How inequality is growing

This chart, from an article in the New York Times, shows the growth of inequality in the past 37 years.

The income growth that took place in 1980 benefited everyone, but primarily those at the bottom of the income scale.   That didn’t mean the rich became any less rich.  In fact, their gains measured in dollars rather than as a percentage probably were greater.   But a rising tide lifted all boats.

By 2004, things were just the opposition.  Most of the income growth that took place in that year was concentrated among the top income earners.

There is an interactive chart in the original article that shows the hockey stick pattern began in the 1980s, but really shot up beginning in the 2000s.

My theory is that the driving forces were (1) the Carter-Reagan era upper-bracket tax cuts, (2) the deregulation of the financial industry during the Clinton administration and (3) the refusal of the Obama-Holder administration to prosecute officers of financial firms “too big to fail.”

Deregulation created new ways you could to get rich in ways that didn’t create value for others.   Refusal to prosecute meant that you could get  rich dishonestly and keep what you had.

The Trump administration will not change this.   It is making things worse by advocating for eliminating what little financial regulation there is, and by granting tax relief that primarily benefits the upper brackets.

LINK

Our Broken Economy, In One Simple Chart, by David Leonhardt for the New York Times.

How Did They Get So Rich? by Matt Breunig for Jacobin.  [Added 8/10/2017]  Breunig shows that the great increase in the income of the wealthy came from ownership of capital.  They became so much richer because they were already rich.

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