Wallace Turbeville — The Rising Tide: Whose Boats Benefit

The Wall Street Journal piece completely ignores the real significance of income disparity. The authors use the Gini Index, which measures high and low income differences. It concludes that certain states that pursue relatively progressive policies, such as New York, Connecticut and California, have greater disparity than other states that do not, like Wyoming, Alaska, Utah, Hawaii and New Hampshire, suggesting a causal relationship. They conveniently leave out Texas and Florida, each of which has a Gini Index almost the same as California, but which are hardly known for progressive policies....

Do you see the pattern that the authors assert? Me neither. In fact, it seems like the list consists of places in which there are large concentrations of either very wealthy people (finance, energy, wealthy retirees, entertainment) or very poor people (immigrants, minorities, rural populations) or both. 

Aside from omitting the second and fourth largest states in the union, this simple minded linkage of disparity with progressive policies is totally misleading. For one thing, it ignores that disparity can be a function of a concentration of the super rich. But, of course, there are many other flaws in their argument. The simplistic measurement of absolute disparity tells us nothing useful about the dynamics of the economy unless all income groups move in lock step with growth of the overall economy....

The authors of the Wall Street Journal piece eventually mention Texas by praising its laissez faire policies. They describe how Texas has attracted businesses from places like California by offering minimal regulation and low taxes as if this were a good thing. 

The right way to see this policy is that it encourages a race to the bottom by abdicating government’s responsibility for the general well-being of its citizens. By omitting the Gini Index data on Texas, the authors hope to skate by the obvious consequences of the wild-west policies of the Lonestar State: letting business run free and not taxing the wealthy makes the rich richer and the poor poorer and less secure.

More lying with statistics by excluding relevant data? Seem that right wing foundations and media are hiring either sub-standard economists or else propagandists. Another hit piece aimed at the discussion that Piketty has provoked?

This diversion — blame inequality on progressive policy. Talk about preaching to the choir.

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The Rising Tide: Whose Boats Benefit
Wallace Turbeville, a former vice president of Goldman Sachs and a fellow at Demos