---
title: "A magnificent article in the New York Times on income inequality"
author: "Stan Voo"
url: https://www.99rabbits.com/blog/a-magnificent-nyt-article-on-income-inequality
published: 2010-10-17
summary: "Someone on Twitter shared a New York Times column on income inequality. I was just finishing Atlas Shrugged, and it read like a page torn out of the book."
---

# A magnificent article in the New York Times on income inequality

Someone on Twitter shared a link to an article in the NY Times, ["Income Inequality: Too Big to Ignore"](http://www.nytimes.com/2010/10/17/business/17view.html).

Many thanks to him for that. I enjoyed it.

The thing is, I'm just finishing [*Atlas Shrugged*](http://ru.wikipedia.org/wiki/%D0%90%D1%82%D0%BB%D0%B0%D0%BD%D1%82_%D1%80%D0%B0%D1%81%D0%BF%D1%80%D0%B0%D0%B2%D0%B8%D0%BB_%D0%BF%D0%BB%D0%B5%D1%87%D0%B8), and this article struck me as a page torn out of that book. Incredible!

The author is trying to convince us that unequal distribution of income is bad and that something needs to be done about it.

His argument begins with how good things were after World War II, when the US economy grew by 3% a year and infrastructure developed, and how optimistic all Americans were back then.

And now, he says, look how slowly the US economy is growing and how bad infrastructure has become. And all that meager growth comes from the rising incomes of the richest.

Apparently the author considers these facts connected enough to convince us of the danger of growing income inequality. I don't see the connection yet. Oh well, moving on.

Next he blames economists for having no clear position on income inequality. Let's skip that, since it doesn't matter.

Then he explains how so-called "expenditure cascades" come about: the rich spend more because they simply have more money. Brilliant, isn't it?

Their spending so impresses other rich people with slightly lower incomes that they, in turn, start spending more, and so on, all the way down to the poorest. And now, attention, he draws his conclusion: because of these cascades it's getting harder and harder for the middle class to reach its financial goals.

Next the author brings out the heavy artillery:

1. statistically, the regions where income inequality is growing fastest also show the most symptoms of financial distress (bankruptcy rates, for example);
2. regions with greater income inequality also have higher divorce rates (young couples can't make ends meet);
3. regions with greater income inequality also see people spending more time commuting, because they're forced to move to cheaper areas farther from work.

Now please explain to me (I had problems with statistics at university): **since when does a correlation between two factors indicate cause and effect?**

Why does the author of an article published in such a respectable paper allow himself such a, to put it diplomatically, "small inaccuracy" in his argument?

Wait, there's one more gem ahead.

> Nobody is saying that increased inequality is necessary from the standpoint of fairness. So maybe we should agree that it's a bad thing (increased inequality, that is; note by Stas Parshin) and try to do something about it.

*Robert H. Frank is an economics professor at the Johnson Graduate School of Management at Cornell University.*

That's it!

P.S. Please forgive my clumsy retelling of the article. Maybe it's my poor English, and I got it all wrong?