It may be helpful to illustrate income distribution in the US. I can't vouch for the accuracy of these figures, but this illustration seems consistent with what I've seen before (rotate it 90-degrees clockwise to put the axes where they usually go). This doesn't really bother me since I don't believe the baloney that relative, not absolute, income is supposed to make me unhappy. Nevertheless, the temptation to confiscate the extreme income is obvious. I think a football field makes for handy comparisons, too.

What is the middle class? Definitions vary quite a bit. It could start anywhere from the 20- to 40-yard line and run all the way to the 85- to 95-yard line. Wherever the boundaries lay, it's a no-brainer that Democrats would want to "reconnect" with such a vast swath of voters.

Who is in the middle class? Operationally, the Democratic Strategist authors are looking for workers who are financially secure yet aspire to a more comfortable lifestyle. This can extend broadly upwards from frugal blue collar workers. The upper end is more vague.

How wealthy is wealthy? The ability to set oneself on a course for greater prosperity probably begins somewhere near six figures. The precise point, however, is not important. I believe that for the purposes of evaluating Democratic strategy, the question is who should be the target of the taxation that will be necessary to fund the pro-middle class policies. Based upon the distribution curve, the deep pockets are the top faction of 1% of earners.

Who is wealthy? In my earlier post, I repeated the conventional wisdom that it is CEOs and celebrities. But as a paper by Steven Kaplan and Joshua Rauh (PDF) finds, the usual suspects account for a minority of the super-rich: See Table 8a on page 61. Top executives of public firms (Main Street); financial executives, bankers, and investors (Wall Street); corporate lawyers; and celebrities and athletes account for 16-22% of the top income earning categories (and at liberal estimates no more than 40%). The rest of the top earners may be trial lawyers, executives of private companies [small businessmen, perhaps], second-tier executives of public companies, and other independently wealthy individuals. (Interestingly for populists, the authors write, ". . . our evidence suggests that stealing CEOs or poor corporate governance cannot possibly be more than a very small part of the picture of increasing income inequality . . ." (p.38))

It's hard to know what, exactly, Kim et alia meant when they said that the middle class are the engine of the economy, but I take that they believe our economy grows and prospers based upon the activities new Democratic policies would seek to foster: home ownership and college education. Left unstated is what the middle class would do with funds freeded up by shifting the burdens of medical-, child-, and elder-care to the wealthy (via taxation). Presumably, some of this would also go toward mortgages and tuition, but I don't think that's certain unless there are also some additional carrots and sticks from the Democrats.

So what is seen is the beneficial increase in homeownership and education (and the questionably beneficial increase in disposable income) among a large swath of the public. What is unseen is the reduced economic activity among the wealthy.

This is partially obscured by the fact that the public don't really know what the wealthy do with their money. I suspect there is still a persistent, if latent, belief that the super-rich have money bins. Or failing that, "Lifestyles of the Rich and Famous" and "MTV Cribs" have convinced many that the wealthy live in conspicuous luxury; no doubt that is true for some of them, but Kaplan and Rauh disabuse us of the notion that celebrities account for anything but the merest fraction top earners. Further, the research of Thomas Stanley, popularized in The Millionaire Next Door, shows that this popular image is misleading. The point is, if Democrats rely on such illusions to justify confiscatory taxation to pay for their pro-middle class agenda, it will be an inaccurate argument.

And really, it doesn't so much matter what the rich spend their money on; it matters what they do to earn that money. This is the fundamental shift required to understand why conservatives believe that the wealthy are the engine of the economy. Despite antipathy for some of the very rich (trail lawyers, incompetent CEOs, decadent celebrities), conservatives consider most of them important leaders of industry, especially the much-praised small businessman. Taxing them seems counter-productive in the fullest sense of the word.

Ultimately, I think this shift in perspective explains the dichotomy Kim et al propose. Liberals focus on the aggregate actions of ordinary people, conservatives on the risk-taking of talented individuals. The question of who drives the economy is not, then, merely empirical. It requires one to choose one of these perspectives.