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Nonetheless, if we use consumption data then the change in inequality is much less clear. Some
studies show increased consumption inequality, some don't. FWIW, in my
view the consumption gap between the middle class and rich has widened
over my lifetime, and the consumption gap between the middle class and
poor has narrowed. Since I care much more about poverty than the middle class/rich gap, I'm not particularly dismayed by the changes we've seen in recent decades.
Some
liberals claim it's about political power, which correlates with income
more than consumption. I doubt it. Public policy is less pro-rich than
when Reagan was president (for instance MTRs on the rich have risen
sharply since 1987), and yet income is much less equal than when Reagan
was President. I see no evidence that income inequality correlates with
more political power for the rich, as compared to consumption
inequality. (That's not to deny that the rich have more political
power, they do.)
Source: Scott
Sumner, “Imagine There's No Economic Inequality,” econlog.com, January 20, 2014
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