Income Inequality (I’m tooting my own horn)
I’ve been on the beat of income inequality since I started blogging here. My theory: We changed the way we make money from one of making it from producing (polishing rocks into tools) to one of making money from money. When you can make money from moving money, you don’t need to compete. Just buy back your stock, just collect rents, just get your tax cuts.
The World Bank has a new report out on Inequality 2018. I want to direct you to a chart that appears on page 7.
Now, here is one half of the chart I posted December 7, 2007.
Notice the approximate time of the crossing over of the Bottom 99%’s income vs the Less chained Personal Outlay? Look at that top chart from the World Bank. Notice the date?
I will tell you, that the 2 dates coincide with one other number. 15%. That is the share of income I calculated at the time of crossing over of my chart for the 1%. All of this was done using Saez’s data. One more chart. The other half of my December 7, 2007 posting.
This is the first half of my data for that December posting. Notice what happens around 1942. At that crossing over, the top 1% share of income falls below 15%. Coincidence?
Prior to 1942, we were coming out of the Great Depression. The relationship of the 3 lines in my chart prior to 1942 look to be the same as after 1996.
One other thing to notice, around 1988. The share of income for the 99% fell below disposable income. Prior to this since 1942 it was riding even to sometimes above the disposable income. You know what happened in 1988? Two years past the 1986 tax law with the reduction of the top tax rates, reduced to 3 brackets and changes made to be able to pay more with stock shares. Prior to that, it became legal in 1982 for companies to buy back stock.
We changed how we make money and no one is pointing this out as to why the nation is in such a mess. It won’t matter if we bring back manufacturing. It won’t matter if we raise the minimum wage. Neither of these things will make the full change we want such that we revert back to post 1942/pre 1988. We have to change the way we make money.
One last thing I wish those running for president would point out: Taxes are not bad. They are not the problem. How we are spending the money is the problem. You know, spend it so we are actually building nations/public capital instead of letting the current capital be sucked dry!
Frankly, the 99% when you adjust for the business cycle looks pretty steady until the debt crash of 2008. The late 90’s was the last big boom and it clearly created a bulge there though 2006-7 had its own little blip. The 65-73 boom was even more intense and took over a decade to correct.
One of the problem with you ole northern republican progressives is, you think growth is never ending and indeed it is. Without above trend growth of 1+ percent above population growth, things don’t “feel” great, because your looking for a high or as a junkie would say, a fix.
The whole bringing back manufacturing jobs line is a pure hoot. Manufacturing isn’t going to provide growth unless a new growth in technology based around revolution can provide the means for growth. It peaked in 1923, stop growing after 1957 and started contracting in 2000, until 2008 when it flattened since. Manufacturing as a national security or self-efficiency model not based on growth? I am down with it, but that requires less spending, less eating out and more conversation of resources. Capitalism as the banks started when the Papacy pushed monarchies in 1352 after a large wave of the Black Death, is a ponzi scheme. Its about debt expansion piling up like a pyramid. That is why I laugh at Austrian/Libertarian idiots that say otherwise. Its Bernie Madoff in a large historical era………..and yes as Bernie found it, things do fall down.
Yes Bert, the 99% is a pretty steady line. Unfortunately, steadily in debt.
Bulge? It only looks that way because the growth line for the 99% actually declines in slope. It kind of was back to where a projection line would have taken it by 2002 and then goes flat. Still, the divide between the income line and the other two just got wider over time.
“One of the problem with you ole northern republican progressives …” quite the assumption there and in the rest of your statement.
Thanks for pointing out something that’s been a burr under my saddle for some time.
Also, as I’ve followed this debacle the past decade or two, I remember reading how much greater percentage of GDP the financial sector is now. Can’t recall the exact figure and don’t know if it’s still that increase.
The stock market is a casino. No longer do you ‘buy a piece of the company’, you buy a chit that you hope to cash in on seconds to weeks or months after you purchase it. No wonder stockholders love buy backs!
Another thing that reeks is the idea that ‘shareholder value’ trumps everything else.