Inequality Has Two Sides?

Shattering the Conventional Wisdom on Growing Inequality - Freakonomics - Opinion - New York Times Blog

Levitt is considered one of the smartest young enconomists, his book "Freakonomics" was interesting in that it was willing to be "politically incorrect" on the abortion issue, among other things.

His core assertion here is so simple that it would be common sense if we didn't live in a world of extreme bias where the MSM keeps the sheep only looking left. "Inequality that matters" is defined by BOTH the income and what you do with it. (Duh). Unsurprisingly, WalMart and other discount outlets continue to drop prices on a lot of the stuff that low income folks buy, but at the higher end of the market, there isn't as much competition for lower prices, so while the rich make a lot more, they also end up paying a lot more.

While the INCOME side of the gap seems most interesting-since it is simple and looks bigger. Most people aren't really greedy misers just looking at how much money they can get there hands on, most want to DO SOMETHING with that money, and when that is part of the equation, any realistic gap analysis has to take the SPENDING side into consideration.

This quote from the article sums it up pretty well:

When people talk about inequality, they tend to focus exclusively on the income part of the equation. According to all our measures, the gap in income between the rich and the poor has been growing. What Broda and Romalis quite convincingly demonstrate, however, is that the prices of goods that poor people tend to consume have fallen sharply relative to the prices of goods that rich people consume. Consequently, when you measure the true buying power of the rich and the poor, inequality grew only one-third as fast as economists previously thought it did — or maybe didn’t grow at all.

Why did the prices of the things poor people buy fall relative to the stuff rich people buy? Lefties aren’t going to like the answers one bit: globalization and Wal-Mart!