Piketty, along with colleagues Emmanuel Saez, and Gabriel Zucman recently published a paper with a focus on those issues, “Distributional National Accounts: Methods and Estimates for the United States”. An overview of the paper is available at the web site of the Washington Center for Equitable Growth.
Here are a couple excerpts:
"...To understand how unequal the United States is today, consider the following fact. In 1980, adults in the top 1 percent earned on average 27 times more than bottom 50 percent of adults. Today they earn 81 times more. This ratio of 1 to 81 is similar to the gap between the average income in the United States and the average income in the world’s poorest countries, among them the war-torn Democratic Republic of Congo, Central African Republic, and Burundi..."
"...Policies that could raise the pre-tax incomes of the bottom 50 percent of income earners could include:
- Improved education and access to skills, which may require major changes in the system of education finance and admission
- Reforms of labor market institutions to boost workers’ bargaining power and including a higher minimum wage
- Corporate governance reforms and worker co-determination of the distribution of profits
- Steeply progressive taxation that affects the determination of pay and salaries and the pre-tax distribution of income, particularly at the top end"
Update: Some additional information on the trajectory of inequality in the U.S. is presented in an article by Ben Casselman at the 538 site.
3 comments:
When I worked in radio 25 years ago one station did news, sports, and middle-of-the-road music. We did okay in the ratings, okay enough to keep on keeping on. But I'll never forget something my boss said to me: "Jim, if pigs oinking got better ratings than this, I'd program the pigs 24/7."
Of course Big Media is going to focus on the Trump circus. They need lots and lots of eyeballs to pay for their operations and make the margins their investors expect. You don't do that by writing front-page articles about things like Piketty's latest work.
That said, while I agree that the level of inequality we have is a serious problem and it is giving rise to the populism we are seeing nationally and worldwide, I don't agree with most of Piketty's proposed solutions. I don't know why there isn't enough attention paid to how the current system of corporate stock has contributed to this inequality. The financial industry has shifted hard toward using the system as a way of extracting money for the 1%. Public companies are no longer about the products and services they provide, they are entirely about stock price. Their stock is now their product; their customers are their investors. And those customers are leveraging the system to the hilt, and ultimately it's the average American worker who takes it in the shorts. This, I think, is the crux of the problem.
There is no doubt that the way the financial/banking system has developed over the past forty years has contributed greatly to financial instability. That seems to be due in a large part to inadequate oversight and regulation. That is only a part of the story, however. Piketty's main contribution to explaining the issues is to develop data sources and analyses that were not previously available, particularly in regard to the issue of inequality.
What Piketty has shown is that there are quite a few contributors to the extraordinary inequality which has developed in the U.S. Those include the fact that most wealth accumulation is the product of non-productive property ownership and that it is increasingly concentrated in the upper ten percent through inheritance. Simultaneously, there is a huge and ever-growing gap in remuneration for managers and workers, due in a large part to undermining of worker bargaining power through anti-union legislation and court rulings, along with prejudicial trade agreements. Trump's refusal to divulge his tax returns is a pretty good indicator of what has happened to the idea of fairness in the tax laws.
What I see as a Republican response from people like Ryan are straw man arguments based on made-up nonsense about budget balancing and non-existent social security insolvency, along with a rush to gut or privatize public services. It seems pretty obvious to me that the country was on the right track in the two decades after WWII, and that most other advanced industrialized nations are doing much better now with inequality amelioration than the U.S. precisely because of the reasons that Piketty has described.
Jim,
I see I did not address the first half your comment about the media. You are right that there is heavy economic pressure determining what gets on the air and in print. Traditionally, there seemed to be certain agreed on standards regarding the separation of editorial, news and advertising, at least in journalistic endeavors which claimed to adhere to some kind of ethical standards. I think a lot of editors and reporters still try to stick with those standards, but there is quite a lot of evidence pointing to the ascendancy of the bean counters.
I used to get a good portion of my own world view from the NY Times and the Guardian. The last election cycle resulted in the development of quite a lot of skepticism on my part about the objectivity of those two major publications. As a result I started looking for more variety in my information sources, and I ended up paying for a subscription to the on line version of The Nation. They don't have any debt to big advertisers and they frequently feature the work of good thinkers and writers. I still read the Times and the Guardian, but not with such attention as in the past. I also visit quite a few other news sites daily including three Spanish papers, and several web sites including Nate Silver's 538, Economist's View, and a couple local NM blogs and newspapers.
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