Yesterday, I
wrote a diary which attempted to show that growing income and wealth inequality in the US meant that the average American was no richer than the average European, despite much higher GDP per capita.
Last summer, I wrote a diary with a number of graphs showing how a very small fraction of the population was capturing most of the income. A new study (again, by Thomas Piketty and Emmanuel Saez) was published this month by NBER which updates some of these graphs (I purchased it here) and they provide more relevant information.
That graph above is pretty amazing in that it shows that the income of the very richest (we're talking about approximately 10,000 people here) has increased massively in the past 25 years - which is not unexpected - but that this increase has come mostly from the increase in
salaries (which include bonuses and other forms of indirect compensation).
This is part of the "winner take all" economy: the most successful top executives, traders, newscasters, sportspeople, etc... get huge incomes, which are larger by orders of magnitude than those of others in the same sector, simply because they are the best known and the most visible, and capture most of the loot (there's no other word). There is a successful second tier that does well also (but nowhere nearly as much), and everybody else is left behind:
(This is an update of a graph in last summer's diary, which went only to 1998)
Despite the hit taken by the very richest in 2001-2002 (most likely from the crash of the markets, the aftershocks of the Enron scandal and the - temporary - consequences on executive compensation), the share of the top 10% has been steadily rising since, you guessed it, 1980.
This is not just about "fairly rewarding success". As noted in yesterday's diary, the top 10% captured half of the growth in income in the past 40 years, and the top 1% captured more than the bottom 50%. This is having a real macroeconomic impact: if you take out the very rich, growth over the past 40 years has been effectively divided by 2 for everybody else.
This is not about free markets. This is about class warfare, and one class is clearly winning. "Reform" means exclusively "fewer jobs", "less paid jobs" and "fewer rights for workers", and the results are all too visible: growth - for the rich.
And the Piketty and Saez study shows that this is essentially an US, and to a lesser extent an English-speaking world phenomenon:
So if you wonder why the dominant discourse in the business press is that France and Japan (and Germany, which I expect is in the same position) have "stagnant" or "rigid" or "unefficient" economies, remember that they are rigid and unefficient FOR THE RICH.
Defend France. Defend unions. Defend workers. Defend workers' rights. Defend government programmes (the liberal kind, not the horribly corrupt and wasteful Bush-Cheney kind). It's all part of the same ideological fight. It's all part of the same class war.