Critics of capitalism often assume that the economy is a fixed pie, and that any increase in income or wealth by someone at the top of the distribution inevitably must come at the expense of someone at the bottom of the pile. This erroneous mindset is an implicit component of arguments that the "rich are getting richer while the poor are getting poorer."

Yet consider what has happened to the economy over time. Per capita GDP was less than $10,000 in 1947 (1996 dollars). By 1997, it was more than $27,000, almost three times larger. It should not take a rocket scientist to figure out that the pie got a lot bigger. Census Bureau income figures also show an expanding economy. Inflation-adjusted per capita income between 1969 and 1996 climbed by more than 62 percent. And real personal consumption expenditures rose by more than 66 percent in the same time period.

But what about the assertion that these income and production figures simply represent a windfall for the wealthy? Once again, the Clinton Administration's figures show this simply is not true. According to the Census Bureau, households making less than $10,000 (1997 dollars) accounted for 15 percent of the total in 1967, the earliest year for which figures are available. By 1997, these poorest households had fallen to 11 percent of the population. Meanwhile, households making more than $75,000 jumped from 7.1 percent of the total in 1967 to 18.4 percent of the total in 1997. In other words, Americans are climbing the income ladder over time.

Confronted by these facts, statists often shift gears and claim that upper-income people are grabbing a larger share of the growing pie. In other words, the accusation now is that "the rich are getting richer faster than the poor are getting richer." On the surface, this is true. The Census Bureau data reveal that the top 5 percent of the population earned 21.7 percent of the income in 1997, up from 17.5 percent in 1967. Ironically, the bulk of the increase actually has occurred under this administration. The top 5 percent had 18.6 percent of the income in 1992, perhaps showing that income-redistribution policies such as Clinton's 1993 soak-the-rich tax hike do not really work.

Yet even these figures are misleading. In short, the people who were rich and poor in 1967 are usually not the same people who were rich and poor in 1997. President Clinton's Council of Economic Advisors reports, for instance, that "studies indicate a reasonably high degree of [income] mobility over time" and that "almost two thirds of households change income quintiles over 10 years." Perhaps most astounding, a Treasury Department study found that taxpayers in the bottom 20 percent in 1979 were more likely to have reached the top 20 percent by 1988 than they were to have stayed at the bottom. All told, more than 85 percent of the poor climbed into a higher income level during the ten-year period.

With this in mind, the best that leftists can argue, assuming they want to be accurate, is that "the people who become rich today are richer than the people who became rich in the past." Somehow, this phrase does not have quite the same bite as the now-discredited charge that capitalism means the rich get richer at the expense of the poor.

At some point, however, it is important to address the morality of wealth accumulation. What if Bill Gates became wealthier while the rest of us saw our incomes decline? The left's knee-jerk resentment of wealth obscures the fact that such lofty heights in a market system are only reached by serving the needs of other people. Bill Gates, for instance, became wealthy by creating products and services that consumers and businesses valued. None of his money was obtained by theft or coercion. Likewise, Michael Jordan has earned his millions because consumers voluntarily purchase tickets to see him play and advertisers pay to show his games on TV. No fans are forced to watch the Chicago Bulls.

Instead of trying to tear down the rich, policy makers would be well advised to focus on policies that limit how fast the poor can rise. We know, for instance, that education has a big impact on future earnings. Why, then, do statists resist school-choice plans that would specifically benefits poor children in the inner city? We know that every economic theory in the world, even Marxism, explains that capital formation is the key to rising wages and long-term growth. Why, then, do statists oppose tax-reform plans like the flat tax that would eliminate the current code's bias against savings and investment? We know that compound interest is the key to wealth accumulation. Why, then, do statists oppose Social Security privatization, a policy that would allow lower-income workers to tap into the capital markets that have served the rich so well over time?

Winston Churchill once remarked that "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery." If the behavior of modern statists is any indication, they would rather everybody suffer than live in a system where everybody is better off but some earn more than others.