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We are the 36%

J Brauer | © Stone Garden Economics

The global economic recession of 2008 and 2009—which is not entirely over yet, certainly not in Europe—spawned groups such as Occupy Wall Street, We Are The 99%, and The Other 98%. One way or another all are railing against skewed economic outcomes, especially income inequality, and the alleged power of corporations.

I am all for, and have written about, a somewhat less unequal distribution of income, wealth, and opportunities, and I am all for transparency and accountability of government and firms, big and small. But the same goes for civil society organizations. For example, The Other 98% does not reveal on its web site just how the 98 percent are defined. Neither does We Are The 99% say what the reference point is: Is it a percent of annual income or of total wealth? Just how much income does one need to have earned to be counted among the top-2 (or 1) percent?

The organizations are quite clear about their mission: To tell stories and to incite emotions with selective numbers and “infomercial” (i.e., misleading) graphs, the better to rail against big, bad corporations and their government handlers.

This bothers me. Greatly. So, I took a peek at the numbers. Should I wail and rail with the 98%?

It turns out that according to the U.S. Census (Table HINC-06), in 2011, of 121 million U.S. households, only those with incomes of a quarter-million dollars or more fell into the upper 2% of income earners. My own household income that year placed me at about the 80th percentile so, yes, I am part of the 98%.

But this is patently absurd! It is absurd to roll everyone earning less than USD250,000 into the 98%, as if the ordinary family doctor or small town lawyer or independent accountant or college professor or airline pilot or store branch or factory manager had much in common with the people I occasionally ask to clean my house or mow my lawn.

I am not poor, by any measure. I can’t possibly be lumped into the 98% suffering the oppression of the 2%. I am far better off, economically, than are the secretaries and the janitorial staff at my university or the proverbial Walmart greeters and cashiers.

You see, if we really want to improve the lot of, say, the 36% of households who earned USD35,000 or less (in 2011), we’d have to redistribute income not just from the top-2% of income earners but from ourselves, the next top-62% of income earners. But that, of course, does not lend itself to build a mass movement.

If sincere, the fallacy of groups such as The Other 98% is to believe that a redistribution of income from the top-2% would in fact trickle down to the 36%. Rather, I suspect, the actual objective of The Other 98% is to redistribute income from the top-2% to those who already earn more than the 36%—that is, to the middle class. The Other 98% is, in effect, more of a middle-class power grab than it is a sincere attempt to address the economic distress of the 36% who really do live in relatively dire economic straits.

J Brauer is Professor of Economics, James M. Hull College of Business, Georgia Regents University, Augusta, Georgia, USA. He is also a Visiting Professor of Economics at the EBA Program, Department of Economics, Chulalongkorn University, Bangkok, Thailand.

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