Home > income redistribution, Plutonomy > Top .01%, Top 1%, Bottom 99%

Top .01%, Top 1%, Bottom 99%

from David Ruccio (and the New York Times

For the arithmetically challenged, that’s a total of 93 percent of the growth in income in 2010 that went to the top 1 percent of taxpayers.

What these numbers indicate is that the wages and salaries of the bottom 99 percent barely changed but the surplus those same workers created during 2010 (a) increased, (b) was mostly captured by the top 1 percent, and (c) was sheltered from taxes.

In other words, the tiny minority at the top made out like bandits in 2010.

  1. March 27, 2012 at 12:18 pm

    That result is entirely predictable and explicable. It follows from Ricardos Law of Rent as it applies in conditions of full land enclosure. For a more detailed analysis, refer to Henry George’s book “Progress and Poverty”. Marx gives a defective explanation by conflating land and capital and failing to define either with precision.

    There is little more to add to what Henry George said. He spelled out what needs to be done bad sadly those would would wish for economic reform looked elsewhere so the problem has never been solved.

  2. robert r locke
    March 28, 2012 at 8:11 am

    All my life i’ve had a certain conception about America. American cannot be Ameica without a people of plentty residing in its borders. Most Americans rich and middle class shared this view, although they fought about how it could be achieved. Then c. 1980 the Ameican directing classes abandoned this belief and in a selfish grab for money increasingly maldistributed wealth in civil society, so that a gap between the rich and poor steady grew,which these statistics demonstrate. People who hold power and the purse strings in the country have abandoned the people to their fate. And the exceptionality of Ameica has disappeared: just another of the many countries characterized by a society filled with a small rich elite and lot of poor.

  3. Ignacio
    March 28, 2012 at 9:37 am

    It would be nice if the post was complemented with a comparison on debt growth during 2010 so see if US consumers are deleveraging at all. The problem is that we don’t now how household debt is distributed among the top 1% and the bottom 99%.

  4. Stuart Birks
    March 28, 2012 at 10:02 am

    Someone once asked why sportspeople who suddenly appear and excel in their first season commonly do much worse subsequently. An answer was that not only were they better than everyone else in their first season, but also they were performing well above their own average.

    It may be that someone in the top 1%, or top 0.1%, is performing well above average that year. It would be wrong to assume that someone in that top group this year was in that group last year and will be next year. I don’t know what the turnover rate is in these groups, but it is most probably more than the zero assumed in the article.

  5. merijnknibbe
    March 28, 2012 at 11:48 am

    Dear Stuart,

    you really think that the 0.1% really ‘earned’ that much? A lot of them are bankers, who might as a matter of fact nowadays often have a negative value added and be worse than everybody else. Never heard about the sub-prime scandal and the triple A rated ‘baskets’ of mortgages including these sub-prime mortgages? What a scam. Did I tell you about my bank (ARS bank) , which (must have been about ten years ago) suddenly sold my shares (and earned a fee because they did this) and reinvested the money in ‘funds’ which never yielded any dividends, but which, unlike the shares, did cost an additional 1,5% a year in fees? Did I tell you that I filed a complaint about another bank which wanted to lend me 40.000 for home improvement, of which I would only see 30.000 while the other 10.000 (which I had to borrow!) would be used to buy a kind of insurance from the bank, for the bank (didn’t do this, of course, but many, many other people did: DSB bank). Do you know that, every month, I have to lend my entire salary to the bank as I’m obliged to have a bank account on which my salary is paid, while the bank charges me for having this account? Don’t be a muppet, get real.

  6. Stuart Birks
    March 28, 2012 at 10:02 pm

    Merijn, we are talking at cross-purposes. I have no doubt that some have gained a lot of money in exchange for poor services, and others have lost a lot of money due to the actions of others. History is full of examples to support this view, contrary to representations of an ideal world in some economic theories.

    However, that is not the same as saying that there is a small group of people at the top of the heap for which the membership does not change and who work together to further their own interests and keep everyone else down. It may be that (1) membership is changing, and (2) the group consists of individuals who, far from working together, are actually in cut-throat competition with each other and with everyone else. I am not saying that this alternative is definitive, but neither is the former. It may be satisfying to set up some “other” as the enemy, but it does not help if this is inaccurate. “Know the enemy”, Sun Tzu, The Art of War, Chapter 3, point 18.

  7. paul davidson
    March 28, 2012 at 10:53 pm

    One obvious reason for this growinmg inequality of income is that now many white collar jobs and blue collar jobs [ except personal services, etc] can be outsourced. Outsourcing and the mere threat of further outsourcing keeps the remaining US employed workers “in their place”. As long as there is cheap foreign labor that can do the same tasks whether it be working in factories , call centers, or even technical jobs such as computer programming radiology readings, etc. most US workers will see little or no growth in real income — and may even suffer declines in real income

    The top 1% get much of their income from their portfolios (ofter inherited) of financial and real asssets, plus wages and salaries and bonuses by being in top management of multinational corporations. Thus, for example, before he died Steve Jobs was in the top 0.1% while most workers for Apple in the UJS had little to gain in recent years –except if they had stock options– while factory workers that produce ipods, iphones, and ipads work under uncivilized sweat shop conditions in China, etc.

    But we can solve the outsourcing problem and bring back prosperity to the 99% of the US labor force by installing a 21 century version of the “Keynes Plan” that Keynes produced at Bretton Woods. For a modern version of this Keynes Plan and an explanation of why it stops outsourcing creating income inequality producing problems see my IMCU [International Monetary Clearing Union] plan as developed in my THE KEYNES SOLUTION 2009 [Palgrave] book and/or my textbook POST KEYNESIAN MACROEOCONIMC THEORY , 2nd edition [Elgar, 2010]

    Psul Dvidson

    • Alice
      March 29, 2012 at 11:08 am

      Except we still cant mention the unmentionable????…as to why the top .o1% is doing so well can we? Corruption of government processes right to the top… pure and simple. They and their money are above the rule of law (which has become a joke) and the 1% can do what they want without fear of repercussions, sanctions, criminal charges or jail (none of which exist for them – except feather duster on the wrist fines – the cost of which is a minute part of their business costs and a minute part of their criminal proceeds).
      There is almost no point in discussing a remedy of economic theory until we face the fact that current useful economic theory has been subverted, along with the rule of law.
      Was Bush charged with crimes of torture or with exercising warrantless spying activities on US citizens? Were any Wall Street execs charged with fraud? Were any banks who repossessed people’s property without good reason charged?
      No – they were all exempted by retrospective decisions of both republicans and democrats.
      Crime does pay and will keep paying while ever this corruption isnt dealt with. Its the government that has been corrupted.

  8. robert r locke
    March 29, 2012 at 12:43 pm

    Forget economics and crooks. Look at the firm. It has owners, individual proprietor, partnerships, or joint-stocki owners. The people who work in tthe firm have no voice in how the rewards earned by the firm working in a free market are distributed. The proprietors or their agents determine that. The problem starts there. So deal with the problem there: conceive of the firm as an entity, wherein employees, stockholders, and customers can participate in decision-making about how firms are run and emoluments paid out. If you don’t start with firm governance you won’t get anywhere.

    • Alice
      March 30, 2012 at 10:10 am

      The entire problem is robert, we do not have firm governance. I think that was my point…and who of which party is going to introduce firm governance?/

      Its ridiculous to even imagine they will with the system the way it is in the US. Its corrupt. I cant even see the point of engaging in which economic policy would actually produce good outcomes for the economy when the heavyweights of industry are leaning on a beleagured and paid for puppet in government to introduce the sort of reforms for paying lobbyists that will only benefit the wealthiest. All the stats are out there now. The wealthiest have benefitted wildly ovr three decades of “let the market rule” hysteria.

      What more proof do we all need?. If the market rules the bastards dont go to jai when they shoul and excessive greed is worshipped instead of seen as a human failing. We can talk about firm governance but who amongst our motley collection of elected representatives didnt get there without the help of big industries who expect a return from the political donation dollars they put in?

      The US political system is a lump of swiss cheese with holes you could drive a truck through.

      Thats why all this talk of how to “fix the economics / economic model” is completely and utterly meaningless. First fix the rotten to the core government proceses and we might actually ahve a chance of getting good economics in – but until then, it is quaint to discuss, for those so inclined, but essnetially a waste of time. For every decent economic policy proposed, the stink tanks and their media friends will snow most people with a well advertised rotten economic policy.

  9. robert r locke
    March 30, 2012 at 10:29 am

    I’m inclined to agree with you Alice, about the United States, but the battle is still on outside the US-UK orbit, which is where so many of the people who participate in this blog live in fact and psychologically. I live in Gemany and I have studied the German firm governance system for over 30 years. It isn’t perfect and it has been eroded by the invasion of US-UK Investor capitalism in the past few decades. Its a tough battle to give those who have no voice in firm governance a voice, but it is not hopeless, except in America. I am just hoping in the coming years that the non-US-UK world, whose importance is getting greater in the total complex, will find a more equitable system for distribution of the rewards to people who work in private firms. Don’t expect much from US politics, it just gets worse there.

    • Ignacio
      March 30, 2012 at 11:06 am

      Few days ago I read a comment in this blog, that I found illuminating I don’t know if it was yours but it was within your line of thinking, I believe. The commentary was that labour should not be seen as a cost, but as a share of corporate benefits. It follows that good governance should seek fair benefit sharing between corporate owners, managers, financers and the labour force, As you say, corporate governance is an important playground. This playground have different rules depending on which country and I confess, as a spanish, to feel somehow envious about german rules. I also notice that corporate structure (size, ownership etc.) is quite different when we compare countries such as Germany and Spain. My point is that it is a complex playground, where the labour share has been “conveniently” divided and negotiations are tricky, due to complex labour rules. One of the tricks is to change labour rules depending on the economic sector and companies have workers in different sectors.

    • Alice
      March 30, 2012 at 11:25 am

      Maybe the battle is still on in those countries as you say Robert outside the US-UK orbit ..and hang on could I suggest the battle is still on in what the charming US pro vested interest media refers to as “the socialist europeans” – its all so tiresome isnt it?

      I dont expect much from US politics. It has been so overcome with the pressure from corporations, that basically whoever has any power (starting from Nixon and watergate through to Bush and his illegal tapping of US citixens with the large telecom companies that handed over millions of p\eoples phone records without a pause, and Goldman Sachs and its illegal behaviours and the banks who illegally foreclosed on many people’s property (and they were retrsopectively immuinised from their own illegala behaviours) well they all got pardoned by every incoming president (and without a pause the rhetoric was the same “we want to move on now and get over the past” and thats no accident when corruption has set in. Its a standard line – well practised by Obama and rebublican govenments in the US. The powers of large corporations and political appointees that break the law are above the law.

      There is no point discussing whats wrong with economics until this mess is fixed.
      No one should be above the law – but they are. The US is effectively lawless. Its a joke.

  10. Stuart Birks
    May 11, 2012 at 6:24 am

    A New Zealand study looked at income by base-year decile over time:
    “There is substantial mobility over time. The mobility is both up and down, though there is more mobility for the bottom deciles than the top deciles – only 24% of those in the bottom decile in 2002 were also there in 2009, compared to 46% of the top decile.”

    Persistence seems to be higher for the top decile, but it was still under 50%.

    The report can be found at:
    http://www.treasury.govt.nz/publications/informationreleases/income-deprivation/t2012-866.pdf

  11. July 15, 2012 at 4:38 pm

    I don’t think one can Legally call top 1% bandits but I think the rich 1% should and will have to pay more. Since the country has to pay its bills and Rich are the people who earn most of the income, then it is rich people who can really contribute to the revenues.

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