Re-estimating wealth inequality in the United States
from David Ruccio and Jamie Morgan and the current issue of RWER
If we return to the World Inequality Lab, the share for the top 1 percent in the United States is higher than the global figure. It was, for example, an astounding 41.8 percent in 2012 and 35 percent in 2014 (compared to 45.3 percent for the bottom 90 percent of households) However, depending on how it is measured, actual wealth inequality may be even higher.
Both the World Inequality Lab and the Federal Reserve (in the Survey of Consumer Finances) include housing and retirement pensions in household wealth – and those two categories comprise most of the so-called wealth of most Americans. The important point is that they don’t own much in the way of financial or business wealth. They live in their houses and they retire based on contributions from their wages and salaries over the course of their work lives. They own little in the way of equities, fixed-income claims and business assets, which we can refer to independently as real wealth (in so far as this wealth is something they can additionally call upon beyond specific retirement products or their home). If we take out housing and pensions and calculate just the shares of financial or business wealth – and, thus, equities, fixed-income claims, and business assets – the degree of inequality is much, much worse. According to my calculations, in 2014 the top 1 percent owned almost two thirds of the financial or business wealth, while the bottom 90 percent had only six percent. That represents an enormous change from the already-unequal situation in 1978, when the shares were much closer (28.6 percent for the top 1 percent and 23.2 percent for the bottom 90 percent):[1]
What does this mean? The majority do not have the ability to amass any real wealth; put another way, they produce most of the wealth but don’t take home any of the surplus. For the small group at the top, things are quite different. They do get a cut of the surplus, which they use, not only to purchase housing and put aside in their pensions, but to accumulate real wealth, for themselves and their families. Moreover, as the labour share declines and the profit share increases, this is exacerbated. This is the background against which wages and incomes stagnate or fall for the majority, a trend that has continued throughout the “recovery” since the global financial crisis. read more
[1] https://anticap.files.wordpress.com/2018/02/wealth-inequality.jpg
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Real-World Economics Review Blog 
Inequality is getting worse than ever in history. The people who actually produce wealth through their work are being “robbed” by the little group that just reads the figures. They don’t do any wealth creation at all. I suspect the the wealth producers will eventually realise that they have t take some action to get their fair share.
It is unprecedented and it is indeed global. The true wealth-creators have neither the resources nor the stamina to reverse the course of hijacked history, but sure some action is always possible.
About 2500 years after the first appearance of domesticated plants in each region (8000 to about 10,000 BCE), average wealth inequality in both the Old World and the New World was near a Gini coefficient of 0.35. This figure stayed steady in North America and Mesoamerica. But in the Middle East, China, Europe, and Egypt, inequality kept climbing over time, topping out at an average Gini coefficient of about 0.6, roughly 6000 years after the start of agriculture at Pompeii in ancient Rome and Kahun in ancient Egypt.
Branko Milanovic and Peter Lindert and Jeffrey Williamson published “Measuring Ancient Inequality” via the NBER. Their conclusions are:
First, as measured by the Gini coefficient, income inequality in still-pre-industrial countries today is not very different from inequality in distant pre-industrial times. In addition, the variance between countries then and now is much greater than the variance in average inequality between then and now. Second, the extraction ratio – how much of potential inequality was converted into actual inequality – was significantly bigger then than now. We are persuaded that much more can be learned about inequality in the past and the present by looking at the extraction ratio rather than just at actual inequality. The ratio shows how powerful and extortionary are the elite, its institutions, and its policies. For example, in a regression using ancient inequality evidence (not included in the text) a dummy variable for colony has a strong positive impact on the extraction ratio. Furthermore, while a relation between conflict and actual inequality has proven hard to document on modern evidence (see Collier and Hoeffler, 2004), we conjecture that the introduction of the inequality possibility frontier and the extraction ratio might shed brighter light on that hypothesis. Third, differences in lifetime survival rates between rich and poor countries and between rich and poor individuals within countries were much higher two centuries ago than they are now, and this served to make for greater lifetime inequality in the past. Fourth, unlike the findings regarding the evolution of the 20th century inequality in advanced economies, our ancient inequality sample does not reveal any significant correlation between the income share of the top 1 percent and overall inequality. Thus, an equally high Gini could and was achieved in two ways: in some societies, a high-income share of the elite coexisted with a yawning gap
between it and the rest of society, and small differences in income amongst the non-elite;
in other societies, the very top of income pyramid was followed by only slightly less rich
people and then further down toward something that resembled a middle class. Why were
some ancient societies more hierarchal while others were more socially diverse? While
this paper has focused on inequality description in ancient societies, it has not explored
the social structure underpinning inequality or its determinants.