Kevin D. Williamson explains in a National Review Online column why some economic commentators have missed the mark in their assessments of the negative impact of income inequality.
… [C]ommentators on economics often write as though there were buckets marked “Income” and “Wealth,” the contents of which are ladled out by some agency or agencies according to a set of rules and procedures. There is in fact no such thing as income distribution — “distribute” is a transitive verb, and here it has no real direct object. What there is is the occurrence of income. The argument that inequality causes income stagnation or decline for those who have been worse off in recent years assumes that if the rich were earning less then the middle class and the poor would be earning more, which in most situations is not the case. If Goldman Sachs earns less money this quarter, that does not mean that some quantity of money is therefore liberated from their foul clutches to float about until lower-wage workers can claim it. High incomes at the top do not cause low incomes at the bottom, or vice versa. To assign economic agency to the abstraction that is inequality assumes the opposite. …
… The problem is not inequality: The problem is declining or stagnant wages for those Americans who are not thriving in the 21st-century economy. Cannier politicians will note that while they may respond to cheap rhetoric about the new robber barons, Americans are by and large much more concerned about their own paychecks and bank balances than they are those of other people. Republicans would be foolish to adopt the rhetoric of inequality and its implicit class-war thinking, but they would be much more foolish to ignore the underlying economic reality that gives teeth to that critique: Things are not good for the American middle class, and things are bad for the poor. There are signs that economic mobility is in decline, especially at the extremes, and the general environment of economic pessimism, so alien to Americans, is not entirely unjustified.
Republicans have a battery of issues with which to arm themselves here: By standing in the way of educational reform, Democrats rob poor families of educational opportunity in order to look out for the interests of relatively well-off teachers and the growing legion of six-figure school administrators. In defending to the death the entitlement status quo, Democrats ensure a net transfer of wealth from struggling young workers to relatively well-off retirees, in a system that disproportionately benefits higher earners. The nearly universal and frequently criminal misgovernance of large American cities by Democratic political machines — Detroit, Chicago, Los Angeles, Philadelphia, Cleveland, Washington, Camden — immiserates millions of Americans, robbing them of educational opportunities, work opportunities, and safe streets.
