{"id":39277,"date":"2011-09-06T10:00:01","date_gmt":"2011-09-06T15:00:01","guid":{"rendered":"http:\/\/media.lclark.edu\/content\/hart-landsberg\/2011\/09\/05\/one-nation-divisible\/"},"modified":"2011-11-09T01:09:10","modified_gmt":"2011-11-09T06:09:10","slug":"one-nation-divisible","status":"publish","type":"post","link":"https:\/\/thesocietypages.org\/socimages\/2011\/09\/06\/one-nation-divisible\/","title":{"rendered":"One Nation Divisible"},"content":{"rendered":"

Cross-posted at Reports From the Economic Front<\/a>.<\/em><\/p>\n

The media generally\u00a0talk about the economy in national terms — as if economic trends affect us all equally and we all share a common interest in supporting or opposing the same economic policies.\u00a0 This comforting view\u00a0tends to promote political passivity — since we are all in the same \u201cboat,\u201d it makes sense to leave policy making to the experts.<\/p>\n

A recently published\u00a0study<\/a> on income distribution by economists Anthony Atkinson, Thomas Piketty and Emmanuel Saez stands as a welcome corrective.\u00a0 Uwe E. Reinhardt discusses\u00a0some of the main implications of their work in his New York Times<\/em> blog<\/a>.<\/p>\n

Reinhardt\u2019s Figure 1\u00a0shows\u00a0average annual income growth for households in the United States and the different experiences of the top 1% and the bottom 99%.\u00a0\u00a0From 1976 to 2007, average household income grew\u00a0at an average annual\u00a0rate of 1.2%.\u00a0 Over the same period,\u00a0the top 1% of households\u00a0experienced an average annual\u00a0income gain of 4.4% while the bottom 99% of households gained only 0.6%\u00a0a year.\u00a0 Household income gains were higher in both subperiods (1993-2000 and 2002-2007), in large part because these subperiods\u00a0were recession free.<\/p>\n

\"02economix-growth-chart1-blog480.jpg\"<\/a><\/p>\n

Figure 2 shows\u00a0the share\u00a0of total income growth in each time period\u00a0that was captured by the top 1% of households.\u00a0 Over the years 1976 to 2007, these households\u00a0captured 58% of all\u00a0income generated.\u00a0 Their share was\u00a0an astounding\u00a065% in the period\u00a02002 to 2007.<\/p>\n

<\/span><\/span>\"02economix-growth-chart2-blog480.jpg\"<\/a><\/span><\/span><\/p>\n

This skewed income distribution means that average income figures present a\u00a0highly\u00a0misleading picture of the American experience.\u00a0 As Reinhardt explains:<\/p>\n

So if an American macroeconomist — a specialist who tends to think of nations as people — or high-level government officials or politicians mimicking a macroeconomist boasted on a television talk show that \u201caverage family income grew by 3 percent during 2002-7, more than in most European economies,\u201d about 99 percent of American viewers, reflecting on their own experience, would probably scratch their heads and wonder, \u201cWhat is this guy talking about?\u201d<\/p><\/blockquote>\n

Figure 3\u00a0highlights the growth in real GDP per capita and\u00a0median household income from 1975 to 2007.\u00a0 The data show a growing divergence between what working people produced and what the average household received from that production. \u00a0Real GDP per capita rose by an annual compound rate of 1.9% while real median household income increased\u00a0by less than 0.5%.<\/p>\n

<\/a><\/a>\"02economix-growth-chart3-blog480.jpg\"<\/a><\/p>\n

As Reinhardt points out: \u201cOther than national pride in league tables, that 1.9 percent average economic growth does not mean much for the experience of the median household in the United States.\u201d<\/p>\n

This brings us back to the issue of whether it makes sense to talk in \u201cnational\u201d terms, especially given the dominance of the top 1% of households.\u00a0 According to Anthony Atkinson, Thomas Piketty and Emmanuel Saez:<\/p>\n

Average real income per family in the United States grew by 32.2 percent from 1975 to 2006, while they grew only by 27.1 percent in France during the same period, showing that the macroeconomic performance in the United States was better than the French one during this period. Excluding the top percentile, average United States real incomes grew by only 17.9 percent during the period while average French real incomes — excluding the top percentile — still grew at much the same rate (26.4 percent) as for the whole French population. Therefore, the better macroeconomic performance of the United States and France is reversed when excluding the top 1 percent.<\/p><\/blockquote>\n

None of this is to suggest that U.S. society is best understood in terms of a simple division between the top 1% and the bottom 99%;\u00a0the latter group is far from homogeneous.\u00a0 Still, this division alone is big enough to establish that talking\u00a0in simple national terms hides more than it illuminates about the American\u00a0experience.\u00a0\u00a0Said differently, just because\u00a0the top 1% of U.S. households have\u00a0reason to celebrate\u00a0the U.S. economic model doesn\u2019t mean that the rest of us should join in the celebration.<\/p>\n","protected":false},"excerpt":{"rendered":"

The media generally\u00a0talk about the economy in national terms\u2014as if economic trends affect us all equally and we all share a common interest in supporting or opposing the same economic policies.\u00a0 This comforting view\u00a0tends to promote political passivity–since we are all in the same “boat,” it makes sense to leave policy making to the experts. […]<\/p>\n","protected":false},"author":1853,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[29,36,253,1776,3920],"class_list":["post-39277","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-class","tag-economics","tag-history","tag-nation-france","tag-nation-united-states"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/39277","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/users\/1853"}],"replies":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/comments?post=39277"}],"version-history":[{"count":6,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/39277\/revisions"}],"predecessor-version":[{"id":41678,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/39277\/revisions\/41678"}],"wp:attachment":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/media?parent=39277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/categories?post=39277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/tags?post=39277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}