This column begins with a quiz. (Don’t worry; it’s based on common sense, not Common Core nonsense.)
Two guys visit a casino for a day. One, Mr. Rich, decides that he’ll gamble all of his $200,000 in accumulated lifetime wealth at the slot machines. His friend, Mr. Poor, makes the same decision, and puts his much smaller lifetime horde of $20,000 at risk.
At day’s end, the house predictably wins. Mr. Rich winds up with $140,000, while Mr. Poor comes out with $10,000.
Who got hurt more that day?
This not a trick question — unless you either work at the Pew Research Center or are a member of the establishment press.
Anyone with an ounce of sense will answer that Mr. Rich, who lost $60,000, suffered far more than Mr. Poor, who lost $10,000.
But if you’re at Pew or with the press, you’ll argue that Mr. Poor suffered worse losses that day by dishonestly claiming that the wealth “gap” between Mr. Rich and Mr. Poor actually grew.
How can the gap between the two possibly have grown? Obviously, Mr. Rich entered the casino with $180,000 more than Mr. Poor, but came out with $130,000 more. The gap between the two, as any reasonable human being who understands the word’s dictionary definition would conclude, shrank by $50,000. A “gap” is “a wide divergence or difference; disparity”; please note, not “a degree of disparity.”
That’s not how Pew and its propaganda relay team in the press want readers to see it.
Pew’s envy-obsessed view is embodied in two brief reports, one on race and the other on class, published last month. Their work was based on the organization’s review of the Federal Reserve’s recently released, disastrous news-bearing Survey of Consumer Finances.
Pew’s fevered view is that when the pair began their day, Mr. Rich had ten times as much money as Mr. Poor. But at the end of the day, he had 14 times as much. Therefore, despite his $60,000 in losses, Mr. Rich really ended up better off. Somehow, I don’t think either Mr. Rich or Mr. Poor would agree.
Pew’s logarithmic visual presentation of its findings compounds its numerical dishonesty. Here is its chart comparing black and white households:
Looking at the past six years, Pew’s chart closely parallels the quiz.
In 2007, inflation-adjusted median white household net worth, i.e., assets minus debts, was $173,300 greater than black household net worth. During the next six years, though the graph’s distorted format conveniently conceals its severity, white households took a hit of $50,600. Meanwhile, black household wealth declined by $8,200. The wealth gap between the two groups fell by $42,400, from $173,300 to $130,900.
It’s true that white households’ relative wealth increased from ten times that of black households in 2007 to 13 times in 2013. But that’s a matter of degree, and has absolutely nothing to do with the gap itself.
One could reasonably argue that those with relatively little wealth can ill afford in six years to lose, as black households have, over 40 percent of what they had. That doesn’t change the fact that the quantity of damage suffered by a typical white household has been far greater, and that those households saw their wealth decline by a far from insignificant 26 percent.
Extending Pew’s illogic to the extreme exposes its utter inanity.
If the quiz’s Mr. Rich instead had left the casino with only $100 and Mr. Poor with $1, its authors would presumably drone on about how awful it is that Mr. Rich is 100 times “better off” — while the real problem is that both men are now virtually broke.
This leads us to the real problem with wealth in America. During the past six-plus years, under the grip of the POR (Pelosi-Obama-Reid) economy, most Americans have become decidedly poorer.
While doing its best to shield this painful reality with a decidedly deceptive title, Pew’s other key chart based on income class demonstrates how horrible the POR economy’s damage has been:
Contrary to the chart’s title, all classes had higher real wealth after the first 18 of the 30 years presented. From 2001-2007, wealth increased in middle-income and upper-income households while declining by 6 percent among those with lower incomes. These predominantly favorable results, covering a quarter-century of “boom, with just slight interruptions by shallow, short recessions in 1990 and 2001,” arose from the economic, tax and regulatory reforms of the 1980s embodied in Reaganomics. That quarter-century is also known as “the greatest period of wealth creation in the history of the planet.”
The POR economy’s appearance in the spring of 2008, and the current administration’s implementation of spendthrift, business-hostile, market-controlling, intrusive, high-regulation policies in the years following Barack Obama’s election to the presidency brought all of that to a screeching halt. Median household wealth seriously declined in all income classes during the next three years. During the most recent three-year period, the Obama-era “recovery” has continued to harm lower-income households, done absolutely nothing for those in the middle, and benefitted only households with higher incomes.
A further dive into the Fed’s underlying report indicates that only the group comprising the top 10 percent of income-earning households has experienced an increase in wealth.
Yet the left and the press continue to ridicule the “trickle-down” policies which, when implemented, led to greater wealth for everyone, while lionizing the past half-dozen years of Keynesian calamity which has enhanced the position only of those at or near the top.
How hypocritical — and typical.