Income Inequality Is Real, It's Global, and It's Worst in the U.S. (Matthew O'Brien)

[swag]

http://www.theatlantic.com/business/archive/2012/03/income-inequality-is-real-its-global-and-its-worst-in-the-us/254248/

I know this sounds like blasphemy, but is it possible that America isn't an exceptional nation? Allan Meltzer makes the case that we are not and never have been -- at least when it comes to income inequality. Here's his chart from the Wall Street Journal showing trends in the income share of the top 1% for a handful of developed countries over the past century.



Let's begin with the left of the graph. As you can see, the incomes of the 1% move (roughly) in tandem across national boundaries. Blaming factors like globalization and new technologies for rising inequality may not be sexy, but that doesn't make them any less true. To the chagrin of Newt Gingrich, there's nothing particularly exceptional about America here.

But as your focus moves to right past 1980, the top 1% in Anglophone countries like the United States, Great Britain and Canada began pulling away from their European peers. And America pulled away from everybody else. Something more than just globalization is going on here.

That something is in large part government policy. A common mistake people make when they think about the government's role in inequality is to focus solely on tax rates. Skyrocketing inequality in the United States coincided with an era of tax-cutting for the rich, so intuitively it seems obvious that the mania for slashing top marginal rates was responsible for the rise of the 1%. Intuitive, but wrong. It's actually been a massive increase in pre-tax incomes for the 1% that has driven soaring inequality, not decreasing redistribution. Which brings us to the Reagan-Thatcher model of deregulated -- or in the case of derivatives, unregulated -- markets. It's this laissez-faire approach to financial markets and corporate boardrooms that explains why our rich have made off like bandits.

. . . more

[Skinner]

1. It is striking how the curve starts to bend back up right around 1980.

What might have happened then?

[swag]

2. Oh, I seem to remember something.

Something that gave me the blues for 8 or 12 years or so.

Seems to be a gift that keeps on giving, to the very wealthy at least.

[Odin2005]

3. We gots trickled on.

[midnight]

4. One in five American children now living in poverty according to new report Read more:

Read more: http://www.dailymail.co.uk/news/article-2027013/Child-poverty-1-5-American-children-living-poverty.html#ixzz1oqOMNdP4

Govt. Policy demands the creation of jobs.

[midnight]

5. Aren't tax cuts just entitlements for the rich?