"Striking it Richer," a paper by Emmanuel Saez (an economist at UC Berkeley) looks at the way that the dividends of the slow US "economic recovery" have been distributed. Saez finds that 121% of the economic gains since 2009 have been captured by the richest 1% of Americans -- in other words, despite economic growth, the poorest 99% of Americans actually got poorer through the "recovery."
This confirms a pattern that Matt Stoller highlighted: that income inequality increased more under Obama than under Bush. And the new Saez paper also describes how it came about. In short form, income to the top 1% is significantly influenced by capital gains. Remember, the tax reporting is not clean here: rising equity and bond markets help all those private equity and hedge fund professionals, who are able to get capital gains treatment for what ought to be labor income. But the paper also stresses that the lower orders were hit hard in the aftermath of the global financial crisis than in the dot-bomb era, which also saw a big drop in capital gains. That isn’t as hard to understand. The collapse of the dot-com mania didn’t impair the real economy overmuch because it was not fueled in a meaningful way by borrowings. By contrast, the housing bubble, and more important (in terms of damage to the financial system) the much housing exposure created synthetically by CDOs that consisted entirely or mainly of credit default swaps was highly geared, hence when it collapsed, it took credit providers down with it.
Yes, Virginia, the Rich Continue to Get Richer: the Top 1% Got 121% of Income Gains Since 2009 [Yves Smith/Naked Capitalism]
BB pal Rob Walker says: My Significant Objects co-conspirator Joshua Glenn and I have started a new adventure: PROJECT:OBJECT will publish four “themed” volumes of stories-about-objects from an all-star cast of writers. Volume 1, POLITICAL OBJECTS launched today, with stories from Luc Sante, Lydia Millet, and Ben Greenman. This series will continue on HiLobrow through […]
If you’re a California state employee — including an employee in the UC system — no longer use California state funds travel to Kansas, Mississippi, North Carolina or Tennessee, or any state “that has passed a law that (1) authorizes discrimination based on sexual orientation, gender identity and gender expression, or (2) voids or repeals […]
My friend Clayton Cubitt has taken a phenomenal series of portraits for the Women’s March on Washington.
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