{"id":45691,"date":"2012-03-16T12:30:00","date_gmt":"2012-03-16T17:30:00","guid":{"rendered":"http:\/\/thesocietypages.org\/socimages\/?p=45691"},"modified":"2012-03-14T13:38:53","modified_gmt":"2012-03-14T18:38:53","slug":"is-the-american-income-gap-exceptional","status":"publish","type":"post","link":"https:\/\/thesocietypages.org\/socimages\/2012\/03\/16\/is-the-american-income-gap-exceptional\/","title":{"rendered":"Is the American Income Gap Exceptional?"},"content":{"rendered":"

Cross-posted at Montclair SocioBlog<\/a>.<\/em><\/p>\n

This graph tracks the share of income going to the top 1% in seven countries.\u00a0 It\u2019s from a paper by two Swedish economists, Jesper Roine and Daniel Waldenstr\u00f6m (pdf<\/a>).”’<\/p>\n

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The trend was towards greater equality up to 1980 — the share of the 1% was shrinking.\u00a0\u00a0\u00a0 Since then, the 1% have increased their share of the income pie in all seven countries.\u00a0 But the graph seems to show important differences, especially in recent decades.\u00a0 Here is a\u00a0 cropped version of the graph showing the 1980-2004 years.\u00a0 I have added straight lines connecting those two points for Sweden and for the U.S.<\/div>\n
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Both changes are increases, but are they the same or are they different?\u00a0 The answer is crucial.\u00a0 The U.S. and Sweden have different economic policies.\u00a0 If the changes are no different between countries, then inequality is just one of those inevitable things that\u2019s happening no matter what governments do.\u00a0 But if the growth of inequality in the US is much greater than in Sweden, maybe government policy can in fact mitigate the trend towards inequality.<\/div>\n
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The Swedish 1% share went from a little under 5% to about 7.5%.\u00a0 In the U.S., the 1% share increased from about 7% to 16%.* You might see those increases as very similar.<\/div>\n
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In fact, Allan Meltzer in the\u00a0Wall Street Journal<\/a>\u00a0takes precisely that view.\u00a0 He stretches out the graph to de-emphasize the vertical differences, and adds a title implying that all countries are \u201ctogether\u201d in this shift of income to the top 1%.<\/div>\n
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He adds this explanation:<\/div>\n
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As the . . . chart . . . shows, the share of income for the top 1% in these seven countries generally\u00a0follows the same trend line.<\/em> That means\u00a0domestic policy can\u2019t be the principal reason\u00a0<\/em>for the current spread between high earners and others. Since the 1980s, that spread has increased in nearly all seven countries.\u00a0The U.S. and Sweden, countries with very different systems of redistribution<\/em>,\u00a0along with the U.K. and Canada\u00a0show the largest increase in the share of income for the top 1%.<\/em>\u00a0[emphasis added]<\/div>\n<\/blockquote>\n
If your pay went from $5 an hour to $7.50 an hour while your co-worker\u2019s went from $7 to $16, you might think that your co-worker had gotten a substantially heftier raise.\u00a0 But if so, that\u2019s because you\u2019re not the Wall Street Journal<\/em>.<\/div>\n
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Meltzer\u2019s main point in the article is that we should not raise taxes on the very wealthy.\u00a0 However, as Bruce Barlett points out (here<\/a>), if the rich are getting just as rich in high-tax countries like Sweden and the Netherlands as they are in low-tax countries like the U.S., we may as well raise taxes on them. They\u2019ll be doing just as well, like their Swedish and Dutch counterparts, and the nation will have more revenue to put towards Medicare, education, deficit-reduction, etc.But Meltzer is wrong.\u00a0 Sweden and the Netherlands are very different from the U.S.\u00a0 As the graph shows, the income share of the 1% in the U.S. is twice that of the 1% in Sweden and 3 times that of the 1% in the Netherlands.\u00a0 And it has risen more rapidly.\u00a0 Yet Meltzer claims that inequality trends are similar everywhere.<\/p>\n

So who are you going to believe – the Wall Street Journal or your lying eyes?<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Cross-posted at Montclair SocioBlog. This graph tracks the share of income going to the top 1% in seven countries.\u00a0 It\u2019s from a paper by two Swedish economists, Jesper Roine and Daniel Waldenstr\u00f6m (pdf).”’ The trend was towards greater equality up to 1980 — the share of the 1% was shrinking.\u00a0\u00a0\u00a0 Since then, the 1% have […]<\/p>\n","protected":false},"author":258,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[36,1804,3920,304],"class_list":["post-45691","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-economics","tag-nation-sweden","tag-nation-united-states","tag-the-state"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/45691","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\/258"}],"replies":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/comments?post=45691"}],"version-history":[{"count":2,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/45691\/revisions"}],"predecessor-version":[{"id":45697,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/45691\/revisions\/45697"}],"wp:attachment":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/media?parent=45691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/categories?post=45691"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/tags?post=45691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}