The super rich get super richer.
(Edited to fix a math error.)
Brad Delong and Kevin Drum report on the latest U.S. income inequality statistics from Emmanuel Saez. The latest news is that incomes for the top 1% increased 14% between 2004 and 2005 while stagnating again for everybody else. Moreover, those income gains "are showing strongly along all components: wages, business income, dividends, and capital gains." In other words, whatever force is making the rich get richer isn 't a bubble or a transitional accident. It's solid, structural stuff. (For my money, Brad Plumer has made some of the best arguments on how this process works.)
Here is the updated inequality money chart:
It's remarkable when you think about it, given how much wealthier, more efficient, more technologically advanced the world is than it was 30 years ago (in the days before the home computer or the modern word processor for instance) that 99% of the U.S. population isn't any absolutely richer than we were then. To an extent, of course, we're all going to benefit from the technological advance going on around us -- less waiting in lines, for instance, or the ability to download freeware to convert documents or order things we need online rather than going out the store -- but most of our private shares of wealth we've generated since the end of the Vietnam War is actually lower than it was then, the same sized piece of a much bigger pie.
Another interesting factoid from the graph footnotes:
Income is defined as market income (excluding realized capital gains) and excludes all transfers such as Social Security benefits, unemployment insurance, welfare assistance, etc. The importance of transfers has grown overtime. They represent in 2000 about 15% of personal income and around 10% in 1973, and only 1-2% before 1930.
So in the same period in which market incomes have stagnated, real income from cash transfers has grown by something close to 50% in real terms among the bottom 99% of the population. (The fact that there has been a general trend in targetting transfers away from the very destitute and toward the lower middle class is another story.) As just one example, payouts from social security's disability insurance program have skyrocketed in recent years, a trend that many economists think stems less from greater experience of disability onset than from the decreasing attractiveness of consistent labour force participation to many workers.
In a way it makes sense. If the pie is growing and the market isn't going to dole out acceptable pieces, people will find alternative ways to absorb some of the largesse. Some, like I say, comes from general osmosis -- richer societies offer more comfort, more convenience and more things to see and do. But people will also pry it out the government by applying for more transfers, voting for politicians who offer them specific transfers, etc. etc. Conservatives who rail about the creeping welfare state and the perfidity of handouts but also hate the idea of market interventions that might force a more equal sharing of the spoils of progress should keep that in mind.
Brad Delong and Kevin Drum report on the latest U.S. income inequality statistics from Emmanuel Saez. The latest news is that incomes for the top 1% increased 14% between 2004 and 2005 while stagnating again for everybody else. Moreover, those income gains "are showing strongly along all components: wages, business income, dividends, and capital gains." In other words, whatever force is making the rich get richer isn 't a bubble or a transitional accident. It's solid, structural stuff. (For my money, Brad Plumer has made some of the best arguments on how this process works.)
Here is the updated inequality money chart:
It's remarkable when you think about it, given how much wealthier, more efficient, more technologically advanced the world is than it was 30 years ago (in the days before the home computer or the modern word processor for instance) that 99% of the U.S. population isn't any absolutely richer than we were then. To an extent, of course, we're all going to benefit from the technological advance going on around us -- less waiting in lines, for instance, or the ability to download freeware to convert documents or order things we need online rather than going out the store -- but most of our private shares of wealth we've generated since the end of the Vietnam War is actually lower than it was then, the same sized piece of a much bigger pie.Another interesting factoid from the graph footnotes:
Income is defined as market income (excluding realized capital gains) and excludes all transfers such as Social Security benefits, unemployment insurance, welfare assistance, etc. The importance of transfers has grown overtime. They represent in 2000 about 15% of personal income and around 10% in 1973, and only 1-2% before 1930.
So in the same period in which market incomes have stagnated, real income from cash transfers has grown by something close to 50% in real terms among the bottom 99% of the population. (The fact that there has been a general trend in targetting transfers away from the very destitute and toward the lower middle class is another story.) As just one example, payouts from social security's disability insurance program have skyrocketed in recent years, a trend that many economists think stems less from greater experience of disability onset than from the decreasing attractiveness of consistent labour force participation to many workers.
In a way it makes sense. If the pie is growing and the market isn't going to dole out acceptable pieces, people will find alternative ways to absorb some of the largesse. Some, like I say, comes from general osmosis -- richer societies offer more comfort, more convenience and more things to see and do. But people will also pry it out the government by applying for more transfers, voting for politicians who offer them specific transfers, etc. etc. Conservatives who rail about the creeping welfare state and the perfidity of handouts but also hate the idea of market interventions that might force a more equal sharing of the spoils of progress should keep that in mind.
0 Comments:
Post a Comment
<< Home