Tuesday, February 28, 2006

Where has the money gone? To the very American oligarchy.

DeLong liberates Krugman from the NYT pay-prison (emphases mine):
Brad DeLong's Semi-Daily Journal

From Krugman, NYT:
So who are the winners from rising inequality? It's not the top 20 percent, or even the top 10 percent. The big gains have gone to a much smaller, much richer group than that. A new research paper by Ian Dew-Becker and Robert Gordon of Northwestern University, "Where Did the Productivity Growth Go?," gives the details. Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only 34 percent, or about 1 percent per year. So being in the top 10 percent of the income distribution, like being a college graduate, wasn't a ticket to big income gains. But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that's not a misprint.

Just to give you a sense of who we're talking about: the nonpartisan Tax Policy Center estimates that this year the 99th percentile will correspond to an income of $402,306, and the 99.9th percentile to an income of $1,672,726. The center doesn't give a number for the 99.99th percentile, but it's probably well over $6 million a year....

The idea that we have a rising oligarchy is much more disturbing. It suggests that the growth of inequality may have as much to do with power relations as it does with market forces. Unfortunately, that's the real story. Should we be worried about the increasingly oligarchic nature of American society? Yes, and not just because a rising economic tide has failed to lift most boats. Both history and modern experience tell us that highly unequal societies also tend to be highly corrupt. There's an arrow of causation that runs from diverging income trends to Jack Abramoff and the K Street project....
So when does the revolt occur? Will we see a reinvented Al Gore return at the vanguard of a populist rebellion?

Tonight, on NPR, I heard a naive young woman describing a book she'd written about the financial hurdles faced now by her Gen Xrs. Specifically, she and her husband couldn't really afford to live in New York City, but that thought didn't seem to have occurred to them -- so they ran out of cash. What she's really experiencing, of course, is life when the returns on productivity are increasingly concentrated in an Argentinian-style oligarchy. The fact that she wasn't advocating a populist government tells me things will need to get quite a bit worse before most folks catch on.

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