Senator Bernie Sanders isn’t the only one saying it—today you can’t go very long without hearing about how “the rich are getting richer while the poor are getting poorer.”
But is that really true?
Chelsea German over at HumanProgress.org says “no”:
“Senator Sanders is half right: the rich are getting richer. However, his assertion that the poor are becoming poorer is incorrect. The poor are becoming richer as well.””]
How does that work, and what does it have to do with pie? First, imagine the wealth of the United States as a pie chart (or regular pie, if you prefer). When people say the rich are getting richer, they mean that the rich have a larger slice of the pie—that is, a larger portion of the wealth—than the poor.
But the problem is that this view doesn’t really reflect the growth in wealth. As German explains:
“A simple logical error underlies Sanders’ belief. If we assume that wealth is a fixed pie, then the more slices the rich get, the fewer are left over for the poor. In other words, people can only better themselves at the expense of others. In the world of the fixed pie, if we observe the rich becoming richer, then it must be because other people are becoming poorer. Fortunately, in the real world, the pie is not fixed. U.S. GDP is growing, and it’s growing faster than the population.”“]
In other words, while the rich might have a larger slice of pie compared to the poor, the size of the pie as a whole has been growing and growing, and the poor have never been better off.
Read the whole post at HumanProgress.org.