Income Inequality is Getting Lots of Press Today

It started with Prof. Krugman's post from yesterday called Even More Gilded where he talks about a very important but overlooked report by Prof. Emmanuel Saez. Now, this morning the front page of Huffington Post. This issue needs to catch on.

I strong urge people to read to Prof. Saez report: Striking it Rich. Here is the most striking excerpt:

The labor market has been creating much more inequality over the last thirty years, with the very top earners capturing a large fraction of macroeconomic productivity gains. A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II - such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality. We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional reforms should be developed to counter it.

Saez Income Inequality, via Krugman
Src: Paul Krugman, Saez Income Inequality U.S.

Worthwhile to note the research only goes to 2007.

Remember the equation? Income Inequality + Globalization + Financialization = Destruction of middle class

Sorry for the short post but still reading health care reform bills.

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I added Krugman's graph

to your post. Krugman had extracted one shocking graph that shows income inequality in beyond belief increase up to 2007.

I'd really like to see those numbers for 2008-2009.

What was that about executive compensation regulation?

Hope you don't mind, but the graph really drives the point home on how working America is plain getting raped.

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I don't mind at all

I am not very proficient at posting graphs very quickly.

Interesting, if you look at this graph and consider the decline in the manufacturing sector they appear to be heading in opposite directions. - Financial Information for the Rest of Us.

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user guide for images

there are multiple methods to post images on EP, but the lines of code to do it are displayed in the user guide.

I tried to make it simple so you could cut and paste and then just replace the example URL with the image URL you are going to display.

In your browser, right click on any image to either find the URL of it, or save it to your hard drive for uploading.

the rich text editor has an image insert button on it too. Admin forum has some additional info, tools.

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Inequality igual

Of course, A.G. would have (past tense) argued that the destruction is creative, since we are creating middle classes somewhere else.
Frank T.

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Frank T.

Great Report!

That's a great report by Prof. Saez. I recall reading several one-to-one correlations a year or so ago (I'll try to hunt down the graphs on these) concerning the rise in wages of Chinese workers between the ages of 20 to 29 years, and the same percentage drop in wages of American workers, aged 20 to 29 years, for the year 2007.

The second one-to-one correlation existed between the rise (really, an explosion) in American CEOs and senior management salaries and perks and the correlated drop in patents awarded to American citizens.

The obvious super-concentration of wealth normally bodes ill for real progress. One need only observe recent history: the connection between the widespread education boost from WWII's GI Bill, and the technical/industrial consequences from the NASA/Apollo Moon Project (utilizing the educated talent via that WWII GI bill).

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GI Bill -and infrastructure

The GI Bill was a great innovation -- you had millions of men getting out of service, many at age where they would form families, and inflationary demand. The GI bill took many out of the labor force for a few years and enabled expansion of universities, at the same time as a baby boom got under way (We used to refer to the married student housing as "conception village," a phenomenon which was replicated many times over). GI Bill also provided vocational education, and a stipend for farming. The outputs included a well-trained labor force and an educational infrastructure for the 1960s achievements. Other innovations that complemented this were the National Defense Education Act and the Interstate Highway System.
Today's GI bill does not have the same potential because the numbers are not as large, but we need the same kind of innovative thinking to deal with current problems. All the innovations I cited were paid for by the American taxpayer -- with great return on investment. That was a much better use of public funds than bailing out imprudent mega-banks and non-bank speculators.

Frank T.

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Frank T.

Maybe someone should connect the dots

Household debt ... marginal tax rates ... interest rates ... asset bubbles ... income inequality ... crash and burn.

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Someone has

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Prof Saez further said

Prof Saez further said Income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression. The paper points to a unprecedented disparity in American incomes. It's high time we focus our efforts on radicla policy changes

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