The Myth of American Inequality audiobook cover - How Government Biases Policy Debate

The Myth of American Inequality

How Government Biases Policy Debate

Phil Gramm, Robert Ekelund & John Early

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The Myth of American Inequality
Core Premise+
The Poverty Myth+
Measurement Flaw 1: Missing Transfers+
Measurement Flaw 2: Missing Taxes+
The True Inequality Gap+

Quiz — Test Your Understanding

Question 1 of 6
According to the authors, what is the primary consequence of relying on the official economic statistics used in the United States today?
  • A. They provide a highly accurate foundation for rational democratic debate.
  • B. They fail to account for inflation, making the middle class seem wealthier than they are.
  • C. They are misleading, fueling populism and creating a false picture of severe inequality.
  • D. They rely too heavily on global standards rather than domestic economic data.
Question 2 of 6
How do the authors conceptually distinguish between poverty and inequality?
  • A. Poverty is a measure of wealth, while inequality is a measure of income.
  • B. A society can have income inequality without having widespread poverty.
  • C. Inequality inevitably leads to poverty in modern capitalist economies.
  • D. They are essentially the same metric, just measured over different periods of time.
Question 3 of 6
Why does the Census Bureau's definition of income fail to capture the true spending power of low-income households today?
  • A. It calculates income on a monthly basis, missing seasonal employment spikes.
  • B. It only counts income from formal employment, ignoring the modern gig economy.
  • C. It fails to account for the massive increase in credit card debt among the poorest quintile.
  • D. It is heavily cash-centric and excludes modern 'in-kind' government transfer payments.
Question 4 of 6
Why has the official poverty rate remained relatively stagnant between 11 and 15 percent since 1963, despite the 'war on poverty'?
  • A. The official statistics do not count the trillions of dollars spent on government transfer programs as income.
  • B. Population growth has outpaced the creation of new middle-class jobs since the 1960s.
  • C. Inflation has completely neutralized the increased minimum wages of the lowest earners.
  • D. The government drastically reduced overall welfare spending during the 1980s and 1990s.
Question 5 of 6
How does the Census Bureau's treatment of taxes affect the public's understanding of income inequality?
  • A. By looking only at after-tax income, it makes the wealthy appear significantly poorer than they actually are.
  • B. By deducting state taxes but not federal taxes, it creates massive statistical inconsistencies across different regions.
  • C. By recording only before-tax income, it ignores the heavy progressive tax burden on the wealthy, exaggerating the income gap.
  • D. By factoring in corporate tax loopholes, it artificially inflates the reported income of the middle class.
Question 6 of 6
When government transfer payments and taxes are fully accounted for, how does the true income of the top quintile compare to the bottom quintile?
  • A. The top quintile has roughly 16 times as much income.
  • B. The top quintile has roughly 4 times as much income.
  • C. The top quintile has exactly 60 times as much income.
  • D. The incomes of the top and bottom quintiles are nearly identical.

The Myth of American Inequality — Full Chapter Overview

The Myth of American Inequality Summary & Overview

The Myth of American Inequality (2022) corrects widespread misconceptions about inequality in the United States. Taking aim at misleading official statistics, it shows that poverty has all but disappeared in today’s America and that the gap between rich and “poor” isn’t nearly as large as many people assume. 

Who Should Listen to The Myth of American Inequality?

  • Politicos and policymakers
  • Historians and economists
  • Anyone interested in contemporary debates about economic justice

About the Author: Phil Gramm, Robert Ekelund & John Early

Phil Gramm is a former senator who spent years heading up the US Senate Banking Committee. He is currently a visiting scholar at the American Enterprise Institute. 

Bob Ekelund is a professor of economics at Auburn University in Alabama. He is the author of over 20 books as well as hundreds of articles on economic history and policy. 

John Early is a mathematical economist and former assistant commissioner at the Bureau of Labor Statistics. He has written widely on topics including price change, labor force dynamics, and health care.

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