A new study
by economist Emmanuel Saez claims that the top 1% income earners in
the United States hit a new high in 2015. The study used data from
the IRS to show “families at or near the top of the income
ladder did substantially better in 2015 than those below them. The
share of income going to the top 10 percent of income earners—those
making on average about $300,000 a year—increased to 50.5 percent
in 2015 from 50.0 percent in 2014, the highest ever except for 2012.”
Saez
concludes that the 2013 tax increases had no substantive effect on
reducing inequality beyond a “dip in pre-tax income earned by
the top one percent in 2013” as “by 2015 top incomes are
once again on the rise—following a pattern of growing income
inequality stretching back to the 1970s.”
In other
words, while President Obama claimed in 2013 that income inequality
was the “defining challenge of our time,” his policies
have made no meaningful contribution to addressing it.
Economic
inequality is not only getting worse, but it may arguably be worse
than it has ever been. At least that is the conclusion of economists
Peter Lindert and Jeffrey Williamson, who write in a new book that
income inequality today is the worst it has ever been in all of
American history.
The larger
historical argument is problematic, as it starts with colonial
America and goes through the time of slavery, where the analysis
includes food and shelter for slaves as compensation, but the trend
is undeniable. With a few exceptions, contemporary America is
unrivaled in its level of economic inequality.
Lindert and
Williamson come to conclusions through their long-view historical
analysis similar to those of other scholars, restricting their study
to the previous decades. Rent-seeking through the financial system
provided the rich of America—old and new—with break away wealth.
In earlier periods, it was the industrialists and land speculators
running away with the gains, whereas today it is derivatives traders
and hedge fund managers.
At least the
robber barons of old left a railroad or two when the bubble burst.
The plutocrats of today leave nothing but heartache once the
pillaging is done.
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