Transcripts For CSPAN2 Phil Gramm The Myth Of American Inequality 20221106

This. I think, important conversation about a topic that i have cared a lot about for my entire career. And im so to have a great and dear friend to i to our country. Former senator phil gramm with us and his coauthor early to talk about their wonderful new book, the the myth of american inequality how government biases the policy debate. And i mentioned that this is an important topic to me because. Before i came to aei and then for a while while i was at a i spent all of my time focusing on people at the bottom of the income scale and how we can help them move up. And i had seen and felt both when i worked in these programs in new york city, in new york state, and when i wrote about them here at aei, that we would made progress, that we werent getting credit for, because the official says, is because of the united states. I did not account for that progress in an accurate way. And there was something wrong with the way we were telling each other the facts about what was going on and the topic is not entirely new one i think our two coauthors would acknowledge that others before them think ever start. Scott winship michael strain even Charles Murray have written about topic at the extent to which efforts we make in reducing poverty or reducing seem to be go unaccounted in the official statistics of the united states. But whats great about this book is that it pulls it all together in a comprehensive way and actually gets to new ground about. What this effect is having on the feeling about our country among americans, little further up the income scale and well get that in a minute. But that job is really just to introduce it and turn it over to our speakers, let them speak for a while, and then theyll pause. Ill some follow up questions will get into a dialog, a discussion, and then well open it up for questions from all of you. I just want to remind everyone who doesnt already know it that senator phil is one of those rare things. He was an academic, a good academic, an economist who became a politician and a great united senator. And now hes back writing and thinking. And as scholar. So senator graham, its great to have you back with us. John there you go. A little applause for senator. Really one of the great heroes of our of our country. John hurley is a statistical economist who has served as the assistant commissioner in the bureau of labor statistics. Hes written and thought about these issues for a long time. And he is, of course, a partner in in describing the true facts with senator graham. So im going to turn over you now, senator graham. Take it away and give us the story, then, john, then then conversation. Well, first of all, thank you for coming and robert, thank you for inviting me. And thank you for every im very proud of my association with the. And i appreciate everything you do. The fundamental Building Block of our of our individual wellbeing is a estimate what income is. And over the last two decades that estimate income has in conflicted with all the governments that have been by the census by the bureau of labor statistics and by other Government Agencies economists from bruce ma here, aei across the spectrum whove looked at consumption levels, whove looked at wealth, are cumulation have increased only on an unexplained gap between what they observe. People spending and what the census measures people as having earned. Now let me give you two example. Polls of the conflict. From 1947 to 1967, the poverty rate in america, the number of america kids who were deemed to be poor by the definition that weve out in the government. A massive expansion in prosperity, broadly shared. And then in 1967, the decline in the poverty stopped and for 50 years it has flunked. You rated roughly between percent of the population and 14 of the population. Or measure having been poor. But yet during same 50 years, the real value adjusted for inflation of transfer payments. The bottom 20 of American Income earners has risen from 9,600. To 45,400. And yet, even though we are providing benefit. Worth 35,000 to all average to face that on the bottom 20 , the income. It has had no measured impact on. Poverty, obviously that raises some fundamental. A circuit anomaly is every quarter. The bureau the census presents data what happened to income in the previous quarter and what it is measured as in this quarter. The same quarter the bureau of labor statistics presents data consumption. And for the last 20 years, the bottom 20 of american earners have on average spent as much as a measured income. The second quintile is 11 more than is measured in, and the top quintile all has spent only 50 of its income, even theres no Financial Data available that suggests that people are saving 50 of their income. Now, how did all this happen . Well, what we have done is we have gone back to the. 1947 system set up by to measure income, looked at all the decisions that have been made since. And basically the conclusion that the census does not count two thirds of all transfer by the federal state and local governments as income to the recipe even though census numbers are routinely compared to tell us what has happened to income equality. The census numbers dont adjust for taxes. We found that if you count all transfer payments, as in to the recipient, if you the taxes paid from the income of the people who pay taxes, most of whom never see the income that whereas the census says that the ratio of the top quintile of earners to the bottom is 16. 7 to 1. Weve find that it is in fact for the. Now, look, in a free society you can debate what the level of Income Distribution ought to be. But its much harder to argue that we to be redistributing more when the numbers 4 to 1 rather than 16 points 7 to 1. We have also found that for the last 50 years, the flows of benefits means tested benefits going to poor people has been so large in real terms that it is for outside drilled earned income, especially earned income after taxes. And so the bottom 60 of american households today, for all practical purposes, have the same income, especially when you adjust for income, size now, needless to say, if you have low skills and low earning capacity and you can have an income from the government that puts you in middle income america, there is relatively little to work. And sure enough, over the last 50 years, the Labor Force Participation rate among the bottom 20 of income earners has declined from 68 to 36 . We look at poverty and find that you count all transfer payments as income. The recipients that poverty rate is not 14 . Its about percent. We look at income over time the economy which tells us it is a truth universally except that inequality in the developed world is high and rising. Bernie sanders says that it is absurd and under sustained double. Weve learned that when you take into account all transfer payments as income the beneficiaries and paid as income lost tax payer that the the income that the the the that the the ratio of top to the bottom quintile the gini curve a major economy used is lower today than it was in 1947. Let me tell you the toughest part about. This book is convincing that it is possible that we are having a debate in about whether to fundamentally change our system to deal with growing inequality when inequality is actually declining and this hard believe that were in the world now. We look at why earned Income Distribution, the amount that people actually earn is becoming more and equal. And we find the two largest sources of inequality already are people dropping out of the labor market because opportunity in america is in a job and in the private sector, the economy, the second largest cause of income, earned income inequality, is differentials in the quantity and quality of education, primarily at the primary secondary level. We look at the ultra rich, the mega rich that basically end up being the focus of all discuss about inequality and we address the issues do rich people pay their fair share . The answer is yes yes. We look at picketers and say stuff shows and basically show that they produce the result produce because they can no government transfers to income and because they artificially inflate the income of high income individual all by counting capital that are never received because the assets are not sold. You remember when a blue what was the group that had the stole and data. Yeah they had this the stolen tax data but it didnt show what they wanted to show and so what did they do. They did a very in switch where they looked at the income tax return but they didnt look at the taxes paid. They looked at what the income. They looked at taxes paid, but they looked at what income would have had people sold, the assets they own and the Capital Gains. So by inflating the income they produced, the result they wanted to produce. We looked at mobility. 91 of all people in the bottom quintile better than their parents at one generation. 70 of the people born in the quintile do better than their parents. In one generation. We look at crosssectional studies, including in my strange work and i and we combine it with other studies to show that mobility is alive and well in america. Now there is a return to parenting good parents pay off. Look at asians in america and their extraordinary success success. But its better to be born rich, beautiful and brilliant than be born and ugly and ordinary. But poor, ugly and ordinary americans succeed every day in this country. The level of mobility to us is extraordinary. Now theres as much water, a glass as you want to see. But we make the case and i think we make it very strongly that mobility in is alive well, and so is the American Dream. We look at the last 50 years and the progress made, and its been a extraordinary 50 years, the most maligned 50 years in american history. But the world, the facts speak themselves. This has been a golden age, and it would be call that in any other country in world except america. And then finally we look at policy conclusions. We need to get the congress to for us, the government to include all income in taxes, in all its comparative simple. And we at ways we could improve mobility levels. Want to talk about american fairness income inequality. But america promised equality of result in the competition of. In we celebrate the fact that some people are successful in the words of will durant freedom and, equality or eternal sworn enemies and where one lives the other does. We chose freedom, and were proud of it. And it shows up in inequality. But promise of america is opportunity, as lincoln said, a fair chance, open way. And we show that if we had a mandatory work requirement like we had with afdc, to bring people back the labor market, and if we gave more choice and more freedom to people in choosing to educate of their children, especially in inner cities, that we could draw medically expand the amount of opportune energy in america. And john, you tell him why we did all these right. Thank you. Thank you, bill, for setting it up for me. And thank you, robert, for the invitation. And thank you all for coming to make hopefully a rather exciting dialog once we get through with laying out the facts. So im going to layout embellish on a few of points that senator graham made there with some some specifics of the data and methods. But we cant go deep. Feel free to ask questions when the arrives. The data we have about income levels at the household level, about equality of income, about poverty all come from the same fundamental source, which is the census estimate of Household Income, and this is the distribution of that income in the 2017 to about 13,000 at the lowest quintile, fifth of the population. When we talking about quintiles, thats the lowest fifth and the top fifth quintile income. About 220,000. So that data is the foundation it can be arranged in a number of different ways explained in a number of different ways but thats where all the official data is related to Household Income come from and the difference between the top and the, as bill said, is a ratio of 16. 7 to 1 and numbers that sort are built into the entire set of data based on it are two basic point. Two basic components of that data are earned income and transfers earned income comes from work and savings transfers come from government. This shows that distribution and and were going to parse that here in a moment. So lets start with the earned income. The blue curve there is, the census measure. But it leaves out things at the high end. It out, believe it or not, Capital Gains. Oh, you know, phil mentioned that, but there are real Capital Gains. These are the real realized Capital Gains that are here. The other folks added some that you had realized yet. So thats missing as of some other Investment Income and middle level or were missing earned income from the Employer Paid benefits most particularly Health Insurance. And at the bottom, theres some miscellaneous failures to collect right data on the part of census data that these are failures that they know about, have not adjusted the official data by by the oopsie daisy hang on. Okay. So earned income is a. Ratio of 60 to 1 now. So a much higher ratio of earned income. But this is the value added. This either working or giving your capital out. The people earn in the. And so we want to look at what are the causes of this and the biggest one single one is the behavior of prime age adults between the ages of 19 and 65 in terms of their participation in labor in the bottom quintile, only 6 of the work workers constitute only 36 of the prime workforce. Okay. At the top quintile is than 100 because you have a lot of people working that are beyond both in terms of older and younger than the prime age workforce. So right there weve got a big difference by whos working and they work they work half as many hours in the bottom quintile and they twice as many hours in the top quintile. And that difference, Labor Participation and and engagement in work accounts for about a third of the income difference. Okay. This is just the earned income. Now the next 25 comes from differences in education. Of course, obviously a a b. A. Degree earns you 70 more income than just a high school diploma. And on then after that, your choice of occupation education, a masters degree in science earns you half as much as a masters degree in biologic science. Theres another 2 that comes from experience any the average person in the workforce over their work life will double their real income. So that adds percent to the difference. Theres another. 18 from employment income that we havent yet been able to. Parse all the details on on. But we know its from employment income because we have the total data and then the final 17 comes from earnings on savings. Okay. So thats earned income. But now we, weve heard that transfer payments affect this a lot. So there is the census data, the biggest single thing in census transfers are social security, but includes unemployment workers comp, temporary assistance to needy families. But thats about all. They only include about six or eight programs out of the more than 100 income transfer programs. And theres whole lot missing. Two thirds of the total is missing. Examples would be. Refundable tax for the medicaid. Food stamps. Why arent we counting those things . Theyre not counted. So we those and weve got a total and now we look what happens the between the top and the bottom is no longer point seven its only 5. 7. So weve gotten rid of about 90 of the 60 ratio and earned income and. Were now already down to less than what the census said it was because census didnt count all the transfer payments even though they didnt count some of the income either, which we also added in. But then come in because the government giveth, the government taketh away and weve got a little red and orange shading showing there where that is. 7 of the income in lower quintile goes to the government, 35 in the top quintile goes to the government. And so once have done that, were now down to the point, if you look at that dashed line, which is income after transfers and taxes, its only 4. 0. So that takes out an additional 30 of that. The inequality in earned income. But its not just the difference between top and bottom that changed. It also between the middle and the bottom. Look at the little rectangle down there and we see that the first, second and third quintiles are essentially the same income. So at this this chart here is the same data just in a different format of and you can see here that the second quintile has only 8 more income than. The bottom quintile does yet 2. 8 times more of their prime age workers have a job and work. 17 to. Yeah, they. About 17 hours a they im sorry they work nearly all full time as opposed to the 17 hours in the bottom bottom quintile and then the middle quintile has 32 more income, but have three times as many people working and they work twice as many hours. Okay, so that doesnt give you a whole lot of incentive to work. Government can replace most of the money you lose if you decide not to work, which is why the workers, as a proportion of the adult prime age population and dropped from 68 to 37 . Now theyll mention the size we look at a number of them. There are three that are commonly used and ive just averaged them here for brevity. But look what happens those bottom three quintiles have almost exactly the same size income, the bottom or the quintile receives more income actually on size adjustment than the second does by 5 . And the third quintile only has 7 more sausage is the number of people in the household. Okay, thanks. Borrowing that. Okay. The statisticians speaking there for a time. I beg your pardon . Im an economist. Gini coefficient. Some of youve heard of that. This is not fictitious critter that lives in a bottle fellows name but as a measure of inequality zero means absolute. Every household has the same amount means all the incomes in one household census publishes that going back to 1967, they have archived tabulations that allow us to take and extend that back to 1947. And this shows an increase in income inequality. But before we get to excited about it, lets notice a couple of things there are some discount here. All of a sudden theres a big jump in 19 in 1993 and in 2013 and in both of these cases without going into details census changed the way it collected process the data. There was not any change in actual inequality. They just found more income at the top. So they never however adjusted the for that. So it looks like the income was getting 30 more unequal over time but they however publish data that we were able use ourselves to adjust it and instead of rising 22 or 24 over time, it adjusts in rose only 16 , which says that the official numbers are rising. Half again as fast as they were supposed to. And then the missing transfer and the missing taxes. When you those in its basically flat dropping 3 over the last 70 years. So if you count all the numbers, it makes a difference finally let me reference poverty field began that laid the groundwork for that noting that this rapid decline by of poverty in the 20 years following the war Second World War and then so johnson declares a war on poverty. So what happened he expected poverty go down more and for people to shift getting handouts to earning own income and well poverty continue to decline for five or six years there. But if all the existing trend and then is stopped and poverty then just oscillated between 11. 1 and 15. 2 over the next 50 years, nothing changed. But yet we quadrupled the amount of money we were giving as government transfers. Well, if we adjust for putting all those transfers in and lo and behold, it the poverty rate drops to just two and a half percent as opposed to 12. 3. Okay. And then if we make some adjustments in, the way they improve their calculation of the that is to say the levels at which people are declared to be poor, it drops again to about 1. 1 . So poverty fell. We just didnt it. And with that i turn it back to robert okay so that was great and thats a good summary of the book and you very much for that but i want to in your in your wall street journal op ed, which you wrote is this book was coming out. You used the phrase a blockbuster finding. I think that was the term that was in there. And it referred to this this thing we may have missed if we went too fast or, werent paying attention about the higher income at the end of the transfer payments and the taxes for people at the bottom who very little compared to people in the next quintile and the one after that who were a lot and i to ask you, it was a little bit of reference in your op. What effect do you think that has on the people in the second and third quintiles attitude toward america and transfer payments . And the situation that we have in our country . Well, i think we both need answer that question. But let me start by saying that it is a blockbuster finding that youve got people who are working very hard and struggling to make good their mortgage payment and they are now living among people who arent breaking a sweat. And this creates a resentment that has shown up in our politics, but also as we looked at the bottom three quintiles of income, your straw but the fact that so Many Americans are still when they could be about as well all but not working which is a great to this country and people but the trend that gets missed in all of this what happened to the people that were working when 68 of the bottom quintile was working and now only 36 are those people. 4 5 years have been left out of the American Dream and used to tell my mom that we were lucky that when i was growing up that they didnt have this welfare system because my life would be very different if we did it. My mother would always like, what in the hell you talking about . I would never take a welfare and i said, well, muller, if you were the system today, your mother, you knew be on welfare, the government would be telling you that youre old. The welfare you would have taken it and our lives would have been very and my mother said you were telling by the hour to take welfare ill denounce. But the point is they are the real victims here because not just money is peoples lives. And how much talent was out there. We never people that could done great things or even a Little Things that to them would have been their achievement sort of my reaction to a overreaction anyway oh robert, youve got another question on that point. Want a little more detail . I can cover pretty well i do want to have is just on a technical issue of the of the definition of working and not working is it working could you work if you were in the in that data set if you worked half time, would you be counted as nonworking or working . Okay, this this is this still uses the Current Survey as a supplement definitions. So this is for the year 2017. If you did not work, you did not work one bit for for pay anyway. Okay. So this then the amount you worked is reflected in the hours. Okay, so they about one third as many on the bottom worked and they worked half as many hours because there is an element of the safe transfer payments does require showing work activity. So for instance the refundable tax credits that are tied earnings, the earned income tax credit, you have to show a little bit of work not a lot, but you have to show some to get the transfer payments that sort of sums up your your earnings. So im i think there i definitely think that the point youre making which is that people who really hard and dont seek assistance are ending up about where people who work either non or a little are at the end of the day. And that that can that can make people feel as if why are they doing all this work when others are getting equal income for less work that is a problem and there some people that want to say the way to address it is just increase transfer payments to the people that that are in the middle, the second and the third. And i wonder how you react to that. Well, i dont had to react to it. We have numbers when we increase the means tested transfers to. Making 125,000 a year or market income. What happened to Labor Force Participation, pension rate, payroll . And let me say, look were trying to store the debate were not trying to end the were not saying we figured all this out. Were not saying that. What we say is the end of the story. But what were saying is that there are there are issues out there that have got to be addressed. And if youve got a better answer than we have, wed like hear it. But you cant neglect of fact that were grossly overstating inequality. And there are policies creating real problems for the country. And were debate making the policies worse based on data thats wrong. And john you feel absolutely certain that the the effect of the transfer payments is to distance work and is the leading cause or the primary cause for the decline in Labor Force Participation. Theres a of a two step decline in, Labor Force Participation or and its specifically of those prime aged adults that were talking about there. Yes. That decline is definitely for a third of the income inequality that that much as simple and that and well correlation not cause it clear is clear is anything ever is statistically that the the level of payments you can get for not working has clearly peoples willingness to work and we shouldnt be surprised about it right you quote you cite Casey Mulligan also is another economist has had findings on that as well. So that leads me to you know, issue that was quite popular still is quite popular among some and that is to expand the nonwork tested in any transfer payment of a child tax credit. This was a very and very expensive component of president bidens build back better proposal and it is there was a news story that senator bennett in colorado is still eager to keep trying to get that end wring. Either the Lame Duck Congress or in the next session, given that that is another transfer of payment without any connection to work, how do you react to it, given your findings today . I think its clear that it will reduce labor force rate and it wont reduce Child Poverty because the census does not count refundable credits as income to the people that get it even though you get a check from the treasury and this was a decision made based on their decision and not to count taxes and so theres nobody with a straight face that can stand and defend a definition of income that says a check you get from treasury is not income. Yeah yeah. I mean, if somebody from the census wants to come here and debate it, id be to stay here for a week in it. Clearly, this is for as a fundamental problem, know how it happened we dont get into that debate but the fact it did happen and is happening were very much in that debate. Do you want to comment on the child credit, john . Lets say it would be unfortunate because i mean, it is another transfer. It it would put damper on Labor Force Participation. Sure. In on earnings and is also going to what reallocate resources. So you lose efficiency. You look you lose productivity, lose growth. It would just be, you know, very unfortunate. You know as an old politician once said, if you get everybody in the wagon whos gonna pull it. Yeah yeah that all about with you i thought yeah well yeah i the now ive got one of the thing the one of the elements in the book that is in the tone and way its written and in some of you said today, especially you talked about the 50 years of remarkable accomplishments in the united states, was that now that youve counted correctly, i want to just see if i got right and seen that the Child Poverty rate or the poverty rate so low as bruce meyer and others have shown as well, we should we should say it well that we at least have accomplished that. Mean, do you think raising the material of america and so that there are fewer whose materi el wellbeing whose resources in their is many many fewer of them who are below the poverty threshold. Do you view that as achievement . I think you can say yes its an achievement in a sense, but in another sense, as it induced the Labor Force Participation to fall from 68 to 36, among those in the bottom in terms in the bottom quintile, it it costs x access to the American Dream. So was the intention good . Did the policy see produce good results. Its at least debatable i would say no. The thing about achievement is it belongs to you. Its some you did or large its yours. When government gives you something, you something. But when you own, when you build something. Its yours. And thats thats a value that you can provide with transfer. But john, you want to add anything on that . I think another thing that to think about here is that so poverty for children has become smaller and smaller as. The income is going up. And heres your poverty level. The older, fewer and fewer of them down here, theyre more. And but what happens then . And policy is that we gave money down here to people that were down and they moved up above the poverty level. And then some of them began actually to money and they moved up. But now we said that instead of applauding and on ahead, what we did is we started giving more money to the folks here. And thats and thats thats also detrimental to Labor Force Participation. I want ask about Health Insurance so you count your calculations. I believe and maybe this is more for you, john, or either one. So government provided Health Insurance means premium for for insurance is paid by the government. Tell me exactly how you use that these income data and why you use it in the way that you do well there a couple different things. First of all, for private insurance we include as income the employers contribution to the to the premium because thats income. You know, they paid for percent. 40 didnt do that. Mm. And census doesnt do that. The other is that for medicare and medicaid they are in effect insurance policies for medicaid is all government paid for medicare. The benefits re pays anywhere between 20 zero for the lowest percent pay pay zero premium up to 80 of premium for higher income people after but so the what you pay in premium is not a transfer payment, but the value that you get in excess of what you pay for premium is a transfer payment. But let me also add that on medicare and medicaid. You can obviously question what the recipient value as and thats clearly but with medicaid the recipient is getting something government paid 0. 70 on the dollar for. You cant go out as a private citizen and the health care that medicaid provides at the same price the government did now. So people say, well, medicaid is not worth what we paid for it. Well, it may not be that much to the person who received it if they would like to do it, doing Something Else with the money. Yeah, but its we knew everybody in this room thats paying for private Health Insurance is paying for of medicaid, but paying higher. In the in the way in which you adjust incomes and resources households you do a lot on the bottom obviously that isnt counted. And i guess i wanted to ask you a question, political question. It seems to me that people that want to increase transfer payments because they believe there should be more transfer payments or there ought to be a universal benefit income or people shouldnt have to work whatever they think this. Census bureau mistake thats gone on for years that allows people to say things, cite official statistic thats inaccurate is good for them politically they they got the benefit out of this this it accuracy in the official data that theyve been able to use falsely promote what they really want. Well first of all im willing to say that the people using the data dont know whats false. But clearly, i mean, just take the the poverty level. All of these probes are arms were expanding. You the president said last year that we were going to cut Child Poverty in half by the the refundable tax credit. Well, to more the data comes out from the census and the official number. Its going show it didnt happen what because refundable tax credits dont count right . Right. As income and so they wont show up and theyll find a way to fudge around it. But i think again that were in on this treadmill where there is a problem because the census says its a problem and were going to deal with it by providing money. But then the problems not solved because the census doesnt count the money, its the income and so what weve done, were now in the name of poverty, giving money to people. It aint been poor in a generation. Yeah. And yet there are these or 3 of the people who fall through the cracks that because some special problem when they have theyve got needs that are not being met because we acted as if the more money you give in these transfer the more youre helping the poor when the poor the people are getting that money are not poor anymore. Okay next question has to do with the top end. So are do we have a internet compared to internationally . Did you find that we have a progressive tax system that that is that takes more from welloff welloff people than other countries . Believe it or not, the answer is absolutely. Yes. Yes. The most progressive tax system in world, the top 10 of americans pay a larger of taxes than in any other country. On the face of the earth and the bottom 90 pay a smaller share the taxes than the bottom 90 of earners pay in any other country. On the face of the earth, that data relates to. Just repeat that for a second because youve started with the progressive impact on the top. Its well known that the top 10 are well known among some pay more than any other country in the world. Then you said the bottom 90 pay less than any other country. The list as a poor portion of their income. Now we have a Smaller Government than a lot of other countries, but in terms of sharing the taxable and let me also say its in another part of the book that didnt get much here, but there there seems to be this idea that if we took the income of the super rich that we could pay for all this government. Well if you took the entire income of the super rich, its not rounding, but its not going to pay for government. Were talking about paying for government for a few weeks. The income come that government collects that pays for government comes from people like us. And it and one thing just to add to the data that bill was laying out there, that data on taxes with respect, income tax and payroll. So it doesnt include the fact that in most of those other countries, they have that that then of course, adds more tax to the bottom. And so its its even worse than that. Well, other thing, when you have census report all the data to the oec de we dont rank as the country with the most income with the most uneven distribution. We rank in the middle of the top seven countries in the world, file for me and then lets open it up to the audience who may have even stronger, more tough questions. Who knows . Well see what we get. Just as one of your recommendations, you say point blank programs that provide benefits to low income americans that dont have any kind of work should work requirements. So that would be food stamps or snap public Health Insurance, Housing Assistance are things that pay no attention to work engagement. The only program that does is tanf, which is the cash aid. These other ones havent. If they if they did ever, it a long time ago and theyve been sort of washed away, you you would advocate bringing them back because of the benefits of work and because of the fairness to the people that are working. Is it both those points. Yeah. And let me tell you, one of the things we show clearly is that unmarried women with children that have been subject to a work remember, we reformed afdc and, had a work requirement. And even though the work requirement had been waived, those family, those house rolls have higher work Participation Rate than people of similar incomes. And the most Success School program of my legislative lifetime was reforming afdc c, which we call welfare reform. But it was only a small of welfare, but it was overwhelmingly successful. It people to work. They built new lives, their income went and it was a Great Success story and. I think it needs to be replicated in every means tested program and not because i mean and i wonder to work is because working is what life is about its whats is about. Its what progress in america is about. Were treating people with these programs now some people cant do it, we help them. But for the people can, we should ask them, do it. Okay. I want to turn to the audience now, but i also want to let people know that for those of you who watching in and have got questions from wherever you are, you can send them to katrina dot phee at aei dot org. Thats c. A. R. E. And a dot fema at a i dawg. Or you can them to twitter with the Hashtag Hashtag american inequality aei for the rest of you that are in the room. Im for some questions from all of you. And so ill just look around see what weve got. Yes, sir. Methodological. Wait, wait. The mic. Methodological question. Did you attempt, is there a way to calculate, inform or work at any quintile on untaxed work unreported work . Not too much. There was some that been detected in looking at the lower income through a work that was done by a joint effort between. The Economics Department of chicago and census itself. But thats only at that. Theres not too much good data on that one. Thats a place we would like to get more data, but we havent. You know, one of the problems is if people dont report income, its very for us to gauge that they actually worked. And for many people within the casual economy. If you try to hire somebody, do the some work on a temporary basis, they wont pay in cash. So were probably doubly underestimate work participation and people are being paid twice, once for being if they took the welfare and once for actually working paid in cash, never shown up on the data and of course illegal activities are never measured. So none of these measures are perfect and its its important to understand that. But i think does a very good job of measuring what it measures the problem is it measures the wrong things. Senator, i want to follow up on that question, because that is a very good question. If you spend time in low income communities in america and you referred to the strength of americans in your remarks, you its there are some where theres just a lot of off books work and so that some so that when we talk about people that are benefiting in the lower quintile from these transfer payments, it may be theyre just found a way to work and receive generous benefits and in some way they at least are getting benefit of working. I mean or are they at least have they have the dignity of working. They just happened to found a way to take of the generosity of america. I dont disagree with that. I think people are probably better off working it where its not reported. Didnt just not work. Yes, but i dont you know, we dont the data on it and im very weve decided why in this book to be very about talking about stuff that we couldnt back up with the facts now the fact that we can give circumstantial evidence and there is great but and works in politics but in what were trying to do since we know were not so stupid as think people are going to attack. Weve said that weve to be very careful. Okay. Yes. In the back, young man, then ill come to. Okay. All right. Thank you my question. Just about long term changes in Family Structure over the course of the middle of the 20th century and basically, my question is, to what degree can changes and to what degree can varying levels in each quintile, the Income Distribution be explained by different Family Structures, particularly when you consider the rise of single parenthood at the bottom of the Income Distribution. Why dont you want to take crack at that . You hear better . I do. And the question. The well, let me just try rephrase. So by increasing single parenthood that would imply that theres only one earner per rather than two earners per household and that that would be true but but were looking at only because when we work the tables in the book youll see one of the changes is the number of workers household. And so we calculate the effect these effects we note we also get changing in the number of workers per household as well. Now in a more complete systemic at it. Of course, when you have more to worker, two earner families, i mean two adult family, two adults in the family, then going to be more likely to have two workers in the family rather than one. But were only looking at the total number of people that are working. And at the top, remember, you know, almost 100 are working, whereas at bottom almost, you know, only about a third are so there is some of that in there. Surely, but its the overwhelming. And when we calculate the effects, we also the whole concept of the number of workers. Yes, maam. And wait for that. Mike is coming up. Its it sounds like some of the problems with the data are have to do with historical artifact facts taught right in the u. S. Yeah its its it sounds like some of the problems with the data just historical accidents are artifact facts in the data and i just wonder about other International Statistical agencies, some of the other countries results that look better in terms of inequality or poverty because there statistical agencies have had other methodologies over the years. Thats thats what im wondering International Comparisons and different methodology. Yeah well when when we looked at the income inequality across the oecd countries, its been said you know, that the us had the highest inequality of any of the major industrialized countries in the oecd that was that is part of the part of the problem in that were not counting all of our transfer payments and france counts all their so far as i can tell. And there is a methodology section of that data and i went and read it all and we do to ourselves in other words if if we submitted the same data that the french did. And thats what part of the data we say is missing. And weve added back in when we did the calculation, we would look a lot different. And in fact if you look at another set data which is based on the National Income and product accounts and the percent of gdp that is spent on transfer payments, we spend than anybody except the french, more than the germans, more than the brits and. So that says were spending that money, but its not showing up at the end of where the income comes in. You know, i also always the in response in to an article we wrote that is in the basic material is enriched in the book or argued that it is not fair for america to count medicaid and medicare as transfer payments because they all have socialized medicine like their money yields what the point we dont and in or test their they dont go to everybody youve got be old to get medicare and youve got to be at least by some definition to get medicaid and. So they are transfer payments, no question about it. And so when you count them our situation improves dramatically but countries do different accounting and in my opinion oecd ought to be trying to deal with those instead of trying to outlaw countries having low taxes for. Okay. All right anymore. We got one more and then what . Oh, lets go. There, there and then there well have finished with mr. Miller. Thats good. And were going to. Its good. I am so delighted to hear about book and to see phil gramm. I have heard this analysis from aei in the past and i dont know why we cant have a convention that every year when the census puts out their analysis of the data there should be a companion report the tax and transfer adjusted poverty report may be when the republicans take the house they could do something about that here is. My question i about what is going to be the lefts reaction to and immediate thought you know theyre going immediately go to ethnic groups as to whats been story for them and without going into too much detail. I would like to know do you deal with that in the book and do you good the story back to a little bit of you know we cant you know we dont do more than data will support but nevertheless same basic story applies to african because that we have a long enough history on that and they have improved vastly in terms of their unemployment. I mean their poverty rates theyve improved vastly in terms of their family incomes and so theres still some differential but the differential has gotten much, much, much smaller you know, by a factor of ten. And you can do a little bit the hispanics because weve got a bit of a history on those but its a good story what the data that we do have. Yeah, let me just add to that. The the achievement of asians, america is extraordinary and the achievement of hispanic earnings there. Theyre the the middle income. Theres 21 more hispanics than it be. If you drew people at random. This is a Great Success that is not told. And blacks have made great to the point is when you have when you present the full data picture. The last 50 years its been a period where we created a great cornucopia and it has been widely distributed. Did everybody get same amount . No. Did everybody contribute the amount . No. I didnt get as much as you on what i didnt create anything like much. You see created the point is elon musk created more than got we are all richer because of it. I dont ever intend to buy an electric in my life, but some people do. And the man is clearly a genius and he earned every penny. He made. And why would anybody envy it when benefited from it . Its its a concept i really understand. Okay, weve got one more. We have. Do you have a question . You do that. Bring the mic. Wheres the mic coming. Right there. Right there. No, no. All the way. Come on over there. That guy . Yeah, guy. Thank you. This result is is extraordinarily important. And as you point out, its built on the work of others as well as your own. How are you going to communicate . This result is politically explosive. If it were known and understood by the you would have a substantial change in policy. How are you going to get this out . What is your or plan for a communique . Well, let me say to this point, a lot of the things we develop in detail in the book have been developed at a at a less detail level, a wall street journal article said and weve gotten a lot of comment. You know, i thought graham was dead and im disappointed. Its okay. But nobody has assaulted the fundamental underlying data that backs up the argument theyve said they dont believe it its not true how could anybody believe it . But they dont show the argument what is going to is is center is going to come out, respond to this. We are beginning to affect their behavior. But i think there will be a hope that itll just go away that this is a debate that that people that want more dont want to get into. Now, there is a legitimate debate about how you value trade for payments. We dont have the last word on any these things but value and zero when youre getting a check from the treasury is that then im glad on why to try to sell that argument so were going to try to go all around the country to the extent we can and put the ideas out there and we believe ideas a power for things that ideas both when they right and wrong have one fluence and we know Richard Weaver that was yeah and we think that theyre powerful ideas backed up by what we think too strong or dubious and what we believe with the best available is the best available. And so were going present it. And then as the question, you know, the says you shall know the truth and the truth will make you free. But he left it up to us to ferret out the truth and so its all free presumptuous to say it, but we think we got much closer to the truth in this book than were getting in our government reports that are being. And i would just say also you dont mind the the knowledge about the the inaccuracy of the poverty measures. Now well accepted and agreed to. And theres just no way left for people who use that official measure to go and not sound like theyre using it to advance their own agenda. Dishonestly, is my view. So well, its been a great discussion. Thank you, gentlemen, very much. Thank thank you. Everyone welcome to todays event which was supposed to be at the Commonwealth Club in san francisco, but is online for your viewing pleasure. Im rachel august. I am correspondent for kqed,