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Chapman’s News & Ideas Senator Gramm Punctures Income Inequality

Former Senator Phil Gramm of Texas continues his productive retirement with a superb new book (co-authored by John Early) called The Myth of Income Inequality. Florida Atlantic University’s School of Business in Boca Raton invited me to lunch with him and a discussion of the persistent efforts to confuse Census data on household (paid) income with household income that includes such government benefits as food stamps, aid to dependent children, housing subsidies, Medicaid, and refundable tax credits. The Left and the media tend to publicize the former measurement, of course, and ignore the latter. The reason is that when all forms of income are included the myth of rising inequality fades away.

Bruce Chapman (left) with Senator Phil Gramm (right)

I pointed out that the Census itself (when I was Director four decades ago!) published Dr. Gordon Green’s report showing what a difference there is in the two ways of measuring. The confusion continues to persist mainly because of strictures of Congress, not the Census, and I think Senator Gramm agrees.

The two measurements should be switched in official reports.

Incidentally, even the household income measure that includes government grants does not include other income, such as food bank groceries or the unofficial economy.

When you can do almost as well financially by not working as by working we have a problem. It accounts in part for the national decline in labor force participation.