The rich get richer: and so the poor


It's a common enough trope: the rich get richer, the poor get poorer. As we know, this most certainly isn't what's been happening in recent decades: hundreds of millions of the world's poorest are no longer poor. Something that shows we've been getting at least something right in this economics lark in recent decades.

A version of the first argument is that, in the US at least, it's only the rich that have been getting richer. For the median household, income has been entirely static for decades. Again, this is a common trope and again it's wrong:


The full paper is here. The point being that stagnating US median incomes is an artefact of the way that US statistics are calculated. One of the most obvious is that by measuring household income no adjustment is being made for the change in household size over those decades: yes, it is substantial. Further, measuring money income does not include benefits in kind (or total compensation) so that health care, a very important part of the US working package, isn't included. And yes, the amount of health care offered has been going up over those decades.

As a general rule we have to be very wary indeed of US statistics on incomes, poverty and the like. They're all prepared in very different ways to those of most of the rest of the world and simply aren't directly comparable. For example, our numbers of people "in poverty" are those in poverty after we've tried to help them with tax credits and benefits in kind. The US numbers are those who would be in poverty if there wasn't any attempt to help them with tax credits and benefits in kind. The before rather than the after picture.

While, of course, you should never trust a politician bearing a number, let alone a statistic, this is even more true of the US than many other places.

For while the rich are indeed getting richer and the rich are getting richer faster than the poor are, it's still true that the poor are indeed getting richer.