It occurred to me that perhaps the Occupy movement could stand from a basic economic lesson on the top one percent and income differences from one of the greatest economists of our time, Thomas Sowell. Written long before any encampments were created in Zucotti park, Sowell accurately describes with research to back it up how things really are.

As Sowell points out most economic studies do not follow specific individuals over time. If they did then they would not come to the Occupy movement’s conclusion that the rich are getting richer and the poor are getting poorer. One of the studies that does follow specific individuals and their income growth comes from the University of Michigan (ironically a university that has a reputation for being of the liberal persuasion). From Basic Economics by Thomas Sowell, starting on page 219:

“The University of Michigan study found that, among people who were in the bottom 20 percent in income in 1975, approximately 95 percent had risen out of that bracket by 1991 – including 29 percent who had reached the top quintile by 1991, compared to only 5 percent who remained in the bottom quintile. The largest absolute amount of increase in income between 1975 and 1991 was among those people who were initially in the bottom quintile in 1975 and the least absolute increase in income was among those who were initially in the top quintile in 1975. In other words, the incomes of people who were initially at the bottom rose more than the incomes of people who were initially at the top…

“Similar patterns appeared in statistics from the Internal Revenue Service, which also followed given individuals. The IRS found that between 1996 and 2005 the income of individuals who had been in the bottom 20 percent of income tax fliers in 1996 had increased by 91 percent by 2005, and the income of those individuals who were in the top one percent in 1996 had fallen by 26 percent…Studies of income brackets over time and studies of individual people over time are measuring fundamentally different things that are often confused with one another.

“Some people reach the top one percent in income – approximately $365,000 an up in 2005 – in a given year because of some particular boost to their income during that year. Someone who sells a house may have an income that year which is some multiple of the income received in any year before or since. Similarly for someone who receives a large inheritance in a given year, makes a stock market killing, or cashes in stock options that have been accumulating over the years. Such spikes in income account for a substantial proportion of those whose incomes in a given year reach the top levels. More than half the people in the top one percent in income in 1996 were no longer at that level in 2005. Among those in the top one-hundredth of one percent income in 1996, three-quarters were no longer at that level in 2005.

“Many people who never have a spike in income that would put them in the top one percent may nevertheless end up in the top 20 percent after many years of moving up in the course of a career. They are not “rich” in any meaningful sense, even though they may be called that in political, media or even academic rhetoric. As already noted, the amount of income required to reach the top 20 percent is hardly enough to live the lifestyle of the rich and famous. Nor will being in the top one percent, for half of the people in that bracket who do not remain there…

“The fundamental confusion that makes income bracket data and individual income data seem mutually contradictory is the implicit assumption that people in particular income brackets at a given time are an enduring “class” at that level. If that were true, then trends over time in comparisons between income brackets would be the same as trends over time between individuals. Because that is not the case, the two sets of statistics lead not only to different conclusions but even opposite conclusions.”

So what is the big takeaway here? It is exactly what conservatives have known all along: hard work pays off. Begging for handouts won’t make you rich but if you work hard and smart then you will reach economic prosperity. For the most part the American people understand these concepts. The Occupy movement clearly does not though. What they fail to realize is that they could get what they want if they stopped camping out in rat infested tents playing bongo drums and ranting and raving about how they deserve handouts. If they cleaned up, got a job, and worked their tails off then they would succeed in life.

Of course, fat chance that these people who truly believe they are entitled to free money despite having done nothing to warrant such actions would actually grow up.