Economist Vs. Billionaire: How The Myth Of Income Inequality Is Dividing America

The rich are getting richer, the poor are getting poorer. The wealthiest among us don't pay their fair share in taxes. The American Dream is disappearing... Are these claims true? What data are they based upon? And does it stand up to scrutiny?

This week, we analyze the debate over income inequality and mobility in America with economist and former U.S. Senator Phil Gramm. In his book, "The Myth of American Inequality" (winner of the 2024 Hayek Prize), Gramm lays out the oft-cited data for widening inequality and exposes where it falls short. According to the U.S. Census Bureau, the top 20% of earners possess 16.7 times the income of the bottom 20%. However, Gramm reveals that this data excludes nearly all government transfer payments to the poor, like food stamps, and fails to subtract the high taxes paid by top earners. Adjusting for these factors, inequality drops from 16.7X to 4X!

Gramm also points out that benefits to the poor have increased from $9,700 per household in 1967 (adjusted for inflation) to nearly $50,000 today. He argues that we suffer, not from extreme inequality, but from welfare-driven equality that encourages huge numbers of low-and-middle income Americans to drop out of the workforce.

Senator Phil Gramm served in Washington D.C. for 25 years, first as a Congressman and later as a three-term Senator from Texas. He's an economist by training who taught at Texas A&M before entering public service. His book is a must-read for understanding the inequality debate, the truth about the super-rich, and the state of the American Dream.

00:00 Episode Intro
03:32 Is inequality extreme and growing?
10:45 Does Elon Musk make me poorer?
16:19 Is Warren Buffet cheating the government?
22:55 Industrial Revolution -- setting the record straight
29:35 Do billionaires pay their fair share?
33:40 Is American Dream dying?

[freddonson]

Warning, do not watch unless you need a serious education! This was the best use of an hour of my life so far this month.

[hoursdarknes]

Income is for poor people, capital gains and debt write offs is for rich.. he is arguing from the premise of income lol

[austinbar]

The avg. American is having a tough time, I know I am not alone. There are others in same position as me. By certain statistics: 22% of americans have no retirement savings. 64% are worried that they will not have money in latter years while 47% of adults who are not yet retired think they have to work part-time in retirement. How can I best grow the 100k I have saved seperately outside retirement access which of course had depleted over the years?

[grantbeerling]

So note; 'income taxes and transfers, the wealthy do not pay tax based on income; they dodge (legally) and pay as much as possible via Capital gains, and then often mark down by offsetting bad debt by the old trick of borrowing to purchase a company and then stating the borrowing as a loss even though they have the asset that is the new company! A person working an 8-6 at McDonalds has no such luxury. His argument is based on the worker offsetting Medicare and food stamps, that a) the employer benefits due to lower employment costs b) them ending up with a surplus, really? The maths is so weak and biased his argument that he needs a soft interview.

[Riggsnic_co]

The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life. $52k dividends received in 2022.

[kk-xjoz]

The belief that everyone get 50k in support from the the state is BS. We know that people benefit differently from the support.

[diegocorrea]

Excellent video but Success depends on the actions or steps you take to achieve it. Building wealth involves developing good habits regularly putting money away in intervals for solid investments. Financial management is a crucial topic that most tend to shy away from, and ends up haunting them in the near future.., I pray that anyone who reads this will be successful in life!!

[MaxWolf-sy]

How can anyone claim that inequality is declining when the richest 1% of Americans control nearly all the wealth? And with CEOs earning 344 times more than the average worker, the numbers clearly don’t add up. What kind of 'decline' are we talking about here? If anything, the gap is only widening. This isn't economic progress; it's the steady entrenchment of privilege at the top.

[chrisaustin]

It would be life changing if people in government (politicians/bureaucrats) had the mindset that they exist to protect the citizens.

[isaacanthes]

This was incredible... Thanks so much for sharing... I had to stop and restart to just digest all this amazing info.

[josephstupar]

I was poor until I learned about money. Once I started reading books and watching podcasts about budgeting, saving, and investing. Me and my girlfriend had our highest earning year last year 100k combined. Our net worth has grown for about 10-12k beginning of 2020 to 325-350k today.

[samuelallen]

Would love to have more Left leaning people interviewed on here - to get opposing sides of this argument. Because I can tell you the old story of "hard work" doesn't equate to economic success anymore...and I can assure you the 1% are not struggling like most Americans...and I can assure you even further this has little to do with their "abilities, talents, or work ethic"....

[ddfelder]

Welp, this one made me finally subscribe. Amazing, underrated interview.

[pancernik]

His main argument is that everyone is getting food stamps? I haven't received any of these benefits that he's so eager to count as my income

[grantbeerling]

How dare you even say that! People fled the countryside due to a) Enclosure acts, meaning they could no longer survive on seasonal incomes from the land, as common land went from 3.3 million acres to 0.3 million acres from 1600 to 1904. b) So you either die from malnutrition, or you try your luck in the new industrialised towns. This was no jolly peasantry skipping off to new towns, working shiny new machines by some free market 'choice'!

[ModernGentzz]

To fix income inequality, we shouldn’t try to make the rich have less but help educate the poor so that they can have more

[philmarsh]

"Creative destruction" is a good thing but painful at the time. I typically lost jobs where I wasn't a good match and was miserable at. Over time, my career routed me to jobs that I'm best at and enjoy. Creative destruction tends to kill bad ideas and bad business relationships.

[grantbeerling]

Adam Smith understood artisan traders, but his fight was against Thomas Mun's mercantilism. The artisan trader was bullied by the merchants' power via their huge wealth (gold), i.e., there was no free market it was who had the money. So if it wasn't your feudal landlord trying to kill you for demanding a fair price, it was the Mercantilist trader blackmailing politicians and the aristocracy, so again, you could be hanged for trumped-up charges of corruption. In fairness to Adam Smith, his ideas were of his time, and industrialists of the Victorian period had yet to appear. Still, they took full advantage of his pin factory division of labour that disenfranchised skilled labour to subsistence (Rowntree commission 3 loaves of bread a day) survival.

[DailyProg]

I just put in my resignation intention letter for 3 months from now. It was a hard decision but a very happy moment. Thank you for your video

[PatrickKukla]

Hey Joe, I found your page by accident. I’d like to thank you for funding Palantir. Investing in Companies that are pro Western values even with a far left CEO even I can stomach!