09/05/2022
Former U.S. senator Gramm and economists Ekelund (coauthor, The Economics of Art ) and Early claim in this wonky yet misleading study that, contrary to popular belief, income inequality in America is declining, not rising. The root of that faulty perception, they argue, lies in the U.S. Census Bureau’s policy of not counting food stamps, Medicaid and Medicare benefits, and many other kinds of “transfer payments” as income, and in not deducting taxes paid from household incomes. If those numbers were adjusted, the authors claim, income disparity would appear one-fourth as large as it currently does. They also quibble with the price indexes the government uses to measure inflation, dismiss arguments that America’s “super wealthy” don’t pay their fair share of taxes, and cite Ebenezer Scrooge as an example of “how wealth accumulation benefits society” (“His investments created jobs and growing prosperity for others just as Warren Buffett’s investments do today”). The authors’ assumption that only those “physically or mentally unable to care for themselves” would fall through the cracks of America’s social safety net rings false, as does their claim that the 40-hour work week is a natural by-product of “the massive wealth and productivity of our modern economy,” and not of labor reform activism. Myopic and ill-considered, this provocation won’t change minds. (Sept.)
Finally, a good news story about income inequality in America. Phil Gramm, Robert Ekelund, and John Early show that when properly measured, inequality is declining in the U.S., and the prosperity of people at the economic margins is rising. Read The Myth of American Inequality to be encouraged about the future of the American free enterprise system.
What makes this book an invaluable new resource for public policy and economic education is its focus on how the experiences of Americans of different living standards evolved over time and how earned income and consumption diverged for the poorest households. It traces improvements in the living standards of the poor to transfer programs, shows how taxation of the rich has flattened the distribution of consumption across households, and documents how measurement errors have distorted general beliefs about economic inequality.
But that’s not all. This book is written in straightforward American English, not in economic think-tank jargon. It shows clearly how each element of the analysis (taxation, transfers, inflation adjustment) contributes to its conclusions. Graphs and tables are comprehensive and comprehensible. The style is lively and lucid. The analysis probes deeply to demonstrate the robustness of its conclusions.
Most important, the authors don’t clutter their analysis with contentious approaches to measurement, and they limit their policy recommendations to those that flow self-evidently from the facts they document. It is encouraging that three disparate economists can together write an objective book about the measurement of living standards, poverty and inequality without engaging in partisan advocacy that undermines their findings.
The Myth of American Inequality will have a positive effect on the quality of policy discussions, and may well achieve its objective of changing the ways in which government agencies report information about American household income and consumption. At a time when partisan tribalism makes serious discussion almost impossible in Washington, this book shows that economics is still a powerful tool kit for informing and disciplining our thinking across the partisan divide.
What would you say if someone told you that many academics, the US government, and the media overstate income inequality, understate the real income growth of US households, overstate poverty, and understate income mobility? If someone had asked me, I would have said I believe it. I’ve followed these issues, and even written about most of them. But on reading The Myth of American Inequality: How Government Biases Policy Debate, even I was blown away by the strength of the evidence for these conclusions.
This book is written at a level that most high-school graduates can understand. Yet it has enough detail that it could be used as a college textbook. Best of all, it tells you most of what you need to know in the first twelve pages. It is a must read and a great reference for anyone engaging in the debate over income inequality in America and what, if anything, should be done about it.
Oklahoma Council of Public Affairs
For an impeccably researched book that backs up... findings with overwhelming evidence, consult The Myth of American Inequality[.]
Gramm, Ekelund, and Early are owed a debt of gratitude. With admirable clarity, their book demonstrates that the federal government egregiously overstates the degree of inequality and poverty in the world’s wealthiest nation. Skewed statistics have led to a skewed perception of life in America, and in turn to a skewed political debate on spending, taxing, and the social safety net. The Myth of American Inequality refutes the demagoguery, and convincingly shows that the gap between top and bottom is not wider than ever, but narrower.
What books do you think should be required reading? Because this book definitely makes my list. Phil Gramm, Robert Ekelund, and John Early authored this book to dispel a myth that we are often sold by the American Left. It’s a must-read.
Conservative Bookstore.Com
Our national debates about economic disparities are driven by government metrics that paint a distorted picture. The American Dream is not dead, and upward mobility is alive and well. In cogent, accessible prose, The Myth of American Inequality offers a useful and timely corrective to a popular narrative that is at odds with reality. Regardless of your politics, this book deserve to inform the conversation going forward.
The notion of rising income inequality has permeated modern American discourse and is assumed as inherent to our economic system such that any claim to the contrary is easily dismissed as ignorance or insincerity. Indeed, The Myth of American Inequality: How Government Biases Policy Debate is a rather jarring title. American inequality a myth? Yes, claim Phil Gramm, Robert Ekelund, and John Early. To show we have been misled, the authors dive into the obscure world of bureaucratic statistics. In the process, they fearlessly confront the dominant narrative and demonstrate that government’s ambitious tax and transfer programs have substantially mitigated income inequality (properly measured) while incentivizing idleness. As the authors wisely point out: We must get our facts straight first before we can implement better policies. The Myth of American Inequality is a major step in that direction. It deserves a wide readership.
Action Institute - Stephen Barrows
There is much more in Myth of American Inequality, including a close look at the rapid turnover in America’s economic hierarchy. Gramm’s strongest policy recommendation is simply for Congress to fix how the government measures income. Even Democrats might find something to like: As things are currently reported, Joe Biden had to deal with headlines showing record-high inequality during his first year in office while he was shoveling trillions of dollars in additional transfer payments out the door. But a better reason to fix how we measure inequality is simply that it is better to tell the truth.
Phil Gramm, a seasoned politician and accomplished economist, recognizes government statistics that misdescribe reality. He demonstrates that the nation's condition is much better than it is portrayed by numbers misused to advance political agendas. Thanks to Gramm's mind-opening book, facts—you remember them: they used to appear in political debates—might make acomeback.
It’s not often you read a book that can have a significant effect on the future of our country. Gramm and his coauthors show that when all government transfer payments are counted as income for the recipients of these benefits and taxes paid are reported as income lost to those who pay them, government statistics dramatically overstate income inequality and the poverty rate. Contrary to current political rhetoric, income inequality is actually declining and poverty in America has almost been eliminated.
From all those lists of best books of 2022, here’s one with the potential to change public policy debate and discourse for the better.
Alarmism about inequality from America's left has been a key political force dividing America for decades. This is the one book everyone should read about inequality. It is carefully researched. well written and respectful of the importance of the topic. It brings together a mountain of new and well documented evidence to show that misconceptions and lies about inequality have had a terrible impact on the lives of ordinary Americans. If we are to come together as a people, books like this that document the unbiased facts about important issues will be a driving force.
The federal government significantly and intentionally misreports income distribution, sparking bad policies and political divisions. That’s the argument former senator Phil Gramm and two other economists, Robert Ekelund and John Early, lay out in their compelling and essential new book, The Myth of American Inequality. .... Recognizing that numbers are just tools used to inform policy judgments that involve a range of unquantifiable values and concerns, the authors note that they intend their book to start rather than end a more rigorous debate about inequality and transfer payments. ... Facts may be stubborn things, but ideology may prove to be even more intractable.
Phil Gramm elevates every argument he steps into. In this slim volume the former senator and his two distinguished coauthors undo the cozy myth of unfairness, lay their academic opponents flat, and unveil the shining potential America offers for all. Lucid, bold, and transformative, The Myth of Inequality gives us that missing primer needed on every inquiring high schooler's shelf.
[An] impressive, clearly written book that can introduce everyday readers to the sausage-making process behind the numbers they see cited in the media. It also leaves room for disagreement about the authors' corrections to the official estimates, as well as their policy recommendations.... There are any number of ways to fix the official numbers, and Gramm et al.'s approach is just one of them. But they have done a stellar job of critiquing the statistics at the heart of so many economic debates and providing a thought-provoking alternative.
[V]aluable…. In this authoritative volume, based largely on official statistics, former U.S. senator Phil Gramm and economists Robert Ekelund and John Early crack open the databases to examine the great mystery of poverty.
We will hear a lot about a ‘gender pay gap’ in this election cycle. We explain why almost all of the claims are wrong…. For years, serious economists have discounted claims of a so-called 'gender pay gap,' the assertion that women are being discriminated against by only paying them 84 cents for every dollar a man is paid. While there was pay discrimination in the past, that practice is illegal today. Whatever pay gap still exists is shrinking over time and is easily explained by economic, not discriminatory, factors. Pay-gappers point to Federal Reserve Bank data showing median earnings for full-time work for those 18 and older. For men it’s $391 per week, but only $330 for women. Thus, women earn roughly 84 cents for every dollar a man earns. But that’s not the whole story. Fortunately, The Myth of American Inequality by former Senator Phil Gramm, Robert Ekelund, and John Early, provides the rest of the story.... The authors claim that when all factors are considered, there is only a 1.5-cent pay gap.
Institute for Policy Innovation / PolicyBytes
This book offers a magnificent combination of sophisticated empirical work, historical wisdom and keen policy relevance.... [The authors] answer the call to make America a better place to live in by demonstrating that the official statistics we rely on grossly misstate poverty, income inequality, and other measures of well-being. This book launches heretofore unknown good news about these issues and is destined to have a major benign impact on debate and policies about poverty and inequality.
Quarterly Journal Of Austrian Economics
What makes this book an invaluable new resource for public policy and economic education is its focus on how the experiences of Americans of different living standards evolved over time and how earned income and consumption diverged for the poorest households. It traces improvements in the living standards of the poor to transfer programs, shows how taxation of the rich has flattened the distribution of consumption across households, and documents how measurement errors have distorted general beliefs about economic inequality. But that’s not all. This book is written in straightforward American English, not in economic think-tank jargon. It shows clearly how each element of the analysis (taxation, transfers, inflation adjustment) contributes to its conclusions. Graphs and tables are comprehensive and comprehensible. The style is lively and lucid. The analysis probes deeply to demonstrate the robustness of its conclusions. Most important, the authors don’t clutter their analysis with contentious approaches to measurement, and they limit their policy recommendations to those that flow self-evidently from the facts they document. It is encouraging that three disparate economists can together write an objective book about the measurement of living standards, poverty and inequality without engaging in partisan advocacy that undermines their findings. The Myth of American Inequality will have a positive effect on the quality of policy discussions, and may well achieve its objective of changing the ways in which government agencies report information about American household income and consumption. At a time when partisan tribalism makes serious discussion almost impossible in Washington, this book shows that economics is still a powerful tool kit for informing and disciplining our thinking across the partisan divide.
Gramm, Ekelund, and Early are owed a debt of gratitude. With admirable clarity, their book demonstrates that the federal government egregiously overstates the degree of inequality and poverty in the world’s wealthiest nation. Skewed statistics have led to a skewed perception of life in America, and in turn to a skewed political debate on spending, taxing, and the social safety net. The Myth of American Inequality refutes the demagoguery, and convincingly shows that the gap between top and bottom is not wider than ever, but narrower.
