July 18, 2003
Thomas Sowell on wealth and income

DC Thornton links to a pair of Thomas Sowell columns discussing wealth, income, and taxation. The first column sets up the explanation of the difference between wealth and income, while the second obliterates the whole class warfare game the left is trying to play. As Sowell notes:

While much of the liberal media emphasized that these 400 highest income-earners had increased their share of national income between 1992 and 2000, only the Wall Street Journal pointed out that there are more than 2,000 people among these 400 "richest" Americans. How can you squeeze thousands of people into the top 400?

The key to this—as to so much other nonsense that is trumpeted in the media about "the rich" and "the poor"—is that we are not talking about the same people when we are making comparisons of different income brackets over a period of years. Most Americans do not stay in the same income bracket for even a decade, much less over a lifetime.

In the case of the Internal Revenue Service data on the 400 highest income-earners in the country, only 21 people were in that category throughout the nine years covered by IRS statistics. In other words, more than 2,000 people passed through this category in the course of nine years but fewer than two-dozen actually stayed there the whole time.

Read that last sentence again. Only about 5% of the 400 richest Americans in 1992 were still in the same category in 2000. It's called income mobility, and it lays waste to the class warfare rhetoric of the left.

(UPDATE—19July/9:15AM—fixed open bold tag.)

posted on July 18, 2003 06:28 PM


I wonder how many of the "400 richest" were lottery winners with the cash option.


posted by John Johns on July 19, 2003 04:08 AM

A quick search of the Forbes 400 archives (which only go back to 1996 online) reveals that the lowest net worth to make it onto the list was >400 million, far higher than the cash payout of any lottery winners. Even taking the 20 year payout option would not have been enough to make the list.

posted by Timekeeper on July 19, 2003 09:32 AM

Thomas Sowell is great. I'm currently reading "Basic Economics". Very good book. I'm only a quarter of the way through it, for I have little time to devote to reading, but so far it's very fascinating. It's interesting to me how much of capitalism is really just commmon sense.

posted by Matt M. on July 24, 2003 06:23 PM

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