One of the big complaints about capitalism and Wall Street is that the rich keep getting richer, the poor keep getting poorer, and that the gulf between the two keeps getting wider. Is it true? It’s also something I have to spend time teaching about because according to the International Baccalaureate Organization, there are four economic goals a country has: economic growth, stable prices, full employment, and an equitable distribution of income. I’ve always been troubled by this, because I’m not sure I agree that a country should have as a goal the “equitable distribution of income.” After years of law school, I’m not at all sure I know what “equitable” means in any concrete meaningful sense. And I’m not sure how a country could achieve this goal without redistributing income, which I’m definitely not sure I agree with.
But putting all that aside, and temporarily suspending questions about whether it’s a bad thing for the rich to get richer so long as there are equal opportunities to get rich, is it even true that the rich are getting richer, widening the gap between the haves and the have-nots?
This article in the Atlantic casts some doubt on that proposition. Here are a couple of interesting graphs and a few key paragraphs:
[T]he incomes at the very top started falling in 2008. The Piketty-Saez data, which currently run to 2008, show a little bit of it. But Kaplan has calculated the incomes of the top 1% and the top 0.1% for 2009, and his results show that they continued to fall pretty steeply. (There’s nothing more recent than that because tax data take a while to be finalized).
There’s an obvious caveat: 2009 was a very bad year for finance, corporations, and lawyers, who drive a lot of the top income. Probably 2010 and 2011 weren’t so bad, so these results may well rebound considerably when the data are in. (They also may not; I just don’t know.)
Also, this only shows the 1% and the top 0.1%; maybe the 0.01%, or the 10%, are doing really well, but these groups aren’t.
The larger question is “how much does it matter”? I doubt Occupy Wall Street will be assuaged by learning that the top 0.1% now only receive 8% of the income earned in the US, even if that number is the lowest it’s been since 2003.
But I think it does matter. If we think there’s a real problem, we need the best possible data so that we can understand its contours. Income inequality has been rising for so long that people have started to assume that it has just kept rising, even when the data show otherwise. We don’t want to spend years focused on income inequality, only to learn that the financial crisis fixed it for us.