Sat Feb 16, 2013, 12:32 AM
HiPointDem (20,729 posts)
Top 1% get 121% of income gains since 2009 (100% of new income + 21% from your old income)
Yes, sports fans, you read that headline correctly. The top 1% has captured all of the income gains since 2009 and then some, roaring ahead while the rest of the population slipped behind. A new paper by Emmanuel Saez (along with his frequent co-author Thomas Piketty, a long-standing cataloguer of income inequality) estimates that the income gains to the top 1% from 2009 to 2011 were 121% of all income increases. How did that happen? Incomes to the bottom 99% fell by 0.4%.
This confirms a pattern that Matt Stoller highlighted: that income inequality increased more under Obama than under Bush. And the new Saez paper also describes how it came about. In short form, income to the top 1% is significantly influenced by capital gains. Remember, the tax reporting is not clean here: rising equity and bond markets help all those private equity and hedge fund professionals, who are able to get capital gains treatment for what ought to be labor income. But the paper also stresses that the lower orders were hit hard in the aftermath of the global financial crisis than in the dot-bomb era, which also saw a big drop in capital gains. That isn’t as hard to understand. The collapse of the dot-com mania didn’t impair the real economy overmuch because it was not fueled in a meaningful way by borrowings. By contrast, the housing bubble, and more important (in terms of damage to the financial system) the much housing exposure created synthetically by CDOs that consisted entirely or mainly of credit default swaps was highly geared, hence when it collapsed, it took credit providers down with it.
9 replies, 1227 views
Top 1% get 121% of income gains since 2009 (100% of new income + 21% from your old income) (Original post)
|kenny blankenship||Feb 2013||#3|
|woo me with science||Feb 2013||#5|
|Teamster Jeff||Feb 2013||#6|
|woo me with science||Feb 2013||#9|
Response to HiPointDem (Reply #2)
Sat Feb 16, 2013, 11:30 AM
JaneyVee (10,265 posts)
7. Oops, I was looking at the original Stoller article that link links to.
I would say the reason for the huge income growth for the top 1% is due to the stock market roaring back. The rest of us can't afford to play the stock market. Its become a casino for rich people.
Response to HiPointDem (Original post)
Sat Feb 16, 2013, 02:43 AM
kenny blankenship (15,689 posts)
3. Maybe it will trickle down?
Wouldn't the 1% getting all the income expansion during the recovery, plus that which we in the 99% lost, then be a good thing in that case? After all, it can't trickle down if it doesn't first overflow! Maybe they will get so full and stuffed with income they will blow out the seals in their sphincters and we will get rewarded for our patience all at once?
I'm just so relieved to know that the income lost by the 99% went someplace. I was worrying that it was gone for good. At least we know it's safe now. They will know better what to do with it than any of us. They are used to having a lot.
Speaking of a lot, there's always the Lottery! If it's true that any of us could hit it, we all could hit it. There's no excuse.