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Income redistribution in the United States

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  1. August 17, 2018 at 2:46 pm

    The top .01% of income does not include those monies squirreled away in tax havens which the really, really rich are prone to using.

  2. Graham Hodgson
    August 17, 2018 at 11:43 pm

    Wow. What on earth happened in 1980? Oh! Reagan.

  3. Helen Sakho
    August 18, 2018 at 3:44 am

    To which must be added the network of their “trusted” friends, family members and stooges of all sorts.

  4. Hepion
    August 20, 2018 at 1:54 am

    I wonder if this distorts productivity calculations, since high-income individuals save most of their income, and saving does not put pressure on price level. You could have high-income economy, with low price level. That would raise inflation adjusted GDP, without corresponding increase in actual production and consumption of real goods.

  5. August 26, 2018 at 8:07 am

    The history of income distribution in the US is an interesting story. At its beginning the US was for its time a remarkably equal nation in terms of income. With the coming of industrialization in the 19th century that began to change. With textile and other sorts of factories a primarily rural America began to change. Income began to concentrate as steel manufacturing, oil and natural gas development, and railroad construction grew. By the beginning of the 20th century 10% of Americans possessed over 40% of America’s income. The Progressive movement held back the growth of the concentration somewhat. But otherwise neither Federal nor State governments took any significant actions to reduce the concentration or its continued growth. This is the first instance of casino capitalism. The Great Depression slowed the growth of the concentration, but not much. At the time of the Great Depression 10% of Americans possessed over 50% of America’s income. This remained mostly constant till the mid-1930s. Then declined precipitously to between 12% and 14% due to FDR’s New Deal and World War II and its aftermath. Only after 1970 did the level of concentration again begin to rise. Such, that by 2010 once again 10% of Americans possessed 50% of America’s income, just as in 1929. In the words of Thomas Piketty,

    I will show that this spectacular increase in inequality largely reflects an unprecedented explosion of very elevated incomes from labor, a veritable separation of the top managers of large firms from the rest of the population. One possible explanation of this is that the skills and productivity of these top managers rose suddenly in relation to those of other workers. Another explanation, which to me seems more plausible and turns out to be much more consistent with the evidence, is that these top managers by and large have the power to set their own remuneration, in some cases without limit and in many cases without any clear relation to their individual productivity, which in any case is very difficult to estimate in a large organization. This phenomenon is seen mainly in the United States and to a lesser degree in Britain, and it may be possible to explain it in terms of the history of social and fiscal norms in those two countries over the past century. The tendency is less marked in other wealthy countries (such as Japan, Germany, France, and other continental European states), but the trend is in the same direction. To expect that the phenomenon will attain the same proportions elsewhere as it has done in the United States would be risky until we have subjected it to a full analysis—which unfortunately is not that simple, given the limits of the available data.

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