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Cato Dispatch for April 18, 2007

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

Are the Rich Really Getting Richer?

"The number of U.S. households with a net worth of more than $5 million, excluding their primary residence, surged 23 percent to surpass one million for the first time in 2006, according to a survey released on Tuesday," Reuters reports. "The survey by Chicago-based Spectrem Group found that the number of U.S. households with more than $5 million rose from 930,000 in 2005. In 1996, there were only 250,000 U.S. households in the 'ultra-rich' category, Spectrem said. ... [T]he surge in household growth is underpinned by economic growth in recent years, which has fueled both stock market gains and also the market for private companies. [The study] also ascribed gains to rising real estate valuations and favorable tax policies." 

In the policy analysis "Has U.S. Income Inequality Really Increased?" Cato senior fellow Alan Reynolds writes: "There are frequent complaints that U.S. income inequality has increased in recent decades. Estimates of rising inequality that are widely cited in the media are often based on federal income tax return data. Those data appear to show that the share of U.S. income going to the top 1 percent (those people with the highest incomes) has increased substantially since the 1970s. ... Studies based on tax return data provide highly misleading comparisons of changes to the U.S. income distribution because of dramatic changes in tax rules and tax reporting in recent decades. Aside from stock option windfalls during the late-1990s stock-market boom, there is little evidence of a significant or sustained increase in the inequality of U.S. incomes, wages, consumption, or wealth over the past 20 years."

Gates: Mideast Would Feel Brunt of Iraq Failure

"Failure in Iraq would unleash sectarian strife and extremism and would be felt first in the Middle East, Defense Secretary Robert Gates said Wednesday," the Associated Press reports. "Speaking to a U.S. Chamber of Commerce luncheon on the third day of his Middle East travels, Gates exhorted Arab countries in the region to use their influence to dampen the insurgency and encourage political reconciliation in Iraq. ... He warned that while some who disagree with the war may be cheering for failure in Iraq, 'these sentiments are dangerously shortsighted and self-destructive.' The initial effects of failure, he said, would first be felt in Middle East capitals and communities 'well before they are felt in Washington or New York.'" 

In "The U.S. Needs to Stop Iraq Problem From Spreading to Region," Ted Galen Carpenter, Cato's vice president for foreign and defense policy studies, writes: "It's now too late to stop the civil war in Iraq, but we may yet succeed in preventing it from becoming a regional meltdown. President Bush's decision to send 21,500 more troops into Iraq is an act of desperation, as they, like the rest, will end up trying vainly to referee a multi-sided civil war. Washington should focus on a more achievable -- and more vital -- objective: working with Iraq's neighbors to quarantine the violence there. If the war spills over beyond Iraq's borders, it could easily escalate into a Sunni-Shiite conflagration, undermining U.S. policy throughout the Middle East. Iraq's neighbors are already lining up on opposite sides of the internal sectarian struggle. ... A regional proxy war in Iraq would turn the Bush administration's mission there into even more of a debacle than it is already. Worse, Iraq's neighbors could be drawn in as direct participants in the fighting -- a development that could create chaos throughout the Middle East. Washington needs to take steps now to try to head off those dangers."

Study: Global Warming May Reduce Hurricane Activity

"The debate over whether global warming affects hurricanes may be running into some unexpected turbulence," reports the Associated Press. "Many researchers believe warming is causing the storms to get stronger, while others aren't so sure. Now, a new study raises the possibility that global warming might even make it harder for hurricanes to form. ... The massive destruction caused by Hurricanes Katrina and Rita in 2005 focused attention on tropical cyclones -- as these storms are also known -- and some well-known researchers suggested the warming seas were fueling stronger storms. Last year an El Niņo -- a warming of the water in the tropical Pacific that can affect weather worldwide -- dampened the Atlantic hurricane season. Now, just weeks before the traditional June 1 start of the hurricane season, forecasters and residents of hurricane-threatened regions nervously wait to see what this summer will bring." 

In "There She Blows," Cato environmental studies senior fellow Patrick Michaels writes: "Merely venturing into the discussion of hurricanes and global warming is more dangerous than most tropical cyclones. ... There's also nastiness if you say hurricanes aren't getting worse. ... What is going on here? Nothing unusual. Behavior like this takes place every day at faculty meetings across academia. But global warming and hurricanes are hot topics right now, so the bickering spills over into the press. What is unusual is the especially shoddy nature of the current scientific review process on global warming papers. ... If hurricanes had doubled in power in the last few decades as Emanuel claims, the change would be obvious; you wouldn't need a weatherman to know which way this wind was blowing. All of these feuding scientists would have agreed on the facts long ago."

Kimberly McGinnis, editor, kmcginnis@cato.org