The top .01% (top 14,988 US families, making at least $11.5m in 2007) share increased from 5.46% in 2006 to 6.04% in 2007 leaving well behind the 1928 peak of 5.04 percent. This shows that 2007 was an incredibly good year for the super rich.
Emmanuel Saez has updated his well-known paper on the evolution of incomes with 2007 data, and his conclusions are rather unambiguous:
A stunning portion of growth has been captured by the very rich - between half and two thirds has gone to the top 1% over the past 15 years.
In other words, "growth" for most Americans over the last 15 years has been no better than for Japanese during their "lost decade" or for Europeans throughout their "socialist stagnation" - and that, during mostly supposedly booming times...
And yet, the debate on how to deal with this income inequality is still dominated by thinking like this recent article by the US editor of the FT, pandering to the Common Wisdom of the Villagers:
Much as Mr Obama would prefer to let the rich carry the burden alone, that will not be possible. The US tax code, contrary to popular perception, is heavily skewed towards taxing the rich.
And so, as the idea that the rich are unfairly taxed is perpetuated, and that taxes cannot go up (or rather, as that articles notes, since they have to go up, they will have to go up for the middle classes, in the form of lower pensions, higher retirement age, and more expensive healthcare) we have the ongoing pointless debate - distraction would be a better word - about how to limit banking bonuses when the obvious solution: taxing them is off the table. Sigh...
And the most depressing thing in all of that is this:
which shows that the "quite rich" have not really profited much from the unequal distribution of income: it's really the top 1%, and even within that group, it's pretty much only the top 0.1% or even 0.01% that have most benefitted.
The 1-10% tranche probably believe the Republican propaganda about too much taxes, and deserving what you earn, and not wanting to pay for slackers, but they're being stuffed by the really rich like the rest of the middle class, and they don't even seem to realise it.
Oh sure, I expect we'll hear arguments about how the rich have lost out in the current financial crisis, but let's note right away that the policy responses to this crisis have been massively regressive, with trillions spent to prop up banks and financial assets (which are owned, no prizes for guessing, mostly by the very rich - asset repartition is even more skewed than income repartition, 401ks notwithstanding) and job losses, budget cuts and other restrictions going to services which are rather more vital to the poor and middle classes.
But hey, growth is back, and all is well:
WASHINGTON -- Treasury Secretary Timothy Geithner said he isn't concerned that Wall Street is returning to its old habits and the administration's plan to overhaul financial-market regulation is on track.
In an interview with The Wall Street Journal, Mr. Geithner pushed back against criticism that Wall Street, which is returning to profitability, hasn't changed its ways.
"I don't think the financial system is reverting to past practice, and we won't let that happen," Mr. Geithner said. "The big banks are running with much less leverage now, much more conservative liquidity cushions. There has been a significant shrinking of their balance sheets, getting rid of bad assets and cleaning up. And the weakest parts of the system don't exist anymore."
Phew, I'm so relieved.