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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
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The Myth of American Inequality summary
Phil Gramm
Robert Ekelund
John Early
How Government Biases Policy Debate
21 mins
Brief summary
The Myth of American Inequality by Phil Gramm, Robert Ekelund, and John Early highlights that income inequality and poverty rates in America are exaggerated due to flawed data and methodological errors in research studies. They argue for a focus on upward mobility rather than income inequality.
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The Myth of American Inequality
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Key idea 1 of 5
Official statistics paint a bleak picture of inequality and poverty in America.
The United States is a nation divided by rising inequality. Poverty is back, and it’s snapping at the heels of America’s once-affluent middle classes. For most citizens, this is an age of stagnating wages and belt-tightening. For a tiny class of plutocrats at the top, it’s a bonanza.
So goes the new common sense anyway. That consensus spans the political spectrum. Self-declared socialist senator Bernie Sanders says inequality in America is nothing less than “obscene.” For the staunchly anti-socialist Economist magazine, meanwhile, it’s a “universally acknowledged truth” that inequality is on the rise in the United States. When left and right butt heads, it’s over the question of whether or not this is a bad thing – or if anything can be done about it. That it is rising is established fact. We all know it.
Well, as Mark Twain once said (or is reported to have said anyway), what you don’t know can’t get you in nearly as much trouble as “what you know that ain’t so.”
The authors of The Myth of American Inequality argue that pretty much everything we think we know about income inequality and poverty in the United States falls into that latter category. Americans should debate these topics, they say – such discussions are vitally important in democracies. But productive conversations happen when participants have a solid grasp of the facts. Today’s debates generate more heat than light because they are based on widely held assumptions that are false. That, in a nutshell, is the argument you’ll be hearing in this Blink.
Before we get to busting myths, though, let’s take a moment to define some terms. First off? Inequality and poverty.
These two concepts are often conflated, but they’re not the same. We can all be equally poor on $5,000 a year or equally rich on $5 million a year. We can be poor and unequal – a society in which the poorest households earned $5,000 and the richest earned $10,000 a year would fit the bill. But it’s also possible to have income inequality without poverty. Most people would likely be content to live in an unequal society in which no one earned less than $250,000 a year, no matter what the plutocrats in the top 1 or 0.1 percent took home.
The difference is worth bearing in mind as we’ll be making two distinct but related claims. First, poverty has declined so sharply in the United States that no more than 3 percent of all Americans can be said to be poor. Second, there is a gap between bottom and top earners, but there isn’t a sharp divide between rich and poor. Some 97 percent of Americans are well-off by historical and global standards. Yes, the wealthiest Americans earn more, but the gap isn’t anywhere near as large as many people assume.
This brings us to our next term: income. What is income – or, more precisely, how does the United States government define it? Income can be lots of things. It can be earnings – wages, salaries, or money earned from self-employment. It can be returns on investments – think interest, dividends, and rent. It can also be pensions, child support, alimony, and regular contributions from family members or friends who don’t live in your household. That’s not the full list, but that’s the bulk of the cash entering households which Uncle Sam classifies as income.
The United States Census Bureau sorts households into five income brackets called quintiles. It begins with the bottom 20 percent of earners. Then the second quintile is from 20 to 40 percent, the third is from 40 to 60 percent, and so on. Official figures paint a damning picture of widespread poverty and steep income inequality in contemporary America. Take just a couple of eye-catching numbers from 2017. According to the Bureau, the average annual income of a household in the lowest bracket was $4,908. In the same year, the average household in the top quintile had an annual income of $295,904.
Those are staggering figures. But there’s a well-known saying: there are lies, damned lies, and statistics. As we’ll soon see, official statistics wildly overestimate the extent of both income inequality and poverty in America.
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What is The Myth of American Inequality about?
The Myth of American Inequality (2022) corrects widespread misconceptions about inequality in the United States. Taking aim at misleading official statistics, it shows that poverty has all but disappeared in today’s America and that the gap between rich and “poor” isn’t nearly as large as many people assume.
The Myth of American Inequality Review
The Myth of American Inequality (2021) is a thought-provoking exploration of the American economic system and the misconceptions surrounding wealth inequality. Here's why this book is worth reading:
- It presents a comprehensive analysis of economic data and historical context, offering a nuanced perspective on the complex issue of inequality.
- With rational arguments and evidence, it challenges commonly held beliefs about the causes and consequences of income disparities.
- By delving into the impact of government policies and cultural factors, the book sheds light on the true nature of American inequality, debunking popular myths along the way.
Who should read The Myth of American Inequality?
- Politicos and policymakers
- Historians and economists
- Anyone interested in contemporary debates about economic justice
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The Myth of American Inequality FAQs
What is the main message of The Myth of American Inequality?
The main message of The Myth of American Inequality is that the perception of inequality is often based on misleading data and misunderstandings about economic mobility.
How long does it take to read The Myth of American Inequality?
The reading time for The Myth of American Inequality varies depending on the reader's speed. However, the Blinkist summary can be read in just 15 minutes.
Is The Myth of American Inequality a good book? Is it worth reading?
The Myth of American Inequality offers a thought-provoking perspective on the topic, challenging common assumptions. It's worth reading for anyone interested in societal and economic issues.
Who is the author of The Myth of American Inequality?
The authors of The Myth of American Inequality are Phil Gramm, Robert Ekelund, and John Early.
What to read after The Myth of American Inequality?
If you're wondering what to read next after The Myth of American Inequality, here are some recommendations we suggest:
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- The Moment of Lift by Melinda Gates
- How to Become a Straight-A Student by Cal Newport
- A Brief History of Time by Stephen Hawking
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- Thus Spoke Zarathustra by Friedrich Nietzsche