Fraudulent "Income Inequality" Comes Around To Bite The Left

At this moment, so-called "income inequality" is the favorite theme of those on the Left, from President Obama, to Mayor de Blasio, to the New York Times, to trendy French economist Thomas Piketty.  And this theme at first blush does appear as the perfect approach if your main goal is to see the government expand.  The seemingly independent and neutral Census Bureau puts out lots of "household income" data that show wide and increasing disparities between those at the top and those at the bottom.  And then there is an endless variety of programs -- public housing, Medicaid, food stamps, pre-K education, etc. -- that can be sold to the public as addressing income inequality and yet are counted as zero in the Census Bureau income numbers.  So after spending a trillion or so a year, income inequality doesn't go down and we need another round of the useless programs!  From the perspective of a government growth advocate, what's not to like?

The problem here is that sooner or later someone might look at the data and notice the obvious:  that the government programs actually increase income inequality as measured by the Census Bureau statistics.  In other words, the entire game is a fraud.  I called attention to this issue back in September 2013 in "Do Government Income Support Programs Increase Or Decrease Measured Income Inequality?"  Gradually, a few others are starting to notice.

At Atlantic Cities a couple of weeks ago, Michael Zuckerman went to the Census Bureau data where they publish a number called the Gini index of income inequality for each Congressional district.  (The Gini index is a measure of the degree of income inequality.  Wikipedia has a description of the methodology here.)  He then ranked the Congressional districts by income inequality, from most unequal to least unequal.  The ranking was then picked up by Francis Barry at Bloomberg here, and by Robert Tracinski at The Federalist here.  Barry reorganized Zuckerman's chart to show the ten "most unequal" and ten "least unequal" Congressional districts ranked by Gini index.  Here is that chart:


In this ranking, of course the first thing one notices is that nine out of ten "most unequal" districts are represented by Democrats, while the majority of the "least unequal" are represented by Republicans.  (The very "least unequal" is Michele Bachman's district, Minnesota 6.)   And wait a minute!  Could it be that the most unequal district of all is none other than my very own district, New York 10?  Yes!  First out of four hundred thirty-five.  It's quite an honor.

But, you are asking, isn't this the very heart of the heart of the home of progressivism?  Here is a link to a map of the district.  It's the Upper West Side of Manhattan.  It's Greenwich Village.  It's Soho and Tribeca.  It's Columbia and New York Universities.  The headquarters of the New York Times is in our district.  We have one of the very most left-wing Congressmen (Nadler).  We gave 74% of our vote to Barack Obama in 2012.  We are the absolute kings of social spending to "benefit" the poor.  Why isn't that spending working?  If the various progressive programs (welfare, public housing, food stamps, vast social services, spending double the national per student average on K-12 education, spending double the national per beneficiary average on Medicaid) worked even a little, shouldn't we be well in the bottom half of income inequality?  Instead, we are literally the worst of the worst.  How could it possibly be that we are number one in income inequality?

Part of the answer, of course, is that we have a large number of high earners here.  (Mean household income is $132,864 according to Census data here.)  But that's not the main thing.  The main thing is that the bottom part of the income distribution is completely fake.  Most importantly, all of the in-kind benefits are counted at zero.  And that's only the start.

The Census Bureau says that 16.7% of the people in this district live in "poverty."  That's by their completely fraudulent measure of "cash income," where in-kind benefits don't count.  But we spend vast sums on the in-kind benefits.  We have large tracts of public housing that would have market rental value of easily $40,000 per apartment per year.  We provide Medicaid to the poor at average cost per beneficiary exceeding $10,000 per year.  Food stamps average about $8000 per year.  Many "poor" families in this district have over $50,000 lavished on them per year in in-kind benefits, and some over $100,000, and none of it counts.

And then, also lurking at the bottom of the Census Bureau income numbers, are a lot of people you probably thought were not poor at all.  You might even have thought they were rich.  They may have a lot of resources available to live on but they don't have any "cash income" at this moment.  I'm talking about those law students at Columbia and NYU and Fordham who will get fancy law firm jobs in a couple of years at $200,000 per year, but this year they are living on family resources and working the summer at an unpaid internship for a Federal judge.  The Census Bureau counts them as "poor" with zero income.  Or there's the new college grad who has just moved to Manhattan to make his fortune but hasn't landed his first job yet.  Or the young heiress with an unpaid job at one of the museums.  With enough of these people you can really run up your Gini index.

And by the way, look at some of the other Congressional districts of the top ten in "income inequality," and you will find a remarkable collection of the homes of the progressive gentry.  New York 12 -- that's our cross-town rivals from the Upper East Side.  Pennsylvania 2 is much of the heart of Philadelphia.  Illinois 7 -- that's downtown Chicago and its super-rich north side.  And California 33 is Henry Waxman's coastal Los Angeles district, including Beverly Hills, Santa Monica, Malibu and Palos Verdes.

None of this is a coincidence.  Income inequality is undoubtedly a consequence of the capitalist system; but the extremes of "income inequality" as presented to us by politicians from intentionally misleading Census Bureau data are something else.  These extremes are substantially the product of fraudulent government numbers that systematically exclude the effects of the government programs sold to the public to cure the inequality.  It all works until the public wakes up and notices that the worst "inequality" is right in the heart of the progressive bastions, in the very places where the progressive programs are most lavishly employed.