From Capitol Hill to the Classroom: Senator Phil Gramm Shares Economic Research on “The Myth of American Inequality”

The Phil Smith Center for Free Enterprise welcomed former Senator Phil Gramm to the FAU College of Business, Tuesday, March 26^th. Gramm, who was an economics professor at Texas A&M University before running for the Senate, spoke on his economic research on income inequality in the United States. Over 200 students in Dr. Monica Escaleras’ Principles of Macroeconomics course learned about his career in the Senate as well as his data findings related to inequality in America.

Senator Gramm’s most recent book, The Myth of American Inequality, which was the recipient of the 2024 Hayek Book Prize, sheds light on how flawed data collection methods negatively distort our perception of the wealth gap in the U.S. The official Census Bureau number for Americans living in poverty stubbornly hovers around 12%. As Senator Gramm explained, if all transfer payments were included as household income, this statistic would plummet from 12% to only 2.5%. In addition, Gramm challenged students to redefine exactly what the definition of “poverty” should be by U.S. standards. “People classified as ‘poor’ in the U.S. have the same standard of living as the middle class in most other advanced economies,” said Gramm. His emphasis on poverty paired well with the recent subjects covered in the students’ class, as the effectiveness of government spending is always a hotly debated topic, no matter the level of macroeconomics.

Students also participated in a lively Q&A, inquiring on Senator Gramm’s stance on current issues as well as his congressional track record. A common thread throughout most of his lecture was that the ideas presented about income inequality were not meant to put an end to the conversation on income inequality, but rather to continue it. His visit to the College of Business reinforced his desire to express his own findings while listening to differing opinions.

The Phil Smith Center for Free-Enterprise is named in recognition of FAU College of Business graduate, Phil Smith. After graduating from FAU in 1969, Smith went on to establish Phil Smith Management, Inc., operating 11 automobile dealership locations representing 25 franchises in Florida and North Carolina.  The Phil Smith Center, designated as an Oasis of Excellence by the American Council of Trustees and Alumni (ACTA), seeks to advance Smith’s desire to educate future business leaders on the principles of free enterprise and how those principles affect growth, prosperity, and opportunity. 

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