Class Warfare Is a Fact – Part 2

Paul Krugman makes the important point that the substantial gains in income for the richest Americans has been concentrated in a very small group. It’s not the top 10% or the top 5% or even the top 1% that has prospered the most — it’s the top tenth of 1% and the top hundredth of 1% who have substantially increased their share of the national income:

Of the gains made by the top 10 percent [since 1979], almost none went to the 90-95 group; in fact, the great bulk went to the top 1 percent. The bulk of the gains of the top 1, in turn, went to the top 0.1; and the bulk of those gains went to the top 0.01. We really are talking about the flourishing of a tiny elite.

In other words, income has only increased for the top 5.0% since 1979, and more than half of that increase went to the top 0.1%. It’s as if the bottom 95.0% of Americans haven’t received a raise in 30 years.

5 thoughts on “Class Warfare Is a Fact – Part 2

  1. I wonder what the mathematical odds of that outcome are? I wonder if it’s possible without ‘insider’ manipulation? Maybe the top 99.9% well, maybe 99.99%, should just commit suicide and bequeath all of their assets to the top .001%. I think that they deserve it; they’ve earned it. God bless the rich and especially the ultra rich.

  2. There was a great post on income inequality yesterday that I urge you to read. This fixation and misunderstanding of wealth and income is annoying. It’s even more annoying when a Nobel Prize winning economist turned partisan op-ed writer helps perpetrate the myth.

    • Thanks for your comment and the link, although I don’t consider it “great” at all. It’s a repetition of Republican talking points that aim to justify increasing inequality. For example, there is no wealthy, high-income class in America because lots of people’s wealth and income are constantly fluctuating; and lots of Americans are “takers”, living off generous handouts, such as the average yearly Social Security benefit — which is, by the way, only $13,932 or $1,160 per month.

      The author, Z. Mortensen, does make one valid point: there is a difference between wealth and income. However, the assumption that wealthy people and those with high incomes are significantly different groups is pure supposition. There is no evidence provided. Although there are some people who have high income one year and low income the next, I bet that most people in the top 1% of income overlap with those who have acquired serious wealth. After all, having consistently high income is the way people become wealthy.

      The blog post you recommend is an overheated critique of a fairly accurate summary of a paper by economist Emmanuel Saez (winner of the John Bates Clark medal given to an outstanding young economist). This is the paper:

      Saez’s paper starts off a little technical but isn’t very long. His overall conclusions begin on page 3. I highly recommend reading what he has to say. As you might expect, he isn’t confused at all about the difference between wealth and income and discusses their relationship in his final paragraphs (which I’m going to paste into a new entry in this blog). He refers to the top income group (the 1%) as primarily being the “working rich”.

      • It’s a repetition of Republican talking points that aim to justify increasing inequality.

        Thanks for your reply. It’s difficult to take your quote above seriously if you’re intent on citing your own “partisan.” Saez is an accomplished economist that’s known for having a liberal view of income inequality and has a fondness for “ballpark estimates.”

        I have grown tired of the Republican/Democrat back and forth. Both parties leave much to be desired. Class warfare isn’t anything new, but shouldn’t seemingly smart economists be beyond this kind of populist drivel?

        • Thinking that both sides in this debate are equally misguided is a sign of not paying attention. When the evidence fails us, we can always throw up our hands and retreat into cynicism.

          But, unfortunately, as someone once said, reality is known to have a liberal bias.

          PS — Offering something from the American Enterprise Institute (that bastion of right-wing propaganda, funded by some of the wealthiest people in America) as “evidence” against Saez doesn’t help your case.

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