The numbers generally cited in support of this argument do not actually tell us much about what has happened to the incomes of wealthy households over time. That’s because the people who are in the top bracket today are not the people who were in the top bracket last year. There’s a good deal of socioeconomic mobility in the United States — more than you’d think. Our dear, dear friends at the IRS keep track of actual households (boy, do they ever!), and sometimes the Treasury publishes data about what has happened to them. For instance, among those who in 1996 were in the very highest income group isolated for study — the top 0.01 percent — 75 percent were in a lower income group by 2005. The median real income of super-rich households went down, not up. The rich got poorer. Among actual households, income grew proportionally more for those who started off in the low-income groups than those that began in high-income groups.
When somebody says that that top 1 percent saw its income go up by X in the last decade, they are not really talking about what happened to actual households in the top 1 percent. Rather, they are talking about how much money one has to make to qualify for the top 1 percent. All that really means is that the 3 million highest-paid Americans in 2010 made more money than did the 3 million highest-paid Americans in 2000, the 100,000 highest-paid Americans this year made more money than did the 100,000 highest-paid Americans made in 2000, that the 50,000 highest-paid Americans made more money this year than did the 50,000 highest-paid Americans made in 2000, that the 1,000 highest-paid Americans this year made more money than did the 1,000 highest-paid Americans made in 2000, etc., which is not shocking. But, as the Treasury data show: They are not the same people. [emphasis mine]
These essential facts make the argument routinely trotted out by the left repeatedly to justify their various policies to "redistribute the wealth" completely ridiculous.
WEALTH IS CONSTANTLY BEING REDISTRIBUTED --not by their Marxist policies or 'compassionate' progressivism--but through the neutral, non-partisan and entirely non-judgmental workings of the Market. The "wealthy" are an ever-changing group of individuals. And, the poor are getting richer--not because of any actions by the clever denizens of the left, thank you very much.
Of course, the political lefts and their strategists have a rather vested interest in stirring up class warfare and stoking hatred against "the wealthy". As P.J. O'Rourke wrote in Eat The Rich, "Your money does not cause my poverty. Refusal to believe this is at the bottom of most bad economic thinking."
But that is one thing that the progressive left is incredibly good at--bad economic thinking.
Consequently, much to the puzzlement and annoyance of leftist intellectuals, in those places in the world where their wealth redistribution policies have already been implemented (i.e., in socialist and communist countries) wealth is disappearing; initiative is decline; and the human misery index is climbing. Instead of "sharing the wealth", people in those countries enjoy the benefits of "sharing the poverty" that inevitably occurs when bad economic thinking is translated into public policy--even with the best of good intentions (another thing the political left is particularly good at).
The "great experiments" in the Soviet Union failed abysmally even before it came crashing dowin in the early 1990's. In 1956, when Soviet tanks rolled into Hungary and violently crushed all dissent, it was obvious to anyone with half a brain that these socialist utopias were not all they were cracked up to be. Even today, many on the left cannot bring themselves to admit that the application of Marx to the real world had only succeeded in bringing about abject poverty, misery, death, and slogans. Many many slogans.
Instead of creating a utopia for the proletariat, Marx and his theories only generated the conditions for societal suicide. Look at Cuba. Look, if you can stand it at North Korea.
Marx was entirely wrong about the labor theory of value; and about the whole class warfare thing.
Far from rising up against their "oppressors", the proletariat--in a free system--will want to become wealthy themselves. In America, they have bought into the capitalist system and the "American Dream"--i.e., that they can achieve anything they want with hard work and perseverance-- in large numbers. The sharp differences between the classes have been eroding for generations primarily because of the social mobility that Williamson writes about; as well as the very human desire to improve conditions for themselves and their posterity. Nore and more of those who start out in poverty find their way into the middle class, thus gaining hope for themselves and their children.
Those who make their way up to the highest earners, will find that it is not a "given" to remain in that upper stratum and that they may tumble down without putting forth constant effort and thought (note the number of "instant" millioaires who, after winning the lottery, will waste away their windfall and end up worse off than they were when they won it). It takes more than the possession of money to hold onto wealth, it takes rational thought and effort.
That is why, to great astonishment of the socialists, many of the "oppressed" proletariat are relatively happy and content with their lot! That is why progressives have resorted to calling such individuals "class traitors" or "race traitors", because they dare to do well (without the progressive's compassionate programs; or in spite of them more likely) and are able to move themselves into entrepreneurship and beyond.
Happy and content people do not generally initiate violent revolutions nor rise up against their so-called oppressors--particularly when they don't feel oppressed, but feel empowered.
The legacy of Marx's "social justice" has been the neverending victimhood scam perpetrated by the left.
How inconvenient for the left that the clever capitalist system actually co-opts all those oppressed workers, and empowers them enter the dreaded "middle class"!
Marx always expected that the middle class would disappear as capitalism developed, since he believed that the only sustainable positions were the ones of his dialectic.
That is not what actually happens in the real world as it turns out.
Whenever people are given political liberty and allowed to pursue their own happiness (and not the mandates of the state), the ranks of the middle class expand and grow stronger.
In fact, the values and ideals of this particular economic group have come to anchor society in the United States.
Far from wanting to ignite a worker's revolution as Marx predicted, they enjoy the creature comforts of the capitalist system and feel themselves empowered by it. They even like their health care system for the most part and don't want it overhauled by some monstronsity created by Congressional know-nothings whose "cure" is going to be much worse than the actual disease.
But, even worse from the "progressive" viewpoint, is the typical person in the middle class who believes that he or she can better themselves by using the many opportunities offered by a free, capitalistic democracy. That's why the left are so desperate to create more victimhood constituencies who will proudly stand for all those unworkable policies. That's why they always resort to stoking the "evil rich" meme.
As O'Rourke suggests, they still believe that my money (and yours) causes everyone else's poverty. They have an intense psychological need to believe that because it justifies their stealing other people's wealth.
As long as they can seduce others into believing they are being victimized by the "rich", they are able to get away with supporting the same old, tired economic policies that make them feel good about themselves, but do little to improve the lot of the poor; or to give those who are struggling economically the opportunities that will help them escape perpetual poverty.
Bad economic thinking may be a hallmark of progressive policies, but perpetual poverty for all has always been the historical consequence of those policies.