Stiglitz and Vanity Fair: “Have You No Sense of Irony Sir, at Long Last…?

Stiglitz actually says “all the growth in recent decades—and more has gone to those at the top.” Which top? All the growth and more? Stiglitz says we are comparable to Iran and Russia, worse than “those old centers of inequality” in Latin America like Brazil, and we lag behind old ossified Europe that “George W. Bush” used to deride. As a result, says Stiglitz, we are no longer a nation of opportunity. It is statements like these which disqualify Stiglitz as a serious person. The World Bank produces a table ranking Gross National Income per person by nation titled “GNI per capita, PPP (current international $).” PPP stands for purchasing power parity to adjust for currency fluctuations. Let’s compare the US to some favored Stiglitzian nations. Income per person in America is 22% higher than Canada, 3.2 times higher than Mexico, 4.5 times higher than Brazil, 34% higher than France, 24% higher than Germany, 4 times higher than Iran, 2.5 times higher than Russia and 6.5 times (that’s right) higher than China.

Now I suppose it is possible Bill Gates and Wall Street have all the money, but somehow I doubt it. Sowell describes in his book how important it is to track actual real individuals’ income over their life to get a sense of a nation’s economic progress, not merely how economic “percentile” categories look over time. When you look at people rather than categories a different picture emerges. The IRS actually tracks these statistics, while the Census Bureau, the source of most “inequality data” does not. For example, the actual people in the bottom 20% of income in 1996, increased their income by 91% by 2005. The actual people in the top 20% of income in 1996 increased their income by only 10% by 2005. The actual people in the “top 1%” in 1995, had their incomes actually decline by 2005. In fact, 75% of people in this category in 1996 were not even in this category by 2005. Individuals move from one statistical category to others throughout their lifetimes. People are different than statistical categories.

The most oft used statistical confusion comes from the use of the category “households” rather than “individuals.” Sowell notes that real “household income” rose only by 31% between 1967 and 2005. Meanwhile, real “per capita income” rose by 122% over the same period. The reason for this “disparity” is that household size has declined over the last 40 years. Even more bizarre, is that there were actually 60% more people in the top quintile (when the “quintile” was measured by households) than the bottom quintile.

The topic of income inequality is extremely interesting, complex and worthy of study. But Stiglitz couldn’t care less about it. It is impossible for him to believe the garbage he wrote in Vanity Fair. He is just not that big a moron, although he is dishonest. But Stiglitz does believe modern economies require “collective action.” Collective action is the quintessential Orwellian term, as it means exactly the opposite of what it seems to mean. Collective action is simply a euphemism for a minuscule number of Stiglitzian technocrats controlling an overwhelming disproportionate share of the country’s wealth, which, ironically, would make the current “top percent’s” power seem trivial by comparison.

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