A hasty leap from statistical categories to economic realities underlies many fallacies about income and wealth. When income statistics leave out taxes on Americans in upper-income brackets and transfers to Americans in lower-income brackets, they exaggerate inequalities at a given time. When they fail to follow given individuals over time, they exaggerate lifetime inequality while mislabeling people who are transiently in various income brackets as if they are enduring "classes."

Today, there are more heads of U.S. households working full-time and year-round in the top 5% of income earners than in the bottom 20%. Indeed, most U.S. households in the bottom 20% have nobody working. Concern over poverty, moreover, is often confused with concern over differences in income—as if the wealth of the wealthy derives from, and is the reason for, the poverty of the poor.

"The scourge of America's economy," writes Edward Conard, cofounder of Bain Capital, in his latest New York Times bestseller, The Upside of Inequality: How Good Intentions Undermine the Middle Class, "isn't the success of the 1%—quite the opposite. The real problem is the government's well-meaning but misguided attempt to reduce the payoffs for success." "[The Upside of Inequality is] the conservative answer to Thomas Piketty that you've all been waiting for" [National Review]. "[T]his is serious thinking for serious thinkers" (Mitt Romney).

Edward Conard, a visiting scholar at the American Enterprise Institute, is also the author of the New York Times bestseller Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong. A former senior managing director of Bain Capital, he holds a B.S. from the University of Michigan and an M.B.A. from Harvard University.

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