Myth of American Inequality

Phil Gramm served six years in the U.S. House of Representatives and eighteen years in the U.S. Senate where he was Chairman of the Banking Committee. Gramm is a Visiting Scholar at the American Enterprise Institute. He was Vice Chairman of UBS Investment Bank and is now Vice Chairman of Lone Star Funds. He taught Economics at Texas A&M University and has published numerous articles and books. Gramm lives in the Helotes, TX.Bob Ekelund is currently professor and eminent scholar in economics (emeritus) at Auburn University, beginning his career at Texas A&M University. He is the author of more than 20 books and several hundred articles on the history of economic theory, economic history and economic policy in the specific areas of art, religion, and regulation. He lives and works in Auburn, AL.John Early is a mathematical economist who began working as a legislative assistant to a U.S. Senator and assistant commissioner at the Bureau of Labor Statistics. He has served in senior leadership positions in global consultancies on quality and financial performance and as chief customer and strategy officer for a Fortune 100 company. His publications include improving measurements of price change, labor force dynamics, and improving healthcare. He lives joyfully in Charleston, SC.

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.

• Preface to the Paperback EditionChapter 1: Every Official Measure Understates America’s WellbeingChapter 2: Inequality in Producing and Consuming in AmericaChapter 3: Poverty in AmericaChapter 4: TrendsChapter 5: Causes of Earned Income InequalityChapter 6: Measures of WellbeingChapter 7: Super RichChapter 8: MobilityChapter 9: Fifty Years of GrowthChapter 10: Solutions BibliographyAppendicesAbout the Authors