On [growing] American inequality

How much household income has received the top 0.01% of Americans since 1913?
Here‘s a graph in Paul Krugman’s blog showing it.

The richest 0.01% individuals in America and their income

The richest 0.01% individuals in America and their income

The graph was made with the tables and figures updated to 2007 prepared by Emmanuel Saez, Professor of Economics at the University of California at Berkeley and the most recent winner of the John Bates Clark medal.
Here‘s an updated explanation of the author on the behaviour of top incomes in the United States from 1913 to 2007. And here’s a recent NYT article on the net loss of wealth experienced by the leisure class.

7 Responses to On [growing] American inequality

  1. Ben says:

    It is interesting to remark that from the 1940s to 70s the top .01% of the population was ‘only’ earning 100 times more than the mean. So that means that roughly 7,000 people were making more than $100,000 a year.

    Another interesting stuff is that only at the beginning and the end of the period is the rise of income inequality correlated with globalization and stock market rise (the peaks of the mid 1930s and late 1950s do not appear).

  2. Sarah Couto says:

    You guys (Krugman, Benjamin and Manuel) speak of income inequality like it’s something immoral. The very notion of equality is flawed – people vary by ability and interests, furthermore, any society, human or non-human, has a natural hierarchy. Who do you think creates jobs? Perhaps the title should be “On [growing] American Meritocracy].”

    Not so long ago, less than 100 years ago, most North Americans were malnourished and employed in slavery.

    Regardless of Krugman’s numbers, there’s a human factor. As historians, you must situate a phenomenon in the context of human life and evolutionary history.

    Leftie dogmas served his generation fine, but the ones to come should carve their own path.

  3. Ben says:

    No economic inequality is not bad as such. On the very long run, economic inequality grew tremendously (e.g. compared to 100,000 YA). On the short term China, Brazil, Russia and India all have high inequality rates (and enviable growth rates).

    It does has its problems though: it fuels desindustrialization (Dutch disease), etc. Although I don’t think as some do that the utility curve comes back down passed a certain point. And of course, you have political instability.

    Sarah’s comment however misses the point. The question is not whether inequality is moral or not. It is not even a matter of efficiency. The question is (1.) what causes it (stock market booms, output growth, etc.)? (2.)how does it affect society such as the US which still live on a strong Jacksonian ideal?

  4. Sarah Couto says:

    You cannot say that economic inequality is greater than 100,000 ya.

  5. Ben says:

    In absolute terms, yes and I suspect in relative terms too.

    If you take a society with 300,000,000 people the spread is likely to be significantly greater than in one with only 150 individuals.

    Not mentioning (;) Andrea) that before the ability to build stocks the concept of economic inequality may not have even existed within a group.

  6. Thorfinn says:

    Consumption inequality, which we really should care about, has remained much flatter in this period.

    I’ve looked, and failed, to find any empirical studies causally linking inequality to Dutch Disease or inequality, nor does it seem to obviously impact the “Jeffersonian Ideal”. Honestly, I can’t think of a single tangible harm inequality by itself has caused in the US. Do you have any references?

    • Ben says:

      @ Thorfinn, thx for the comment

      I agree, consumption inequality is certainly more important than income.

      Relative to the Dutch Disease phenomenon and inequality, I’m surprised you didn’t find anything since it is at the root of the stuff (well more broadly of the ressource curse): if the salaries of the resource sector and of the non-traded services rise along but faster than prices, the workforce in the rest of the economy suffers as a result. It is no secret that resource rich countries are severely unequal (as well as some other whose growth was boosted by a single or a handful of sectors, eg China).

      I am no specialist of US history, but it seems to me that a lot or legislations harmful to the economy have been passed while the public was electrified by real or imaginary inequalities (cf antitrust or the whole robber barons story).

      That being said this is just from the top of my mind, I don’t have any reference.

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