One frustrating aspect of this debate is that folks on the left genuinely seem to think the economy is a fixed pie and that rich people get money by impoverishing others.
This is utter nonsense. Just look at this chart comparing North Korea and South Korea, or this chart comparing Chile, Argentina, and Venezuela. With the right policies, countries can get much richer over time, yielding enormous benefits for the average household.
More rational leftists understand this data, so they change the argument by asserting that the rich are getting richer faster than the poor are getting richer and that politicians should “solve” this alleged problem with class-warfare tax policy and more redistribution.
They even cite numbers from the biased bureaucrats at the Congressional Budget Office to supposedly prove their point.
There are all sorts of methodological problems with this kind of research, including the fact that people move up and down the income ladder over time, so it is very sketchy to compare, say, the top 20 percent in 1990 with the top 20 percent in 2010.
But even if you incorrectly assume that all households are locked into their current income levels, the data used by the left is deeply flawed.
My colleague, Peter van Doren, reviewed two studies for one of Cato’s in-house journals. Here some of what he culled from the scholarly publications.*
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