Every so often, I share an image that is unambiguously depressing. Usually, because it suggests that freedom is slowly eroding.
- A chart showing that corporations are using cronyism to pad their bottom line.
- A table on the rapid rise of dependency in the United States.
- A grim chart on the ever-growing number of pages in the internal revenue code.
- A PowerPoint slide on the ratio of producers vs. consumers in Denmark.
- A chart showing the relentless expansion of Medicaid dependency.
I now have another addition to that depressing list.
Just as the Minneapolis Federal Reserve has an interactive website that allows users to compare recoveries and recessions, which is very useful for comparing Reaganomics and Obamanomics, the St. Louis Federal Reserve has an interactive website that allows users to compare national and regional economic data.
And that’s the source of today’s depressing chart. It shows median inflation-adjusted household income for the entire nation and for the District of Columbia. As you can see, the nation’s capital used to be somewhat similar to the rest of the nation. But over the past 10 years, DC residents have become an economic elite, with a representative household “earning” almost $14,000 more than the national average.
By the way, I put quotation marks around “earning” in the previous sentence for a very specific reason.
There is nothing wrong with some people accumulating lots of wealth and income if their prosperity is the result of voluntary exchange.
It’s increasingly just a racket for insiders to get rich at the expense of everyone else.In the case of Washington, DC, however, much of the capital’s prosperity is the result of coercive redistribution. The lavish compensation of federal bureaucrats is a direct transfer from taxpayers to a gilded class, while the various lobbyists, contractors, cronyists, politicians and other insiders are fat and happy because of a combination of direct and indirect redistribution.
I should also point out that the entire region is prospering at the expense of the rest of the nation.
By the way, some people will be tempted to argue that rising income levels in DC are simply a result of gentrification as higher-income whites displace lower-income blacks. Yes, that is happening, but that begs the question of where the new residents are getting all their income and why the nation’s capital is an increasingly attractive place for those people to live.
The answer, in large part, is that government is a growth industry. Except it’s not an industry. It’s increasingly just a racket for insiders to get rich at the expense of everyone else.
Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.