A tale of two countries: inequality; we must help the working and middle classes (Piketty, Saez)

[sharedvalues]

http://equitablegrowth.org/research-analysis/economic-growth-in-the-united-states-a-tale-of-two-countries/

"It’s a tale of two countries. For the 117 million U.S. adults in the bottom half of the income distribution, growth has been non-existent for a generation while at the top of the ladder it has been extraordinarily strong. And this stagnation of national income accruing at the bottom is not due to population aging. Quite the contrary: For the bottom half of the working-age population (adults below 65), income has actually fallen. In the bottom half of the distribution, only the income of the elderly is rising.6 From 1980 to 2014, for example, none of the growth in per-adult national income went to the bottom 50 percent, "



Progressives need to help that 50% of Americans with wage laws and stronger unions, and we need to tax the wealth of the top 1% to flatten the wealth distribution.

[Warpy]

1. THIS is why the Democratic Party needs to catch a fucking clue and campaign on WAGES

Numbers have gone up due to inflation. Purchasing power has cratered. Wages were allowed to drop too far, so far that too many workers can't live on what they take home.

Reversing the growth at the very top is likely not possible, they've grown far too powerful. What might be possible is slowing the growth enough that inflation kills their purchasing power for a change, maybe sending them to buy airplanes and huge pleasure boats instead of Congressmen.

We can't go on like this. Anything this topheavy will collapse.

Campaigning on "middle class issues" in a country where the 1% have destroyed the middle class is no longer viable.

[sharedvalues]

2. Piketty claims only two world wars and a Depression stopped inequality last time

Last time being the first years of the 20th century.

That is one amazingly dark idea.

[Warpy]

3. It is, and the price is too high, especially since we're the ones to have to pay it

What I've been hoping for is a crash in the derivatives casino, something that would take everything with it, at least for a while. Only a handful of high flying financiers would see it coming, most of the 1% would not.

[Igel]

4. I don't know how to follow the argument.

They keep playing with when they're measuring income: Is it national average, pre-tax, post-tax? If post-tax, it's after any government subsidies and benefits; if pre-tax, then it's before any are added. (So if I make $30k and there are two of us, they measure it post-tax, depressing my earnings; if I'm making $15k/year for me and my kid, then it's measured pre-tax, discounting any government aid I'd get, depressing my net income.)

I'm used to household; not sure how it plays out if you look at individual incomes. On the one hand, stay-at-home spouses pull down the average; on the other hand, unemployed spouses also pull down the average. Given how the income distribution curve works, it's a lot more serious to split $250k/year than it is to split $40k/year.

Interesting is "the average post-tax income of the bottom 50 percent of adults(117M Americans) increased by only 21 percent between 1980 and 2014, much less than average national income." You picks your data, you gets your talking point.

At the same time, one conclusion is that the bottom-most cohort pays as much in taxes as it gets, one way or the other. However, some of that is buy-in for Social Security and Medicare/Medicaid; here it's seen as an expense, while most consider it to be a kind of non-collateralized, non-refundable investment.

[sharedvalues]

5. Yes-Their wealth argument is better. The 0.1% of Americans got all the wealth gains since 1980.

NBER paper, later a QJE paper. Saez and Zucman 2013
http://www.nber.org/papers/w20625
Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data

This paper combines income tax returns with Flow of Funds data to estimate the distribution of household wealth in the United States since 1913. We estimate wealth by capitalizing the incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations' tax records. Wealth concentration has followed a U-shaped evolution over the last 100 years: It was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The rise of wealth inequality is almost entirely due to the rise of the top 0.1% wealth share, from 7% in 1979 to 22% in 2012--a level almost as high as in 1929.


Great figure, esp the bottom panel: