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20230402 – The Myth of American Inequality




This book is about widely spread misconceptions regarding enormous and still growing inequality in America. The authors use government statistics to demonstrate, and quite convincingly at that, that it is not the case. The point they make is that government transfers pretty much-eliminated poverty. Furthermore, the calculations demonstrate that government expenses on the poor, if counted as income, would firmly put these poor into the middle class. Here is a lovely table summarizing this point:

The authors also look at consumption and conclude that the poor in America consumes so much of everything that they hardly should be considered poor by comparing them with the poor in most other countries.

The authors also discuss inequality, the Gini coefficient, and how leftist economists manipulate data to arrive to preset conclusions. Finally, the authors demonstrate that, far from being stagnant, America has made significant progress, and the contemporary poor are much wealthier than the real poor in the 1960s.


It is a very interesting book with lots of excellent and relevant statistics. I believe that material well-being becomes secondary after people achieve some level of satisfaction with material needs. The problem becomes not economic but rather psychological. To achieve an acceptable level of self-esteem, a human need to be self-sufficient and effective in obtaining resources from the environment. Handouts and transfers of resources from others prevent such achievement. Hence, people try to compensate for this by the demand to increase transfers to the resource availability level of really self-sufficient people. The hope is that such an achievement of false equality would make the feeling of inadequacy disappear. An even more critical factor is the powerful forces of bureaucracy and government-supported layers of society that control resource transfers from productive people to unproductive, directing a significant share, if not the most, of resources to themselves. These forces include the teachers that produce illiterates after 12 years of schooling and paper pushers that make any business spend extraordinary time and effort complying with meaningless regulations. They also include politicians that create these regulations. Together with other members of the parasitic part of society, they represent a powerful force that would make the “struggle for equality” continue forever, regardless of actual resource availability for everybody in society.

Moreover, with the approaching switch of a large part of the production of goods and services to automatic, AI-based processes, the number of people that cannot compete will grow, increasing the power of the parasitic part of society. This change could lead to an increase in the hierarchical structure of government expanding to include these people directly as educated bureaucrats doing meaningless “work” or indirectly as uneducated “poor” living off government transfers. The alternative to this unified hierarchy would be resource distribution via individual ownership covering the totality of the population and totality of available resources and designed to make such ownership permanent while dynamically adjusting it depending on individual actions and their success or failure. In my essay, I proposed a process for doing just this.


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