Shifty Language

by Don Boudreaux on May 24, 2014

in Education, Inequality, Myths and Fallacies, Reality Is Not Optional

Here’s a letter to the Wall Street Journal:

With an important exception, Brenda Cronin’s summary of David Autor’s paper on income differences that arise from differences in years of education is excellent (“How Education Drives Inequality Among the 99%,” May 23).  The exception occurs near the end of this paragraph: “Between 1979 and 2012, the gap in median annual earnings between households of high-school educated workers and households with college-educated ones expanded from $30,298 to $58,249, or by roughly $28,000, Mr. Autor says.  During the same period, he argues, 99% of households would have gained about $7,000 each, had they realized the amount of income that shifted during that time to the top 1%.”

The word “shifted” (which does not appear in Mr. Autor’s paper) is dangerously misleading to a public that increasingly thinks of income as a pie that is sliced and distributed by some vaguely perceived Power, rather than as a flow of goods and services that must continually be produced with creativity, risk-taking, and effort.

In market economies almost no one’s income gains are “shifted” from someone else’s paycheck.  Therefore, because income must be continually produced, changes in different groups’ ‘shares’ of income result overwhelmingly from changes in productivity across these groups rather than from changes in some mysterious Economic God’s pie-slicing habits.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030​​


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