Divergence at the top in the U.S.
from David Ruccio
I don’t attend the American Economic Association annual meetings. And I’m not in San Francisco this year. However, according to Nelson D. Schwartz, mainstream economists have finally discovered the obvious: income inequality is a real problem in the United States.
The economic association’s meeting is something of a barometer of what concerns economists most, drawing more than 13,000 attendees from the ranks of academia, as well as research groups and the private sector. And in panels, research presentations and speeches, what was once mainly a preoccupation of ivory tower Marxists and other players on the margins of the profession is taking center stage. . .
At the same time, there’s a growing consensus among economists of all ideological stripes that inequality is growing — in the United States and abroad — even if the usual political fault lines appear when the discussion turns to the consequences of the trend and whether new public policies are needed to address it.
“It’s pretty much indisputable that the percentage of income being earned by the top 1 percent, or the top quarter of 1 percent, is going up,” said Richard H. Thaler, the association’s president.
“It was true five years ago, but it was not as widely recognized,” said Mr. Thaler, a behavioral economist who teaches at the University of Chicago. “As with climate change, scientific consensus takes a while to build.”
Inequality, as most people (especially “ivory tower Marxists and other players on the margins of the profession”) know, has been growing since the mid-1970s.
According to data from The World Wealth and Income Database, the top 1 percent income share (including capital gains) grew from 8.86 percent in 1976 to 21.24 percent in 2014. The top 0.1 percent share grew even more: from 0.86 to 4.89.
During the same period, the average (real 2014) incomes (including capital gains) of the top 1 percent grew 178 percent (from $353,380 to $983,896) and those of the top 0.1 percent 356 percent (from $904,450 to $4,129,983). Meanwhile, the average income in the United States increased by only 28 percent (from $46,355 to $59,346).
Now, apparently, at least some members of the American Economics Association are acknowledging that income inequality is an issue that needs to be addressed.