It seems to me the argument written in The Economist that the top 1% share of income has changed little since 1960 is meaningless given the middle Class of America is clearly worse off by any measure.
The Economist talks abut world economics and income inequality. I am not talking abut world economics, I am talking about the USA.
"Measuring the 1%"
Economists are rethinking the numbers on inequality
An academic disagreement has big real-world implications
BriefingNov 28th 2019 edition
https://www.economist.com/briefing/2019/11/28/economists-are-rethinking-the-numbers-on-inequality
"OVER A DECADE before thousands of protesters gathered in Zuccotti Park in New York in 2011, a little-known researcher in France sat down to write about income inequality in a new way. “The focus of our study consists in comparing the evolution of the incomes of the top 10%, the top 1%, the top 0.5%, and so on,” Thomas Piketty wrote in a paper in 1998. With his long-term co-author, Emmanuel Saez, Mr Piketty pioneered the use of tax data over survey data, thereby doing a better job of capturing the incomes of the richest. He revealed that “the 1%” had made out like bandits at the expense of “the 99%”. His research gave Occupy Wall Street its vocabulary.
What followed was an explosion of research into the causes and consequences of a surge in inequality across the rich world. In “Capital in the Twenty-First Century”, a bestseller first published in 2013, Mr Piketty argued that under capitalism rising inequality was the normal state of affairs."
So what contortions do we need to go thru to determine income inequality has not grown since 1960?
"In America the story seemed more solid, based on the analyses of tax data produced by the likes of Messrs Piketty, Saez and Zucman. However, a recent working paper by Gerald Auten and David Splinter, economists at the Treasury and Congress’s Joint Committee on Taxation, respectively, reaches a striking new conclusion. It finds that, after adjusting for taxes and transfers, the income share of America’s top 1% has barely changed since the 1960s (see chart 1)."
It's about taxes? Come on man!
"Few dispute that wealth shares at the top have risen in America, nor that the increase is driven by fortunes at the very top, among people who really can be considered an elite. The question, instead, is by just how much."
Spare me. This is a screwed up logic argument on the level of Dershowitz arguing that if it is the public interest in the President's opinion, anything the President does is OK and legal and automatically good for the country. The rich get richer every day because our form of capitalism is RIGGED FOR THE RICH, PERIOD!
"The Decade in Which Everything Was Great But Felt Terrible"
In the 2010s America achieved late capitalism.
Annie Lowrey - Staff writer at The Atlantic December 31, 2019
https://www.theatlantic.com/ideas/archive/2019/12/road-late-capitalism/603769/
"The central economic dynamic of the 2010s was that no matter how well the market was doing, no matter how long the expansion lasted, no matter how much the economy grew, families still struggled. It was a decade that strained America’s idea of what economic growth could do, and should do, because it did so little for so many.
More.
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Looking at the headline numbers, the decade went so well. The Great Recession officially ended in mid-2009, just after President Barack Obama took office, and the economy has not stopped growing since, expanding through the Eurozone crisis and the taper tantrum and the debt-ceiling crisis and manufacturing downturn of 2016. The current expansion is now the longest in modern American history, extending for 10 and a half years and counting. The S&P 500 has tripled in value over the past decade. Corporate profits just keep climbing. American businesses are sitting on a $2 trillion pile of cash.
But scratch the surface, and there is ample weakness. Annual GDP growth continued its long-term secular decline in the 2010s, meaning that the economy piddled along instead of really booming. Productivity growth—the crucial determinant of rising living standards in the long term—was abysmal. The country’s output grew mostly because its workers did more work, not because businesses became more effective and efficient and ingenious."
The 2010s economy is not really helping the people who need help. We need health care coverage and higher taxes to fix infrastructure, and America needs to fill the Treasury by taxation so we can pay to improve schools and education in general in America.
"The 2010s were a decade that left families fragile, unequal, and divided. These years made clear, if it wasn’t already, that the system is rigged for big businesses and the already-rich. They demonstrated that even a very good economy does not necessarily work for the middle class. The 2010s showed how bad everything could feel when everything was going great. This decade, we made it to late capitalism. We became late capitalism. We are late capitalism."
Go on, do your research, but don't stop at esoteric logic arguments from publications like The Economist. Sometimes when we think too deep with digging really, really deep and wide we get the wrong conclusion.
"Income Inequality in America"
Causes of Income Inequality
By Kimberly Amadeo Updated December 16, 2019
https://www.thebalance.com/income-inequality-in-america-3306190
"One-quarter of American workers make less than $10 per hour. That creates an income below the federal poverty level. These are the people who wait on you every day. They include cashiers, fast food workers, and nurse's aides. Or maybe they are you.
The rich got richer through the recovery from the 2008 financial crisis.1 In 2012, the top 10% of earners took home 50% of all income. That's the highest percentage in the last 100 years. The top 1% took home 20% of the income, according to a study by economists Emmanuel Saez and Thomas Piketty.2
The University of California, Berekely. "Striking it Richer: The Evolution of Top Incomes in the United States (Updated With 2012 Preliminary Estimates)," Accessed Nov. 29, 2019.
By 2015, America’s top 10% already averaged more than nine times as much income as the bottom 90%. And Americans in the top 1% averaged over 40 times more income than the bottom 90%. The chart below shows a breakdown of average household incomes ranging from the bottom 90% to the top 1%."
There is a lot more fact-based evidence in the above article. Read it if you care.
"U.S. Income Inequality Worsens, Widening To A New Gap"
Bill Chappell September 26, 20192:12 PM ET
https://www.npr.org/2019/09/26/764654623/u-s-income-inequality-worsens-widening-to-a-new-gap
"While many states didn't see a change in income inequality last year, the income gap grew wider in nine states: Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas and Virginia.
The disparity grew despite a surging national economy that has seen low unemployment and more than 10 years of consecutive GDP growth.
The most troubling thing about the new report, says William M. Rodgers III, a professor of public policy and chief economist at the Heldrich Center at Rutgers University, is that it "clearly illustrates the inability of the current economic expansion, the longest on record, to lessen inequality.""
More.
"Income inequality is measured through the Gini index, which measures how far apart incomes are from each other. To do that, the index assigns a hypothetical score of 0.0 to a population in which incomes are distributed perfectly evenly and a score of 1.0 to a population where only one household gets all of the income.
In the U.S., the Gini index figure had been holding steady for the past several years. But it moved from 0.482 in 2017 to 0.485 in 2018. While that change may seem small, it's statistically significant, the Census Bureau says. The agency notes that back in 2006, the figure stood at 0.464.
The Census Bureau says five states — California, Connecticut, Florida, Louisiana and New York — and the District of Columbia and Puerto Rico had higher inequality rates than the rest of the U.S. in 2018. Of that group, California is the only state that saw its income gap grow even wider last year."
I suggest caution to readers of "Capital in the Twenty-First Century," and the expert economist Thomas Piketty parsing a view on economic inequality to soften the fact the top 1% are getting more, period, and the FACT American "capitalism" is rigged in a thousand ways starting with the tax code.
I'll say it again, and I have blogged this truth already, the American form of "capitalism" is not free trade or open markets, it is rigged in a thousand ways to keep poor people poor and help rich people gte richer every day starting with the United States tax code.
"Income Inequality In America Continues Its Inexorable Rise"
Andrew DePietro - Contributor - Jan 7, 2020
Opinions expressed by Forbes Contributors are their own.
Personal Finance - I cover small business, real estate and cost of living.
https://www.forbes.com/sites/andrewdepietro/2020/01/07/income-inequality-rise/amp/
"Income inequality is an increasing problem in the United States and has been for several decades now. According to the Center on Budget and Policy Priorities (CBPP), back in the mid-1970s, income inequality reached its lowest point after incomes grew rapidly over the years from the late 1940s to the 1970s. Also, incomes increased at about the same rate for different households all along the income ladder. Then, beginning in the 1970s, economic growth slowed, as dramatically demonstrated by the 16-month recession from 1973-1975, the longest recession at the time since the Great Depression. Ever since then, income inequality has been on an inexorable rise. "
Are all these reporters and studies getting it wrong, and The Economist is right?
"New research suggests rising returns on housing—not all wealth—may help explain rising inequality"
Wealth inequality
NIMBYs in the twenty-first century - Economics - Free exchange
Mar 25th 2015 by C.R. | LONDON
https://www.economist.com/free-exchange/2015/03/25/nimbys-in-the-twenty-first-century
"On March 20th Matthew Rognlie (pictured), a 26-year-old graduate student at the Massachusetts Institute of Technology, presented a new paper at the Brookings Papers on Economic Activity. Although the paper began its life as a 459-word online blog post comment, several reputable economists regard it as the most serious and substantive critique that Mr Piketty's work has yet faced.
In his book, Mr Piketty argues that over the long run the rate on return of wealth exceeds economic growth: a dynamic summed up in the equation r>g. Over time, this relationship increases inequality as the share of national income going to those who own capital (the rich) rises, while the portion going to labour (everyone else) falls. He also argues that the return on capital in recent history has been remarkably stable, even as economic growth has fallen, and that this trend will continue in the future.
Mr Rognlie mounts three main criticisms of these arguments. First, he argues that the rate of return from capital probably declines over the long run, rather than remaining high as Mr Piketty suggests, due to the law of diminishing marginal returns. Modern forms of capital, such as software, depreciate faster in value than equipment did in the past: a giant metal press might have a working life of decades while a new piece of database-management software will be obsolete in a few years at most. This means that although gross returns from wealth may well be rising, they may not necessarily be growing in net terms, since a large share of the gains that flow to owners of capital must be reinvested.
Second, Mr Rognlie’s research suggests that Mr Piketty has overestimated how high the returns on wealth are likely to be in the future. These should also decline over time, he reckons, unless it is very easy for the economy to substitute capital (like robots) for workers. Yet the historical evidence suggests that this is far harder than he suggests.
And third, Mr Rognlie finds that the growing share of national income deriving from capital income has not been distributed equally across all sectors. The return on non-housing wealth, in fact, has been remarkably stable since 1970 (see chart). Instead, surging house prices are almost entirely responsible for growing returns on capital.
Mr Rognlie has critics of his own. He appears to underestimate the role changing technology plays in widening inequality (by increasing the substitutability of capital for labour, for instance, or by raising the demand to live in expensive cities). But his observation that it is homeowners in particular—rather than rentiers generally—who are grabbing a larger share of the pie is important for policy. Mr Piketty used the historical evidence in his book to argue that a global tax of up to 2% a year on individual wealth should be introduced in order to prevent capital concentrating in the hands of the few. But if housing wealth is the biggest source of rising wealth then a more focused approach is called for. Policy-makers should deal with the planning regulations and NIMBYism that inhibit housebuilding and which allow homeowners to capture super-normal returns on their investments.
Just how inconvenient Mr Rognlie's argument is for Mr Piketty's overarching narrative is a matter of perspective."
I agree. Here is the perspective of most Americans who are paying attention. When the US Government passes tax breaks in 2019 for the rich and for corporate America, and I see more such tax breaks planned for 2020, I see the rich getting richer, PERIOD!
What else do I see in 2020 un Tweety Trump? It's a historical fact that dictators need the elite of their country to support them. Money buys loyalty. The Trump and GOP tax cuts seek support from the elite of American society, and they are getting that support by tax cut bribes.
