the reader. Surf along though and you can follow the argument and be surprised by how we've been swindled by uncritically trusting what we are told.
February 22, 2023
American Social Safety Net Programs Are Working
Is the much discussed and debated state of American inequality in the public and political forums a reality, a fiction or something in between? Particularly in a period of hydra-like media echo chambers amping self-serving partisan views, if no other reason than to engender blind loyalty and advertising revenues.
Three authors – Phil Gramm, Robert Ekelund and John Early – have proposed a contrary view to the ones detailed in Thomas Piketty’s seminal 2013 work, “Capital in the Twenty-First Century”. In their 2022 “The Myth of American Inequality” they argue wealth disparities between top and low-income families are more a function of inaccurate government measurements leading to and perpetuating adverse policy programs.
It should be noted, in addition to similar economic education and experience in the private and public sectors, all three hail from Texas with ties to more conservative political persuasions, i.e. the right-leaning American Enterprise Institute and ultra-conservative Cato Institute.
As might be expected, their book is loaded with detailed exhibits that would bring tears to the eyes of Officer Obie of Alice’s Restaurant lyrical fame.
The target of their analysis appears to be the misguided consequences of American social safety net programs such as Social Security, Medicare, Unemployment, Welfare and at least a hundred other initiatives that in a broad sense benefit individuals and families. More narrowly, the term may refer only to programs protecting low income and homeless people.
Recently 67% of the US federal budget is estimated to go to entitlement programs, including the ones mentioned. These programs can be contributory and non-contributory.
The topic of curtailing, if not sun-setting, some of these programs has been a lively discussion pushed by the far-right such as Senator Rick Scott (R – Florida) in his “11-Point Plan to Rescue America”.
The upshot of their analysis is: the lowest income segments (quintile) are actually better off than a cursory look suggests when government transfer incomes and benefits are included. Due to understated calculations by Census Bureau, which the Congressional Budget Office has tried to update, policies designed to support lower income and unemployed families during economic downturns have not been correctly represented for guiding policy development.
Another consequence of this exclusion has been the misperception that the top earning groups are not contributing their appropriate share of taxes – more public debate. This distortion is due to the impact of transfer payment benefits going to the less well off from the higher earning segments, or quintiles. Thus, their wealth is possibly overstated according to the authors.
Finally, their conclusions are: Americans in general have been better off income-wise than certain media voices would endorse. Still better education programs are needed to improve skills and capabilities, e.g., Asian American students outperforming White, Black and Hispanic students, and to compete internationally. A possible corollary: the transfer payment programs are rewarding people receiving benefits to not improve themselves and their capabilities.
It's a lot to take in. And far be it for me to challenge their documentation and analysis.
However, there are some points that get lost in the forest of numbers and exhibits. The most obvious is evident early on detailing the impact of government transfer programs. What jumps out is: the income disparities between low and top quintiles are seriously large before government transfer program benefits are added in.
Contrary to their negative assessment of President Lyndon Johnson’s Great Society programs, it certainly appears the benefits are doing exactly what is intended: peacefully transfer wealth from those better off to those not doing so well. Check out Exhibits 2.1 through 2.4, especially the left-hand Earned Income column before assistance calculations.
Looks to me like the programs are doing what they are supposed to do: level the economics playing field.
This effort by the government is important in US society which, to date, has not shown any consistent effort by those well off to initiate private aid. The authors take a snide swipe at Dickens’ “A Christmas Carol” for distorting through Scrooge the state of British society and well-being which, they claim, was better off. Dickens’ point had much more to do with encouraging more positive, charitable attitudes among his countrymen.
The authors provide some constructive suggestions about improving the education system for strengthening American talent to be more competitive at home and abroad. Laudable intents, though with current disarray in American education from Covid impacts, easier said than done.
And one suspects the authors would prefer the entitlement program funding be redirected to education support. How and in what form? Reduce national standards with less accountability and at the discretion of local politicians to determine what the curriculum should be?
While their analysis have the laws of big numbers with 20-20 hindsight on their side, the authors seem to ignore the increasingly evident non-economic barriers to progress toward equality: denial of voting rights as participation in the system; entrenched racial and religious prejudice; limited access to better food and healthcare; inability of labor to move freely from areas of lower to higher demand – a problem around since Adam Smith’s Wealth of Nations.
In the meanwhile, Brothers Graham, Ekelund and Early, can you spare a dime?
Is the much discussed and debated state of American inequality in the public and political forums a reality, a fiction or something in between? Particularly in a period of hydra-like media echo chambers amping self-serving partisan views, if no other reason than to engender blind loyalty and advertising revenues.
Three authors – Phil Gramm, Robert Ekelund and John Early – have proposed a contrary view to the ones detailed in Thomas Piketty’s seminal 2013 work, “Capital in the Twenty-First Century”. In their 2022 “The Myth of American Inequality” they argue wealth disparities between top and low-income families are more a function of inaccurate government measurements leading to and perpetuating adverse policy programs.
It should be noted, in addition to similar economic education and experience in the private and public sectors, all three hail from Texas with ties to more conservative political persuasions, i.e. the right-leaning American Enterprise Institute and ultra-conservative Cato Institute.
As might be expected, their book is loaded with detailed exhibits that would bring tears to the eyes of Officer Obie of Alice’s Restaurant lyrical fame.
The target of their analysis appears to be the misguided consequences of American social safety net programs such as Social Security, Medicare, Unemployment, Welfare and at least a hundred other initiatives that in a broad sense benefit individuals and families. More narrowly, the term may refer only to programs protecting low income and homeless people.
Recently 67% of the US federal budget is estimated to go to entitlement programs, including the ones mentioned. These programs can be contributory and non-contributory.
The topic of curtailing, if not sun-setting, some of these programs has been a lively discussion pushed by the far-right such as Senator Rick Scott (R – Florida) in his “11-Point Plan to Rescue America”.
The upshot of their analysis is: the lowest income segments (quintile) are actually better off than a cursory look suggests when government transfer incomes and benefits are included. Due to understated calculations by Census Bureau, which the Congressional Budget Office has tried to update, policies designed to support lower income and unemployed families during economic downturns have not been correctly represented for guiding policy development.
Another consequence of this exclusion has been the misperception that the top earning groups are not contributing their appropriate share of taxes – more public debate. This distortion is due to the impact of transfer payment benefits going to the less well off from the higher earning segments, or quintiles. Thus, their wealth is possibly overstated according to the authors.
Finally, their conclusions are: Americans in general have been better off income-wise than certain media voices would endorse. Still better education programs are needed to improve skills and capabilities, e.g., Asian American students outperforming White, Black and Hispanic students, and to compete internationally. A possible corollary: the transfer payment programs are rewarding people receiving benefits to not improve themselves and their capabilities.
It's a lot to take in. And far be it for me to challenge their documentation and analysis.
However, there are some points that get lost in the forest of numbers and exhibits. The most obvious is evident early on detailing the impact of government transfer programs. What jumps out is: the income disparities between low and top quintiles are seriously large before government transfer program benefits are added in.
Contrary to their negative assessment of President Lyndon Johnson’s Great Society programs, it certainly appears the benefits are doing exactly what is intended: peacefully transfer wealth from those better off to those not doing so well. Check out Exhibits 2.1 through 2.4, especially the left-hand Earned Income column before assistance calculations.
Looks to me like the programs are doing what they are supposed to do: level the economics playing field.
This effort by the government is important in US society which, to date, has not shown any consistent effort by those well off to initiate private aid. The authors take a snide swipe at Dickens’ “A Christmas Carol” for distorting through Scrooge the state of British society and well-being which, they claim, was better off. Dickens’ point had much more to do with encouraging more positive, charitable attitudes among his countrymen.
The authors provide some constructive suggestions about improving the education system for strengthening American talent to be more competitive at home and abroad. Laudable intents, though with current disarray in American education from Covid impacts, easier said than done.
And one suspects the authors would prefer the entitlement program funding be redirected to education support. How and in what form? Reduce national standards with less accountability and at the discretion of local politicians to determine what the curriculum should be?
While their analysis have the laws of big numbers with 20-20 hindsight on their side, the authors seem to ignore the increasingly evident non-economic barriers to progress toward equality: denial of voting rights as participation in the system; entrenched racial and religious prejudice; limited access to better food and healthcare; inability of labor to move freely from areas of lower to higher demand – a problem around since Adam Smith’s Wealth of Nations.
In the meanwhile, Brothers Graham, Ekelund and Early, can you spare a dime?
October 3, 2022
It took me way longer to write a review for this than it normally does. The book is just extremely dense - mostly in a useful way but sometimes does get a bit repetitive. For example, I'm a little bit tired of reading about how transfer payments are not included.
I'd really suggest a change of title. I'm fairly liberal and I picked this up for two reasons: one is that I love data and statistics, and the other is that admittedly I was ready to disagree with everything it. Three White guys talking about how inequality isn't real? I'm ready to burn it all down.
BUT, the book isn't about inequality being a myth, it's about how the data we have and what is presented to the public don't give us a good picture of what's really going on in American society. That's a huge problem that needs to be recognized, because how can we improve without knowing where we are? The book gives lots of examples of improvement programs that failed because of exactly this. In short, I feel more educated for having read this book.
Thank you to Rowman & Littlefield and NetGalley for the opportunity to access this free e-arc in exchange for an honest review.
I'd really suggest a change of title. I'm fairly liberal and I picked this up for two reasons: one is that I love data and statistics, and the other is that admittedly I was ready to disagree with everything it. Three White guys talking about how inequality isn't real? I'm ready to burn it all down.
BUT, the book isn't about inequality being a myth, it's about how the data we have and what is presented to the public don't give us a good picture of what's really going on in American society. That's a huge problem that needs to be recognized, because how can we improve without knowing where we are? The book gives lots of examples of improvement programs that failed because of exactly this. In short, I feel more educated for having read this book.
Thank you to Rowman & Littlefield and NetGalley for the opportunity to access this free e-arc in exchange for an honest review.
March 23, 2024
This book addresses the fundamentals of a salient political issue: income inequality in America. The authors take a systematic view in collecting, analyzing, and cross-checking data to look at the real incomes (and spending habits) of Americans, how they are distributed, and how they have changed over time.
This book challenges many popular narratives related to income inequality and wage stagnation using detailed data and thoughtful rebuttals to the analytical methods that serve as the basis for these popular narratives. The data is well sourced and cited, and the authors consistently compare their results to alternative methods from other researchers.
While dense, this was overall an interesting read. I would recommend this to anyone interested in the American economic system, especially if you are interested in how it can be improved. How can we help those that need it when we don’t accurately understand their current economic standing?
This book challenges many popular narratives related to income inequality and wage stagnation using detailed data and thoughtful rebuttals to the analytical methods that serve as the basis for these popular narratives. The data is well sourced and cited, and the authors consistently compare their results to alternative methods from other researchers.
While dense, this was overall an interesting read. I would recommend this to anyone interested in the American economic system, especially if you are interested in how it can be improved. How can we help those that need it when we don’t accurately understand their current economic standing?
July 7, 2023
This is a book about the differences between rich and poor by some people who know a fair amount about the rich and nothing at all about the poor. This is shown most clearly on page 65 when they say that the only reason they can find why poor people work less is because they are getting welfare payments. They can't imagine that a poor person might not get to work because they can't afford to repair their broken-down car? or because they can't find affordable child care? or (by far the most likely) because there aren't any jobs available for them? In fact, the authors have cause and effect exactly backwards: Poor people aren't idle because they are getting payments; they are getting payments because they lost their jobs.
The main thesis of the book is that, when you account for government transfer payments received and taxes spent, the disparity between the wealthiest quintile and the poorest goes from a 60-fold difference to only four-fold. I doubt their numbers are accurate, because their own numbers still show that the wealthiest are consuming more than seven times as much as the poor. (Maybe the poor are just putting more of their money into savings and investments?) If you believe the picture the authors paint, then all the 20% poorest people in the US live on a middle-class income in a spacious home, owning modern electronic devices, a new car, and, for 42% of them, the house itself.
Part of the problem of the book is that the authors deal only with quintiles, not with people. They don't know that most people on welfare are there only temporarily, that they are, for the most part, very happy to get back to work when they can. They don't know that more than half of the US population will be on welfare at some point in their life. They assume that if you are poor, it is because you are lazy. The authors assume that if you made only $300,000 last year, it is because you worked only 0.1% as hard as someone who made $300 million.
There are other problems, too. On pp. 48-50, they go on at length about an adjustment to the Census Gini measure, never mentioning that the adjustment made the measure more accurate, and that their own correction for that adjustment was just plain wrong. And they only ever mention income. By measures of wealth, the disparities between rich and poor are huge (the bottom two quintiles together accounting for approximately 0%--yes, zero--of the total) and growing, and for which their income adjustments are entirely irrelevant.
Some points they make are fair. Total income and outgo are important measures of a household's wealth and, for some applications, should be taken into account. They make a good point at the end of the book that entry level unskilled workers should not need to pay to get licenses to start work. But much of their book is simplistic to the point that it wrong.
The main thesis of the book is that, when you account for government transfer payments received and taxes spent, the disparity between the wealthiest quintile and the poorest goes from a 60-fold difference to only four-fold. I doubt their numbers are accurate, because their own numbers still show that the wealthiest are consuming more than seven times as much as the poor. (Maybe the poor are just putting more of their money into savings and investments?) If you believe the picture the authors paint, then all the 20% poorest people in the US live on a middle-class income in a spacious home, owning modern electronic devices, a new car, and, for 42% of them, the house itself.
Part of the problem of the book is that the authors deal only with quintiles, not with people. They don't know that most people on welfare are there only temporarily, that they are, for the most part, very happy to get back to work when they can. They don't know that more than half of the US population will be on welfare at some point in their life. They assume that if you are poor, it is because you are lazy. The authors assume that if you made only $300,000 last year, it is because you worked only 0.1% as hard as someone who made $300 million.
There are other problems, too. On pp. 48-50, they go on at length about an adjustment to the Census Gini measure, never mentioning that the adjustment made the measure more accurate, and that their own correction for that adjustment was just plain wrong. And they only ever mention income. By measures of wealth, the disparities between rich and poor are huge (the bottom two quintiles together accounting for approximately 0%--yes, zero--of the total) and growing, and for which their income adjustments are entirely irrelevant.
Some points they make are fair. Total income and outgo are important measures of a household's wealth and, for some applications, should be taken into account. They make a good point at the end of the book that entry level unskilled workers should not need to pay to get licenses to start work. But much of their book is simplistic to the point that it wrong.
February 23, 2023
What an excellent and important book this is. The authors take an unvarnished look at American economic statistics and come to the conclusion that things aren't nearly as bad as some complainers like to make them seem. Instead of comparing people via bare income, once you add government transfers and subtract taxes, the playing field is rather level. The bottom quintile is doing quite well considering how many hours it works (or doesn't work) per week. The second quintile is probably in the hardest spot--for every dollars it earns in income it gains by less than $0.20 over the bottom quintile because of lost transfers and higher taxes.
The book is filled with page after page of such eye-opening facts. Comparing different races, the gender pay "gap" (another myth), various regions of the country--it's all in here, explained lucidly. You can't argue income inequality with a straight face if you haven't taken into account this book.
The book is filled with page after page of such eye-opening facts. Comparing different races, the gender pay "gap" (another myth), various regions of the country--it's all in here, explained lucidly. You can't argue income inequality with a straight face if you haven't taken into account this book.
abandoned
February 19, 2023A little too conservative for my tastes, but the real problem was that it was basically all numbers and charts. I spent about an hour reading the blocks of text that were actually all words and pretty much skipped the rest. I think the main argument was interesting, that the measurement of poverty and inequality in the US is really thrown off by how things are measured. A big example is that a lot of cash benefits that poor people get are not counted as income, while at the same time taxes paid by better-off people are not subtracted from their income. Without doubt there are tons of people in the US who live in economic misery and need help, but we need to do better figuring out how many there are and if the numbers are really getting worse or better. Not an easy task, but we really need to better understand what the situation is before we know what’s an appropriate way to help.
December 18, 2022
I’ve long suspected that if Phil Gramm were to write a telephone book, I’d read every g-damn page of it and come out from the experience both glad I had and smarter for having done so. This book right here — with as dry an elevator pitch as that telephone book — proves both sides of that statement.
We are getting the wrong answers about our economy because we systematically ask the wrong questions and measure the wrong things. Senator Gramm methodically walks the reader through all the ways our government knows this and almost always already has figured out how to correct for the mismeasurements that result, only to then continue to track and to rely on the uncorrected measures in its main publications and policies.
What’s maybe most surprising is how thoroughly this book and this author document that measured accurately, the War on Poverty (as course corrected midstream in 1996) has been a near total success on its primary objective — eliminating grinding poverty from the land. How widespread economic growth and its benefits have been, and how very live the American Dream of seeing one’s children do better than one’s self remains for all of society (across all racial, ethnic, and class lines).
It’s less surprising that it also documents how (since 1996) we’ve undermined the protections built into our programs to also achieve the secondary objective of the War on Poverty — allowing every American to develop and achieve to the extent their grit and talent dictate.
Almost everything we think we know about how our economy has changed over the last 50 years is pretty clearly wrong. That’s dictating policy choices that are unmoored from the reality we face (and so incapable of addressing either our real challenges or those phantom-problems they try to solve). We’re going to need to correct what we think we know to make better decisions. This book is a massive contribution to that correction.
Senator Gramm should, as almost always, again be thanked for making that contribution.
We are getting the wrong answers about our economy because we systematically ask the wrong questions and measure the wrong things. Senator Gramm methodically walks the reader through all the ways our government knows this and almost always already has figured out how to correct for the mismeasurements that result, only to then continue to track and to rely on the uncorrected measures in its main publications and policies.
What’s maybe most surprising is how thoroughly this book and this author document that measured accurately, the War on Poverty (as course corrected midstream in 1996) has been a near total success on its primary objective — eliminating grinding poverty from the land. How widespread economic growth and its benefits have been, and how very live the American Dream of seeing one’s children do better than one’s self remains for all of society (across all racial, ethnic, and class lines).
It’s less surprising that it also documents how (since 1996) we’ve undermined the protections built into our programs to also achieve the secondary objective of the War on Poverty — allowing every American to develop and achieve to the extent their grit and talent dictate.
Almost everything we think we know about how our economy has changed over the last 50 years is pretty clearly wrong. That’s dictating policy choices that are unmoored from the reality we face (and so incapable of addressing either our real challenges or those phantom-problems they try to solve). We’re going to need to correct what we think we know to make better decisions. This book is a massive contribution to that correction.
Senator Gramm should, as almost always, again be thanked for making that contribution.
March 20, 2023
"Throughout this book, the analysis of all available data has shown that the official statistics of the United States have overstated inequality and poverty and have understated well-being, thereby biasing the public policy debate. The official statistics are wrong because...they do not include two-thirds of government transfer payments as income for the recipients and do not count taxes paid as income lost to the taxpayers." p.168
December 29, 2024
This is one of those books that could have been an essay in The Atlantic, but instead the author wanted to include all their notes and charts, so it's extended to 250 pages. That said, Phil Gramm (R-TX, '85-02) along with his coauthors make three compelling arguments that should be considered when thinking about political ideas:
1. Poverty Is Mismeasured. Gramm's primary claim in the book is that poverty in America is fundamentally mismeasured, and it is hard, nay impossible, to address unless we're properly measuring it. The thrust of the argument is that since the 1960s when LBJ initiated the war on poverty we should believe one of two things: (1) the war was successful and we decreased poverty, or (2) the war was unsuccessful, and we should rethink these priorities. Weirdly enough, Gramm is open to the idea of (1) because transfer payments are not included in the government's definitions of poverty. Programs like Medicaid, Food Stamps, housing vouchers are somehow a program to alleviate poverty, but don't actually impact how we calculate it. I agree this is a mistake and we should modify our calculations. (Note: there is a debate to how we should incorporate this calculation, because are Food Stamps really work 100 cents on the dollar? Probably not, but I think we'd agree that healthcare via Medicaid and Food Stamps are worth more than zero cents on the dollar)
2. A plateau in economic mobility is misleading. He writes a lot about this and provides evidence, but I'll just provide the analogy from the book:
Suppose you measured the height of all the students in an elementary school and found that they averaged fifty inches tall. The next year you go back and measure the students' height in the same school and find that the average is still fifty inches. You would not conclude that none of the students had grown because you know that after a year of growth, the fifth graders moved on to middle school, fourth graders with a year of growth were promoted to fifth grade and new first graders arrived. The Census numbers do not measure individual income raises, just like the average height of all elementary students does not measure whether individual students have grown. That is an inherent feature of the way the data are computed. (Gramm, 124)
It's not airtight, but it does appeal to a type of thinking that believes that the post-WWII era was the anomaly in the long arc of history, and we are doomed to decades or centuries of low growth and limited economic mobility.
3. Inflation is hard to measure. This book came out in 2022 so a bit before we started arguing about Core vs. non-core CPI and started making little adjustments for everything we didn't like (e.g. used car prices). In a world where arguments about CPI basket composition aren't everywhere the authors raise some interesting points around the error in the BLS's calculation methods...or at least provides suggestions for improvement. This is covered in Chapter 6: Measures of Well-Being and it outlines how we should look at measure of well-being versus the price level because there are just too many variables to adjust for. As an example, even though the price level is higher now, are the poorest among us not better off than their 1970s counterparts? Homes are more spacious, there has been a 300%+ increase in homes with A/C, half of TVs in 1972 were color now 100% are. No one had internet or cell phones, those adoption rates are near universal now. A price for these improvements is difficult to quantify and the CPI basket does not do it justice. This section did not convince me that their Measure of Well Being ("MWB") is the right answer, but there are arguments against CPI and looking at the world through that lens exclusively.
3/5 because it's too long; but the key points (most of which I covered) were interesting.
1. Poverty Is Mismeasured. Gramm's primary claim in the book is that poverty in America is fundamentally mismeasured, and it is hard, nay impossible, to address unless we're properly measuring it. The thrust of the argument is that since the 1960s when LBJ initiated the war on poverty we should believe one of two things: (1) the war was successful and we decreased poverty, or (2) the war was unsuccessful, and we should rethink these priorities. Weirdly enough, Gramm is open to the idea of (1) because transfer payments are not included in the government's definitions of poverty. Programs like Medicaid, Food Stamps, housing vouchers are somehow a program to alleviate poverty, but don't actually impact how we calculate it. I agree this is a mistake and we should modify our calculations. (Note: there is a debate to how we should incorporate this calculation, because are Food Stamps really work 100 cents on the dollar? Probably not, but I think we'd agree that healthcare via Medicaid and Food Stamps are worth more than zero cents on the dollar)
2. A plateau in economic mobility is misleading. He writes a lot about this and provides evidence, but I'll just provide the analogy from the book:
Suppose you measured the height of all the students in an elementary school and found that they averaged fifty inches tall. The next year you go back and measure the students' height in the same school and find that the average is still fifty inches. You would not conclude that none of the students had grown because you know that after a year of growth, the fifth graders moved on to middle school, fourth graders with a year of growth were promoted to fifth grade and new first graders arrived. The Census numbers do not measure individual income raises, just like the average height of all elementary students does not measure whether individual students have grown. That is an inherent feature of the way the data are computed. (Gramm, 124)
It's not airtight, but it does appeal to a type of thinking that believes that the post-WWII era was the anomaly in the long arc of history, and we are doomed to decades or centuries of low growth and limited economic mobility.
3. Inflation is hard to measure. This book came out in 2022 so a bit before we started arguing about Core vs. non-core CPI and started making little adjustments for everything we didn't like (e.g. used car prices). In a world where arguments about CPI basket composition aren't everywhere the authors raise some interesting points around the error in the BLS's calculation methods...or at least provides suggestions for improvement. This is covered in Chapter 6: Measures of Well-Being and it outlines how we should look at measure of well-being versus the price level because there are just too many variables to adjust for. As an example, even though the price level is higher now, are the poorest among us not better off than their 1970s counterparts? Homes are more spacious, there has been a 300%+ increase in homes with A/C, half of TVs in 1972 were color now 100% are. No one had internet or cell phones, those adoption rates are near universal now. A price for these improvements is difficult to quantify and the CPI basket does not do it justice. This section did not convince me that their Measure of Well Being ("MWB") is the right answer, but there are arguments against CPI and looking at the world through that lens exclusively.
3/5 because it's too long; but the key points (most of which I covered) were interesting.
January 31, 2023
This book is loaded with data and references.
It shows a wide range of simply astonishing information.
1. The current poverty rate in the US is about 2% of people, not the 17% you hear on the TV
2. Many of the income statistic routinely used by the government do NOT include Taxes paid or benefits received in income calculations. The "growing wealth gap" is a lie - it has actually decreased since 1947 all things considered.
The chapter 10 summary does a nice job of bringing this all together.
The font in this book is very small, and they spend a lot of time explaining the large number of charts and graphs.
It shows a wide range of simply astonishing information.
1. The current poverty rate in the US is about 2% of people, not the 17% you hear on the TV
2. Many of the income statistic routinely used by the government do NOT include Taxes paid or benefits received in income calculations. The "growing wealth gap" is a lie - it has actually decreased since 1947 all things considered.
The chapter 10 summary does a nice job of bringing this all together.
The font in this book is very small, and they spend a lot of time explaining the large number of charts and graphs.
November 26, 2023
A better title is found on the book flap: "Everything you know about income inequality, poverty, and other measures of economic well-being in America is wrong." The authors (Phil Gramm, Robert Ekelund, and John Early) all have academic or professional backgrounds in economics, and Gramm, of course, was a US Congressman for six years, and a US Senator for nearly 18 years. (He is just a few months older than Joe Biden.) Their audacious thesis is presented convincingly (at least for this fan of free-market capitalism): the "official government statistics" that get reported periodically on inflation, incomes, and poverty are deeply flawed. Alternative measures exist, because serious people demand them. But they need to be dug out of more obscure sources, a task only suited for … well, diligent scholars, like these guys.
The book's style leaves something to be desired for the casual reader. There are graphs and dense tables aplenty. And many eye-glazing paragraphs filled with data: dollars, dates, percentiles, percentages, rates, etc. It's dry stuff. The key points—the stuff the authors really want you to know—are repeated over and over.
But if you can pay attention throughout, it's pretty damning. The government is kind of lying to you. Only "kind of", because it's open about its flawed methods, which may have worked OK in the past, but have persisted due to inertia and (I would guess) political cowardice.
And of course, some favor this inherent dishonesty: it creates winners and losers. It boosts some political narratives over others.
First: the Consumer Price Index (CPI), used to "adjust income eligibility levels for government assistance, federal tax brackets, federally mandated cost-of-living increases, private sector wage and salary increases, poverty measures, and consumer and commercial rent escalations". As a short-term month-to-month measure, it's not bad, but it has well-known biases that overstate inflation. So over years, that overstatement builds up. Good news for (say) Social Security recipients, at least until the trust fund is emptied.
The official US poverty rate has been "stuck" since around 1970 between 10-15%. But the calculation the government uses to determine poverty omits the value of many of its transfer payments to the needy. And the overstated CPI above also inflates the poverty rate. In fact, the authors claim, actual poverty has been in a long-term decline and is nearly zero. (I don't, frankly, know if that includes all those homeless folks in the big cities.)
Another source of bias occurs at the upper end of the income scale, and it's something I'm ashamed to admit that I'd been oblivious to. We citizens also make "transfer payments" to the government: these are called "taxes". These transfer payments are (nevertheless) counted as part of your income. This, despite the fact that in most cases, that money never even touches your bank account; subject to withholding, it just goes directly to Uncle Stupid's coffers. (And, in other cases: as people who pay estimated taxes know, the government gets pretty mean if you fail to pay them first.)
But, bottom line: your "official income" according to the government includes a big chunk of cash that you either can't, or probably shouldn't, spend as you desire on stuff you want.
Taken together, the government mismeasures drastically overstate measures of "inequality" like the Gini coefficient. The authors particularly criticize the scholarship of folks like Piketty, Saez, and Zucman, who use the flawed numbers to argue for (even) more punitive taxation of the rich.
The mismeasures also drastically understate the progress in economic well-being over the past few decades. As noted above, this feeds into a anti-capitalist narrative that's echoed in the mainstream press and in many political speeches. And the result is reflected in the nasty, resentful mood of the electorate. (Headline a couple days ago in the Wall Street Journal: Voters See American Dream Slipping Out of Reach, WSJ/NORC Poll Shows.
The authors wind up with some policy suggestions: first (obviously): reform the government's statistical calculations to use alternative, less-biased measures of economic statistics. But also: Embrace school choice. Reform occupational licensure and other barriers to earning a living. At the same time, remove the disincentives to work, as welfare reform did in the 1990s.
June 23, 2024
The first two sentences in the book flap sum up this book:
“Everything you know about income inequality, poverty and other measures of economic well-being in America is wrong. By not counting two thirds of all transfer payments as income to the recipients and not counting taxes paid as income lost to the taxpayer, government statistics dramatically overstate income inequality.”
The authors take an in depth look at the data from the Bureau of Labor Statistics and analyze it. According to the Census Bureau, the average income of the top 20% of households in America was 16.7 times higher in 2017 than the average income of the bottom 20% of households and “income inequality has grown more or less consistently since World War II.” The Census Bureau also finds that the percentage of Americans living in poverty has been basically unchanged since the War on Poverty was implemented in the mid 1960s. What the Census Bureau does NOT include as income is the transfer payments to the bottom 20% (which didn’t exist until the War on Poverty programs began in the late 1960s) and are NOT included as income. (Liken this to getting tax free money as income from the government.) Transfer payments such as stimulus checks, refundable tax credits, food stamps, government payments for health care (Medicare and Medicaid), aid to dependent children, government rent subsidies etc. When the annual government transfer payments to the bottom 20% of income distribution ARE included and adjusted for inflation from 1967 to 2017, the inflation adjusted dollars to the bottom 20% actually INCREASED from $9,677 to $45,389. Yet the official poverty measures from the Census Bureau have hardly changed in over 50 years because these income transfers are NOT included as income to those receiving it.
The taxes to pay for these transfer payments comes primarily from taxes on the top 40% of household earners. Americans pay $4.4 trillion a year in federal, state and local taxes and 82% of which are paid by the top 40% of household earners. Although most of these top 40% households never see this money because it’s withheld from their paychecks, the Census Bureau does NOT reduce household income by the amount of taxes paid by them when it measures income inequality.
As a result, if the Census Bureau were to include transfer payments to the lowest 20% of earners and taxes on the highest 20% of earners measures of income inequality would be very different. When transfer payments are added to the lowest 20% of earners income and taxes paid are deducted from the highest 20% of earners income, income inequality is NOT the 16.7:1 ratio in the official Census numbers and has NOT been increasing. The ratio of income inequality in 2017 is 4:1 which hasn’t changed much in the last 60 years. Big difference.
This book reminded me of a book I read years ago about how to lie with statistics. It’s a short book but full of information. (183 pages with another 50 + pages of notes and charts) If you are mathematically inclined, and like data you will find this VERY interesting and thought provoking. I had no clue about any of this before reading this very educational book. Worth reading.
“Everything you know about income inequality, poverty and other measures of economic well-being in America is wrong. By not counting two thirds of all transfer payments as income to the recipients and not counting taxes paid as income lost to the taxpayer, government statistics dramatically overstate income inequality.”
The authors take an in depth look at the data from the Bureau of Labor Statistics and analyze it. According to the Census Bureau, the average income of the top 20% of households in America was 16.7 times higher in 2017 than the average income of the bottom 20% of households and “income inequality has grown more or less consistently since World War II.” The Census Bureau also finds that the percentage of Americans living in poverty has been basically unchanged since the War on Poverty was implemented in the mid 1960s. What the Census Bureau does NOT include as income is the transfer payments to the bottom 20% (which didn’t exist until the War on Poverty programs began in the late 1960s) and are NOT included as income. (Liken this to getting tax free money as income from the government.) Transfer payments such as stimulus checks, refundable tax credits, food stamps, government payments for health care (Medicare and Medicaid), aid to dependent children, government rent subsidies etc. When the annual government transfer payments to the bottom 20% of income distribution ARE included and adjusted for inflation from 1967 to 2017, the inflation adjusted dollars to the bottom 20% actually INCREASED from $9,677 to $45,389. Yet the official poverty measures from the Census Bureau have hardly changed in over 50 years because these income transfers are NOT included as income to those receiving it.
The taxes to pay for these transfer payments comes primarily from taxes on the top 40% of household earners. Americans pay $4.4 trillion a year in federal, state and local taxes and 82% of which are paid by the top 40% of household earners. Although most of these top 40% households never see this money because it’s withheld from their paychecks, the Census Bureau does NOT reduce household income by the amount of taxes paid by them when it measures income inequality.
As a result, if the Census Bureau were to include transfer payments to the lowest 20% of earners and taxes on the highest 20% of earners measures of income inequality would be very different. When transfer payments are added to the lowest 20% of earners income and taxes paid are deducted from the highest 20% of earners income, income inequality is NOT the 16.7:1 ratio in the official Census numbers and has NOT been increasing. The ratio of income inequality in 2017 is 4:1 which hasn’t changed much in the last 60 years. Big difference.
This book reminded me of a book I read years ago about how to lie with statistics. It’s a short book but full of information. (183 pages with another 50 + pages of notes and charts) If you are mathematically inclined, and like data you will find this VERY interesting and thought provoking. I had no clue about any of this before reading this very educational book. Worth reading.
Read
December 1, 2025It's been a while since I read Capital by Picketty, but considering this is a topic that conservatives and moderate liberals avoid bring up, I was interested in a different take. This book is political, from what I understand it was meant to respond to Picketty's book, I'm not sure, because the book doesn't actually address what Picketty's book was about. Capital by Picketty is about the growing inequality globally, the United States is not the only uniquely unequal country, although the United States' policy's are some of the most negligent in curbing inequality.
With that being said, Gramm's book is ignoring a huge aspect of the problem of inequality. Gram & Co have tunnel vision on solely income taxes, which means they're not evaluating inheritance and capital ownership in any real detail. They're only looking at wealth base one the wealth generated through labor. I understand the point that maybe these government benefits should be accounted for in certain circumstances in evaluating quality of life, but Gramm & Co are giving the whole picture of what the real problem is. There's also no discussion of corporate welfare that increases the deficit.
The key argument of this book is that looking at income taxes alone, public benefits eliminate eliminate poverty to tiny percentages, sounds like the New Deal and War on Poverty were successful programs. Most of these benefits they're talking about effect senior citizens and the second most children. Personally, I think it's a good thing that people can retire when they're too old to work and they don't have to go to work at an excessively early age. I think we're all collectively better off with that being the case.
I don't want to nit-pick the entire book, but I would like to mention the old dichotomy of liberty vs. equality. This idea arose during the Cold War, socialist equality or capitalist liberty. But in the days of Thomas Paine, you can't have liberty without equality. If there's inequality, those very powerful can easily take away a poorer someone's liberty. For example, someone is raped by a powerful person, that person has the legal means to obstruct the victim even though they had their liberty taken away.
I appreciate that the book took on the subject but they need much stronger arguments.
With that being said, Gramm's book is ignoring a huge aspect of the problem of inequality. Gram & Co have tunnel vision on solely income taxes, which means they're not evaluating inheritance and capital ownership in any real detail. They're only looking at wealth base one the wealth generated through labor. I understand the point that maybe these government benefits should be accounted for in certain circumstances in evaluating quality of life, but Gramm & Co are giving the whole picture of what the real problem is. There's also no discussion of corporate welfare that increases the deficit.
The key argument of this book is that looking at income taxes alone, public benefits eliminate eliminate poverty to tiny percentages, sounds like the New Deal and War on Poverty were successful programs. Most of these benefits they're talking about effect senior citizens and the second most children. Personally, I think it's a good thing that people can retire when they're too old to work and they don't have to go to work at an excessively early age. I think we're all collectively better off with that being the case.
I don't want to nit-pick the entire book, but I would like to mention the old dichotomy of liberty vs. equality. This idea arose during the Cold War, socialist equality or capitalist liberty. But in the days of Thomas Paine, you can't have liberty without equality. If there's inequality, those very powerful can easily take away a poorer someone's liberty. For example, someone is raped by a powerful person, that person has the legal means to obstruct the victim even though they had their liberty taken away.
I appreciate that the book took on the subject but they need much stronger arguments.
April 15, 2023
Probably should be 3 stars. I went to 4 because I appreciated a thoughtful, reasoned set of conservative principals to debate rather than the red hat, gun toting gibberish the other side usually treats us to.
If you bend left of center, it's worth looking at this book because it quite correctly points out that many of the ways we measure are deeply flawed or at least rely on assumptions which should be more carefully understood.
If you bend right of center, you will be comforted by thoughtful work supporting your point of view, but look at that work closely. The authors' criticisms of measures that don't support their theses tend to be thorough, they do not subject the measures that support their preferred outcome to the same rigor. Occasionally a sentence rolls out that is unsupported by anything in the book at all, occasionally a sentence rolls out so full of vagaries it's hard to know what they think they are actually saying. That is disappointing, a more even hand would have led to a better book.
The argument that we all live like royalty because iPads get better every year and that offsets the rising cost of food only makes sense from a chair that is particularly comfortable. The argument that the American poor are doing fine because they are somehow collecting $50K a year is probably quite surprising to the person living in a tent under a bridge and dumpster diving for their daily bread. But it's worth looking at how they get there, my mind wasn't changed but my assumptions were challenged and that's always a good thing.
A reasoned debate with all sides at the table would be progress, you don't want an undiluted version of my preferred policies any more than you want an undiluted version of Phil Gramm's preferred policies. This book is certainly flawed, but it elevates the discourse and that deserves respect.
If you bend left of center, it's worth looking at this book because it quite correctly points out that many of the ways we measure are deeply flawed or at least rely on assumptions which should be more carefully understood.
If you bend right of center, you will be comforted by thoughtful work supporting your point of view, but look at that work closely. The authors' criticisms of measures that don't support their theses tend to be thorough, they do not subject the measures that support their preferred outcome to the same rigor. Occasionally a sentence rolls out that is unsupported by anything in the book at all, occasionally a sentence rolls out so full of vagaries it's hard to know what they think they are actually saying. That is disappointing, a more even hand would have led to a better book.
The argument that we all live like royalty because iPads get better every year and that offsets the rising cost of food only makes sense from a chair that is particularly comfortable. The argument that the American poor are doing fine because they are somehow collecting $50K a year is probably quite surprising to the person living in a tent under a bridge and dumpster diving for their daily bread. But it's worth looking at how they get there, my mind wasn't changed but my assumptions were challenged and that's always a good thing.
A reasoned debate with all sides at the table would be progress, you don't want an undiluted version of my preferred policies any more than you want an undiluted version of Phil Gramm's preferred policies. This book is certainly flawed, but it elevates the discourse and that deserves respect.
September 16, 2023
Whatever your views are about income inequality, you should at least know how much separates the wealthy from the poor before articulating those views. And you probably don't, because the government's reported numbers are deeply flawed, specifically because they largely don't consider the effect of taxes and transfer payments (everything from food stamps to Medicaid and housing subsidies) on inequality. As a result, the "official" inequality measures count income that the wealthy never received because it was taxed away, and fails to consider income received by the poor from the government. This obviously makes no sense if you want to know what the true income inequality in America is.
Once taxes and transfer payments are properly considered, virtually every "fact" reported relating to "growing income inequality," lack of wage growth, and the poverty rate, are revealed as suspect by Gramm in this book. The other big reveal from this adjustment is that our redistributive system rewards non-working people and punishes low income workers who lose the bulk of the transfers, meaning that the working poor have substantially the same income as the non-workers, which is both shocking and terrible policy.
All of this information is in the first chapter of the book, and that's really all that you need to read to get the key insight. But in subsequent chapters, Gramm debunks other canards like the "gender wage gap," "lower social mobility" and overstated racial income differences. He concludes the book with suggested policies such as promoting school choice (because of the massive tie between education and income) and mandating work to receive transfers in order to eliminate the incentive to not work and receive transfers.
Once taxes and transfer payments are properly considered, virtually every "fact" reported relating to "growing income inequality," lack of wage growth, and the poverty rate, are revealed as suspect by Gramm in this book. The other big reveal from this adjustment is that our redistributive system rewards non-working people and punishes low income workers who lose the bulk of the transfers, meaning that the working poor have substantially the same income as the non-workers, which is both shocking and terrible policy.
All of this information is in the first chapter of the book, and that's really all that you need to read to get the key insight. But in subsequent chapters, Gramm debunks other canards like the "gender wage gap," "lower social mobility" and overstated racial income differences. He concludes the book with suggested policies such as promoting school choice (because of the massive tie between education and income) and mandating work to receive transfers in order to eliminate the incentive to not work and receive transfers.
April 30, 2025
The book does a good job in illustrating - in at times mind-numbing detail - the fact that income disparity as discussed in today's media is actually far less when you account for government transfer payments (which generally raise the actual income level of the lower quintile population) and taxes (which lower the actual income level of the upper quintile population). After accounting for transfer payments and taxes, the gap narrows significantly. The book provides ample data to support the view that "things aren't that bad". And, there is good data to support the view that the standard of living has significantly improved over the past 50 years when you consider things like number of bedrooms/bathrooms, AC, number of cars, internet, iphones, etc. that are assumed as part of a minimal living standard today. The "gotcha" in my view is that while the data suggests that "things aren't that bad", I'm pretty sure this won't come as consolation to those in the lower quintiles of the population who feel they are being left behind. The authors seem to imply that because people are better off by most objective measures than they were 50 years ago, and that the income disparity is not as big as most people have come to think, that all is well. They did not deal in detail with how to manage the gap in level of dissatisfaction that persists for a significant portion of the population.
September 4, 2025
An informative read in how gov't statistics on the economic status of the American sectors are based on earned income and do not take into account transfer payment (eg, Medicaid/ Medicare/ SNAP/ etc) primarily to the lower 20 - 40% income groups nor lost income from the higher income groups. The transfer of welfare payments disincentives the lower income groups to work, in fear of loosing these benefits. Even for those in the lower 20% income group who works, they work an average of 17h/ wk.
The primary differentiation factor that separates low vs. high income groups is a college education. However, the primary and secondary schools in inner cities fail to teach the basic skills. Children from the lower income groups who had the benefits to go to private or religious schools (through scholarships or lotteries), for the large part, succeed academically. The public school union is a major obstacle for change.
This is an enlightening book.
The primary differentiation factor that separates low vs. high income groups is a college education. However, the primary and secondary schools in inner cities fail to teach the basic skills. Children from the lower income groups who had the benefits to go to private or religious schools (through scholarships or lotteries), for the large part, succeed academically. The public school union is a major obstacle for change.
This is an enlightening book.
June 29, 2024
Three economists go into incredible detail to explain why the government’s statistics on income inequality and poverty are much worse than reality. They support their conclusions with charts, data and significant footnotes and appendices. This is not a beach read but I did enjoy it immensely. It was very informative.
If you learn nothing else, know this: there are probably only two ways to reduce inequality: provide more benefits to the poor and increase taxes on the wealthy. And yet the US census bureau ignores most government transfers and taxes in its calculation, ensuring that no matter what the government does, there will never be a sign of progress.
If you learn nothing else, know this: there are probably only two ways to reduce inequality: provide more benefits to the poor and increase taxes on the wealthy. And yet the US census bureau ignores most government transfers and taxes in its calculation, ensuring that no matter what the government does, there will never be a sign of progress.
July 28, 2024
I disagree with the books main argument, which is essentially that poor people aren’t poor bc they receive govt transfer payments. But, for one, if the govt is trying to disburse payments, it makes no sense for them to consider those payments as income, creating a catch-22. Like, we don’t need to give this person food stamps bc we already decided to give them food stamps bc we included the cost of that as income? I just don’t understand that argument. I think if you’re poor then you need food stamps, instead this author seems to believe if you receive food stamps then you’re middle class bc you have food.
July 4, 2023
Answers a lot of questions
A bit incredulous that our government could be screwing up something as basic as statistics, but the book makes a good case that that is what is happening. Great team of experts wrote the book so I feel confident about the case it made about the state of inequality not being as bad as the politically motivated say it is. If there is one shortcoming it's that the statistics are a bit thick. I think it could still tell a great story without so many statistics.
A bit incredulous that our government could be screwing up something as basic as statistics, but the book makes a good case that that is what is happening. Great team of experts wrote the book so I feel confident about the case it made about the state of inequality not being as bad as the politically motivated say it is. If there is one shortcoming it's that the statistics are a bit thick. I think it could still tell a great story without so many statistics.
November 25, 2024
Excellent work on an important subject where most people draw their information from TV and social media. The fact that it takes some economists to work this out rather than being common knowledge is a tragedy of our time: most political discourse is simply low IQ and free of real information, and policies are made based on the charged opinions formed from this public discourse. I don’t expect many people to really read this short but informative book. Too bad it just adds to my disappointment how bad the ability of people to self govern is.
February 6, 2023
Should be required reading in all schools
An excellent analysis of the problem with government over-reach, over-tax to enable more control, and the waste associated with “spending other people's money.”
I hesitate to call it a page-turner, but if you care about your country, it almost is.
An excellent analysis of the problem with government over-reach, over-tax to enable more control, and the waste associated with “spending other people's money.”
I hesitate to call it a page-turner, but if you care about your country, it almost is.
March 21, 2024
I had to read this for a class. Definitely learned some stuff but some chapters were not great. The authors leave out important context and if I didn’t have a professor with good background information and a mastery of the topic, certain bits of smoke and mirrors would’ve gone right past me. They open an important conversation but they lost credibility for me when they manipulated readers.
August 24, 2024
You could read this and get upset. But really, it’s a wonderful description of progress. Meant as a treatise against those who compare our world to perfection and get upset about it - and then want to take control themselves because they think they know how to run things.
We have made tremendous progress. Our complaining is a luxury.
We have made tremendous progress. Our complaining is a luxury.
November 17, 2022
Great insights into basic economics
Having lived through the economic times covered in this book, the truth of it resonates deeply with me. This should be required reading for legislators and executive at all levels of government.
Having lived through the economic times covered in this book, the truth of it resonates deeply with me. This should be required reading for legislators and executive at all levels of government.
February 6, 2023
Pretty dry data but stunning information about how wages, taxes and entitlements are tabulated thus making things seem much worse. Should be required reading for all news people, politicians and staff. Just incredible
Displaying 1 - 30 of 40 reviews