Prosperity for whom?

income distribution

This chart shows that during the Obama administration, the United States has had an economic expansion in which the vast majority of the population lost income.   This is the first time this has happened in more than 50 years.

There were sharp drops in average income growth during the Reagan (1982-1990) and Bush (2001-2007) years, but this is worse.

An economic expansion is a period of continuous growth in gross domestic product for at least two fiscal quarters in a row.  Americans are producing more.  But most aren’t getting the benefit of it.

I don’t think this is so much because of anything specific that the President and Congress have done as what they have not done.

I think the economic system is now structured to redistribute income upward unless something changes, and most of the present political establishment, both Democrat and Republican, is unwilling to change.

income-growth

It is true that the top income earners lose a greater fraction of their incomes in recessions that the majority do.  But taking the ups and downs together, the economic elite are taking an ever-larger share.

§§§

Source: “The Most Remarkable Chart I’ve Seen in Some Time”: The Rich Gain More Ground in Every U.S. Expansion by Yves Smith for Naked Capitalism.

If you’re trying to reconcile the two charts, keep in mind that the top chart distinguishes between 10 and 90 percent of the population, and the bottom chart distinguishes between 1 and 99 percent of the population

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3 Responses to “Prosperity for whom?”

  1. whungerford Says:

    Befuddled by political propaganda, we have allowed progressive taxation to be whittled down to ineffective without appreciating the consequence so clearly shown in the chart.

    Like

    • philebersole Says:

      It is no accident that it was during the Reagan era that the income gains of the top 10 percent exceeded to gains of the bottom 90 percent for the first time.

      The Reagan administration, with crucial support from Democratic leaders in Congress, slashed the the top marginal income tax rates and raised payroll taxes to support Social Security (instead of raising the payroll tax cap).

      I don’t think that taxes are the whole story, and maybe not the main story.

      Changes in corporate governance allowed a small group of managers or takeover specialists to milk an organization for their own benefit, even though they added little of value, or nothing of value, or even did harm.

      Changes in banking and financial regulations allowed bankers and speculators to do the same, with the government even bailing out the failures.

      Unethical corporate and financial management not only enriched a tiny few. It subtracted income and wealth from the rest of us.

      In my opinion, the big reason for all this, and the one that underlies all the other causes, is the weakening of the labor union movement, and the abandonment of the labor movement by so many self-identified liberals.

      Like

  2. BOB McGILL Says:

    this is the best part “I think the economic system is now structured to redistribute income upward unless something changes, and most of the present political establishment, both Democrat and Republican, is unwilling to change “

    Like

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