Tuesday, December 14, 2010

Democrats can't do arithmetic

The “rich get richer” argument in the Sunday Newsday has been around for as long as there have been demagogues. It is has been repeated enough to become urban legend but it just does not stand up to a little arithmetic.

The comparison between the top and bottom tiers will always be between people who have little or no wealth and people whose wealth continues to grow. You are comparing something that is by definition close to zero with something that continues to grow. By the laws of arithmetic, the gap between the two groups must continue to get larger.

It is simply intellectually dishonest to continue to make this argument.

The lowest category of category of wealth is always going to contain most recent high school/college graduates, immigrants, drop outs, newly-weds, unwed mothers, etc. In short, people with little or no wealth. The question is whether they stay there over time. As people work, earn, and save, history has shown they go up the economic ladder to be replaced in the lowest category by new people who have little or no wealth. On the other hand, people who are “rich” will be earning more, saving more and generally increasing their wealth at a faster rate (or at least in larger absolute terms) than people who are just starting out. This category is further distorted by the people (Steve Jobs) who started a business that raised them into the highest category.

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