Slate has been running a series about the widening income gap in America. Refreshingly, after almost a century of government policies designed to decrease income inequality, liberals are admitting that these policies do not work. Still, Timothy Noah, the series’ author, cannot resist using the language of class warfare to decry the evils of American capitalism. White-collar office jobs are bad, but unionized blue-collar jobs are good. One quote is particularly telling:
The top was occupied by a group that Clinton's first labor secretary, Robert Reich, labeled "symbolic analyst." These were people who "simplify reality into abstract images that can be rearranged, juggled, or experimented with" using "mathematical algorithms, legal arguments, financial gimmicks, scientific principles, psychological insights," and other tools seldom acquired without a college or graduate degree. At the bottom were providers of "in-person services" like waitressing, home health care, and security. The middle, once occupied by factory workers, stenographers, and other moderately skilled laborers, was disappearing fast.What about plumbers, electricians, auto mechanics, steamfitters, carpenters, train conductors, and all of the other blue-collar trades? These are respectable jobs with good pay and strong growth potential. As long as there are people, these moderately skilled jobs will always be in demand. These jobs are manually intensive so they cannot be automated, and they cannot be outsourced because they depend on a local workforce. The theory advocated by Mr. Noah seems to ignore this segment of the economy.
For insight into how Noah manipulates the data to feed his storyline of the downtrodden proletariat, notice that his analysis relies entirely on the share of aggregate income statistics from the Census. According to these figures, the share of aggregate income for all but the top 20% has decreased. However, at the same time, the economy has also grown. It's not as if millionaires are fighting with the homeless for a slice of a never-changing pie.
If we look at the actual household income figures, we see that all quintiles, even the lowest, saw an increase in income in inflation-adjusted terms. The reason the top quintile has grown more than the others is because the rich are the ones who generate growth in the economy. You don't see very many bums opening factories, shopping malls, or office parks. Contrary to Mr. Noah's polemic about the inherent evils of capitalism, if you take away money from the rich in the pursuit of “equality,” you will only slow economic growth for all.