None of this, by the way, leads to the conclusion that inequality is not a problem. Gaps in life expectancy are still rising, especially for those in the bottom 10% of the U.S. population, as defined by educational status. Nor do Auten and Splinter’s results contradict the notion that, in relative terms, Bill Gates enjoys a more dominant wealth and income position than Howard Hughes ever did. At the very, very top, it is still likely that income inequality has been rising. It is no accident that there has been a boom in super-yachts.
Still, when it comes to the most commonly cited statistic about income inequality—namely, the ascendancy of the top 1%—the dominant discourse has been misleading, if not outright wrong. While dissent has been brewing for some while, it just hasn’t broken through. I hope that now it will.
The solution is not to do nothing. There are still plenty of major problems among Americans in the lower income and educational strata. But it would be better to treat those as issues in their own right, rather than as part of a strategy to deal with the top 1%. In the meantime, we all should be more careful about leaping too quickly to politically convenient conclusions.
Tyler Cowen is a Bloomberg Opinion columnist, a professor of economics at George Mason University and host of the Marginal Revolution blog.