Milton Friedman and Equality

Great video, and study. (via Mark Perry)

 

And this is a little lengthy, but good. It’s notable what most measures of so-called inequality leave out.

The Mismeasure of Inequality – Hoover Institution: We will show that much of what has been reported about income inequality is misleading, factually incorrect, or of little or no consequence to our economic well-being. We will also show that middle-class incomes are not stagnating; in fact, middle-class incomes have risen significantly over the 29 years covered by the cbo study. Lastly, we will address assertions that the rich are not paying their “fair share” of taxes.

The U.S. Gini coefficient cited here comes from an annual report of the Census Bureau, which uses what it calls “money income” in its measurement of income inequality. Money income, which is the definition of income typically used in public references to inequality, consists of cash income only, does not subtract taxes, and excludes the value of noncash transfer payments (such as nutritional assistance, Medicare, Medicaid, and public housing), as well as many other components of income. In addition to transfer payments, which are a substantial portion of income at the low end of the income scale, some of the other missing components of income are: employer-provided fringe benefits (primarily retirement benefits and health insurance, which can amount to as much as 30 percent of income), capital gains, imputed rent from owner-occupied housing, and increases in the value of home equity. We believe excluding these items renders this measure of income inequality relatively meaningless.