Thursday, October 2, 2014

The Very Unequal Growth In Income In The US Since 1980 That Is Poorly Understood

The Occupy Wall Street movement correctly pointed out that the bottom 99% has not seen much growth in their income since 1980.  They focused our attention on the top 1% which has seen its income grow by 175% since 1980.  However, the gap within the top 1% is even greater than the gap between the top 1% and the bottom 99%.  The super rich, or the top 0.01% has seen its income grow by 500% since 1980.  The last three decades has not been good for the bottom 99% which has had almost no growth in its real income.  The new phenomenon, however, has been the emergence of a new class as we entered the "Gilded Age" beginning in 1980.  The economic and political deck was rearranged beginning in the 1980's.  The US is back to where it was in the late 1920's.  It will not be easy to end the new Gilded Age.  The super rich have gained control over the economy and the political system.  It is well defended by its supporters who were able to make it into the top 1%.  That includes the lobby industry in Washington as well economists in the conservative think tanks that have grown up since 1980.  They provide the intellectual justification for the growth in inequality and they attack all efforts by government to end the Gilded Age.  The Hoover Institute recently held a party in which conservative economists made the case for the Gilded Age and attacked government intervention in the new economy that made it possible.  Noah Smith gently criticized one of the speeches at Hoover but his criticism was bounded by a consideration of academic courtesy.

This graph illustrates the pattern of income growth that has created the Gilded Age:

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