A strong economic recovery for 1% of us

piketty_saezWith each economic recovery, the top 1 percent of American income earners take a larger share of the national income.  It’s true that they lose more, percentage-wise, in recessions [1], but they make up for it on the upswing.

Unless you have a good argument that the top 1 percent are contributing more to the U.S. economy than ever before, I think you have to admit the system is out of balance.

Some economists say that increased economic inequality is a result of automation and computerization.   To me, that’s a different way of saying that the income gains are going to people who own machines and computers (who are not the same individuals as the inventors of the new automation and computer technology).


The Rich Get Richer Through the Recovery by Annie Lowrey of the New York Times.

How the 1 percent won the recovery by Dylan Matthews of the Washington Post’s Wonkblog.

The Rich Keep Pulling Away From the Rest of Us by Kevin Drum for Mother Jones.

Breaking Down the Falling Labor Share of U.S. Income by Timothy Taylor on his Conversible Economist web log.   This is an argument that the changing distribution of income is due to impersonal economic factors.  I don’t see it, but judge for yourself.

[1]  As Kevin Drum pointed out in his post, you have to be careful about percentages, because a percentage loss counts for more than a percentage gain.  Suppose you have a stock worth $100 a share and it loses 50 percent of his value.  The stock, now worth $50, must rise 100 percent, not just 50 percent, to regain lost ground.

If you look at how the upper 1 percent have been doing since the 2007 recession, their 36.3 percent loss and 31.4 percent rebound nets out to a 16.3 percent loss in average income.  The rest of us only suffered an average loss of 11.2 percent.

If you look at the long-range trend, it shows that the upper 1 percent are doing all right, and my guess is that they will soon make up for lost ground.   You don’t have to make things seem worse than they are to be concerned about this trend.

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