I once read an argument by the libertarian economist Thomas Sowell against the conventional wisdom that rising income is bad because most statistics which show rising income inequality do not account for individuals moving between income bands over time.
His argument went something like this. Consider the average professional at the beginning of their career, for example a junior doctor ( the argument also seems to apply to non-professionals but in a less extreme way). They won’t be in the top income bracket when they begin working but over the course of their career they almost certainly will at some point. For this reason income inequality is not as significant an indicator of the actual economic situation for many individuals as it does not track how the incomes of individuals change, and often increase, over time. Furthermore, income inequality statistics don’t count people who don’t work, which includes a large number of wealthy pensioners. Therefore rising income inequality can even be thought of as a positive thing as it affords young people the opportunity to earn more, and thus actual leads to less actual inequality of wealth.
I couldn’t find a link to his exact words unfortunately but I suspect that he was making the point from the point of view to defend free-market capitalism.
My question is simply is is argument correct, and if not why not?
I am a physics student, so I’m possibly just not familiar with the most technical economic theory that might explain this, but I can’t figure out why this fact (that people move between income brackets over time) is basically never addressed either in political discourse ( eg the Labour Party are always talking about income inequality but I’ve never heard the Conservatives give as eloquent a response as Sowell) or the popular literature that I’ve read ( eg newspapers on the right and left, and books by modern economists such as Ha joon Chang and David pilling).