Where do you fall on the global payscale?
There was a lot of talk last year, thanks to the rise (and subsequent fall) of Occupy Wall Street, about income inequality. This discussion is most assuredly not over since President Barack Obama has set his sights on higher income earners as part of his misguided domestic platform. But a new tool from the BBC allows you to, by putting your pre-tax income information, see where you are on the global payscale.
Many of my well-to-do friends in Washington, D.C. have been sympathetic to the Occupy movement and the “We Are the 99 Percent” campaign. Indeed, everyone should be outraged when politically connected banks and businesses rob the U.S. taxpayer. But everyone should also recognize that most wealthy people in the United States have made their money by producing goods and services that make us all better off.
But, just to put things in a proper perspective, let us remember that many of those people who belong to the 99 percent in America are also very rich by global standards. Here is a very cool new feature from the BBC’s website that allows you to compare your income with that in the rest of the world. So if you are on an average individual income in Washington, D.C. ($42,078 per year or $3,507 per month before taxes), your income is 237% of the global average (adjusted for PPP, of course!).
Back in November, I noted via The Motely Fool, that most Occupy Wall Street protesters fell inside the 1% of world income earners, putting an ironic twist on the protests. Of course, not many in the media paid attention to this fact, but it offers context to their whining.
And as Shikha Dalmia points out over at Reason, economic liberalization actually helps the poor by providing them with opportunities that make poverty a temporary condition:
[D]espite such opportunity-restricting distortions, America has done a remarkable job of closing the only gap that matters: the personal well-being gap. As economist Tyler Cowen has described, the difference between the basic goods available to average Americans and mega-rich folks such as Bill Gates has steadily decreased. Gates might have personal jets and private gardens. But thanks to technology-driven productivity increases and lowered trade barriers, almost every American can afford bypass surgeries, laptops with Internet access, cars, TVs, and occasional air travel.
What’s more, America remains a highly income-mobile society where poverty is a stage of life, not a way of life. There is no permanent underclass here. A study by Thomas Garrett of the St. Louis Federal Reserve recently found that between 1996 and 2005—nine short years—roughly half of taxpayers who began in the bottom income quintile moved up to a higher one.
To be sure, Americans might be able to scale the income-mobility ladder faster and higher if there were even more opportunities for education and entrepreneurship. That’s why Grusky is right to draw attention to America’s highly cartelized higher-education industry, which has created an artificial scarcity of college slots. Strict accreditation requirements—written by the colleges themselves—have made it very difficult for competitors to set up shop, causing college tuition to shoot up four times more than general inflation in four decades, with no appreciable increase in quality—the exact opposite of the rest of the economy. Breaking this cartel should be a top priority of lawmakers, second only to reforming the K–12 system.
But that requires a commitment to maximizing opportunities and not getting distracted by red herrings such as income inequality.
But again, this is not something you’ll hear on the news or among the hipsters and union thugs hanging out at Occupy rallies and protests.