For example, is Mr. Krugman warranted in dismissing the claim that “the rich are an ever-changing group” with a simple and parenthesized “not so”? Who are the “rich”? And how much income mobility is necessary for well-meaning observers to justifiably claim that “the rich are an ever-changing group”?
Is the following description, from the IRS, of data on individual households merely obfuscatory – something that no reasonable person can possibly interpret as evidence of substantial income mobility – or might it describe a plausible reason for well-meaning people to disagree with Mr. Krugman’s insistence that the rich are NOT an ever-changing group?: “More than half (57.4 percent = 100 – 42.6) of the top 1 percent of households in 1996 had dropped to a lower income group by 2005. This statistic illustrates that the top income groups as measured by a single year of income (i.e., cross-sectional analysis) often include a large share of individuals or households whose income is only temporarily high. Put differently, more than half of the households in the top 1 percent in 2005 were not there nine years earlier. Thus, while the share of income of the top 1 percent is higher than in prior years, it is not a fixed group of households receiving this larger share of income.”
Read full in Cafe Hayek.