Spiky Income

If a picture is worth a thousand words, how much is this graph from Afferent Income (via Kevin Drum) worth a whole lot more. The graph tracks U.S. income inequality between 1979 and 2005 charting the share of national income going to various groups. Look at the spike showing the rise in the share going to the top 1 percent of households over this period.

Comments

[Daniel]

There seems to be a connection that what is bad for the top 1% is good for the bottom 90-95%. If the public would get that, really get that, we could break the celebrity status that the top 1% have and get much more equality in society.

[Michael Wells]

I've just had three attempts to post rejected with "We're sorry, your comment has not been published because TypePad's antispam filter has flagged it as potential comment spam."

What should I do?

[Michael Wells]

The two striking things about this is the gap between the rich and the superrich, and the overall loss of the bottom 90%. It's structural and is why the call of some liberal politicians to raise taxes on incomes over $200,000 is misplaced. I remember reading in David Cay Johnston's book Perfectly Legal "If you're a CPA making $200,000 a year you're not upper class, you're just another working guy" and thinking Come On, but he's right. Believe it or not, folks at that level are not benefitting all that much either. The real inequality is the top 1% (and even more the top .01%) Kevin Phillips Wealth & Democracy has a good discussion of the implications for society.

At the other end it's not just stagnation, but tragedy. The percentage of citizens of the world's richest country who work two jobs, don't have health care and are having their homes forclosed is criminal. Economists may argue about a recession, but the bottom 40% are in a virtual depression.

The chart shows the problem with the CBO measurement of the popluation into quartiles. The Afferent Income site has a good discussion of it, so I won't carry on about it here.

I would argue with the idea that what's good for the bottom 95% is bad for the top 1%. If income and assets are the only measurement, maybe. But it doesn't benefit the superrich to have people hungry, sick and homeless -- in America or worldwide. Bill Gates, Ted Turner, Warren Buffet get this -- they don't need any more money. The issue is systemic and needs to be solved on a systemic scale. The Creative Class theories are part of this, but only part.