World map comparing income inequality in the USA to other countries

Source : http://www.theatlantic.com/international/archive/2011/09/map-us-ranks-near-bottom-on-income-inequality/245315/

Comparisons of income distribution in the USA in 2007 and England in the 17th century (2 charts)

from Edward Fullbrook

The following two charts from http://www.the-crises.com/  compre the distribution of income in the United States in 2007 and England in the seventeenth century.   

It is the worst of times, it is the best of times (USA)

from David Ruccio

Percent of income earned by top 0.1 percent of taxpayers – 6 countries – chart

from David Ruccio

Percent of Income Earned by Top 0.1 Percent of Taxpayers

source (missing years reflect lack of current data)

Lies, damned lies, and the right-wing use of income statistics

from David Ruccio

source

The right-wing wants desperately to show—against all the evidence—that the rich are being taxed to death and that income inequality has dramatically decreased. 

Expiration of Bush tax cuts for the 1 percent are a step forward, but not enough

from Mark Weisbrot

President Obama is currently confronting mostly Republican opponents over whether to extend the Bush tax cuts to the richest 1 percent of taxpayers. Between 1979 and 2007, the richest 1 percent received three-fifths of all the income gains in the country. Most of this went to the richest 10th of that 1 percent, people with an average income of $5.6 million (including capital gains).

So this is a no-brainer in terms of fairness: Allowing the Bush tax cuts to expire for the richest 1 percent of Americans would reverse some of the vast upward redistribution of income that has taken place since the late 1970s. However a couple of caveats are in order.

Where has all the surplus gone?

from David Ruccio

Where has all the surplus gone? 

Inequality—missing the story twice over

from David Ruccio

According to David Rosnick and Dean Baker, the OECD misses the story about inequality. But so do Rosnick and Baker.

The OECD misses the story because of (a) how they measure inequality—they focus on the gap between the top and bottom deciles (the richest 10 percent of the population versus the bottom 10 percent) and forget about the growing inequality within the top 10 percent, especially the share of income going to the top 1 percent—and (b) how they determine the causes of inequality—focusing too much attention on the effects of technology and not enough on changing labor market institutions and the growth of finance. 

Inequality and American exceptionalism

from David Ruccio

American exceptionalism has long been a contested notion.

But there is one area in which the United States has been exceptional from the very declaration of independence: the relative inequality of the distribution of income.

In 1774, the United States was much more equal than England and Wales (and more equal, it seems, than other western societies, such as the Netherlands). Today, more than 200 hundred years later, the United States is more unequal than any of the other advanced capitalist nations.

Thanks to recent research by Peter H. Lindert and Jeffrey G. Williamson, we know that in 1774 the top 1 percent of households had about 9 percent of income—compared to 17.5 percent in England and Wales, and 17 percent in the Netherlands. 

And the rich get richer

from Susan Feiner

A camel and a rich man walked into a fun house. Reflections bend. Turning to each other they asked, “Mirror, mirror on the wall, who’s unfairest of them all?” 

Camel said: “Dude. Unfairest? That’s easy. It’s this country’s economy.”

Rich man: “Say what? This is the fairest place in the world. America is the land of opportunity.”

Camel said: “Not now. Things have changed. In America if you’re born poor, you’ll probably stay poor. Sixty-five percent of Americans born into the bottom fifth of the population stay there, and only 8 percent of the men born at the bottom make it to the top. But 12 percent of British men, and 14 percent of Danish men climb to the highest strata of their societies. Don’t believe me? International comparisons ‘shocked’ John Ridgeland, former aide to President George W. Bush. He said Republicans should talk about the ‘lack of access to the American Dream.’ ”

Rich man: “Pshaw. Put your shoulder to the boulder. Work harder.”

Fed survey shows middle class took a big hit

from Dean Baker

The Federal Reserve Board’s newly released triennial Survey of Consumer Finance (SCF) confirmed what most of us already knew: The middle class has taken a really big hit. It showed that between the 2007 survey and the 2010 survey, the typical family had lost 38.8 percent of their wealth. In fact, the wealth of the typical family was down 27.1 percent from where it had been a decade ago in 2001. This is in spite of the fact that the economy was more than 15 percent larger than in 2010 than it had been 2001.

It wasn’t just wealth that had dropped; the survey showed that income had fallen as well. Median family income in 2010 was down by 7.7 percent from its 2007 level and 6.3 percent from its level a decade ago.

The average American household is becoming increasingly worse off.

from David Ruccio

The average American household is becoming increasingly worse off.

According to the Fed’s latest Survey of Consumer Finances, both average income and average wealth in the United States fell during the 2007-10 period: real before-tax median income by 7.7 percent (to $45,800 in 2010 from $49,600 in 2007) and real net worth by 38.8 percent (to $77,300 in 2010, compared with $126,400 in 2007).

Where has all the surplus gone?

from David Ruccio

Where has all the surplus gone? As in 2010, a good chunk of it has gone to pay Chief Executive Officers of major U.S. companies.

According to a new Associated Press study, the head of a typical public company in United States made $9.6 million in 2011. This figure was up more than 6 percent from the previous year, is the second year in a row of increases, and is the highest since the AP began tracking executive compensation in 2006.

According to my calculations, using Bureau of Labor Statistics data, the typical CEO therefore made 254 times the typical U.S. worker (whose annual pay in 2011 was $37,813).

Here’s the list of the 20 highest-paid CEOs:

Europe’s Crisis and Latvia’s “Success”

from Mark Weisbrot

In recent months some advocates of Europe’s austerity policies have been touting Latvia as a “success story” that shows how “internal devaluation” can work. This was the theme of a book published earlier this year by the Peterson Institute for International Economics, one of Washington’s most influential think tanks. The book was co-authored by the Institute’s Anders Aslund and Latvia’s Prime Minister Valdis Dombrovskis.

The case study is very relevant to Europe because there are important similarities between Latvia’s economic strategy since 2008 and that now being promoted by the European authorities – the European Commission, the European Central Bank, and the International Monetary Fund (IMF), otherwise known as “the Troika.”

A Tale of Two Deficit Charts

from Dean Baker

Not long after I first came to Washington 20 years ago I was at a conference dealing with Social Security privatization. One of the panelists used a number for the administrative costs of private accounts that was far lower than the numbers I had seen in the literature. After the panel, I asked one of the other panelists about her best estimate of the administrative costs of private accounts. She said that this depended on whether I was interested in advocacy or policy.

I was somewhat taken aback by her response, but after a moment I told her that I was interested in accuracy. I have always felt that this is the best approach to policy questions.