Thursday, January 30, 2014

Income unlike water, has been flowing uphill!

The graph is from the Harvard Business Review Blog. It is still another way to visualize the shift in income in the United States from the rest to the affluent. Only the top quintile is getting more of the pie, and the middle quintile -- the prototype of the middle class -- is losing more of the share. The poorest 20 percent, who have little to spare, are losing a significant portion of the share that they had.

The blog post also said:

  • From 1993 to 2013, incomes of the bottom 99% of taxpayers in the U.S. grew 6.6%, adjusted for inflation. The incomes of the top 1% grew 86.1%.
  • The top 0.1% of U.S. taxpayers claimed 11.33% of overall income in 2012, up from 2.65% in 1978. The top 0.01% got 5.47%, up from 0.86% in 1978.
  • The average income of the top 0.01% was 859 times that of the bottom 90% in 2012. In 1973 the top-0.01%-to-bottom-90% ratio was just under 80.
That is one ten-thousandth of the population got five and a half percent of the total income, more than the combined incomes of the bottom 20%.

All that wealth sloshing around in the top 1% leads to more bubbles and crashes. Extreme wealth corrupts the political process.  Income inequality may be slowing overall economic growth. And, as my colleague Walter Frick put it in an email when I brought this up, “given the diminishing marginal utility of income, it’s hugely wasteful for the super rich to have so much income.”

No comments: