“If you believed … Then nothing is cool”

If you believed they put a man on the moon, man on the moon

If you believe there’s nothing up his sleeve, then nothing is cool

Can’t think why those lines from REM occur to me whenever I think of the depressing data from the NYTimes:

The top 10 percent of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago, according to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty.

The top 1 percent took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913, when the government instituted an income tax.

The figures underscore that even after the recession the country remains in a new Gilded Age, with income as concentrated as it was in the years that preceded the Depression of the 1930s, if not more so.

NOTHING IS COOL.

SPRINGSTEEN AND REM

Could anyone not know who Andy Kaufman was?  Look him up and see this:

6 thoughts on ““If you believed … Then nothing is cool”

  1. On the other hand, as a number of economists have pointed out, the Saez-Piketty data don’t mean what a NYT journalist or other layperson might think at first blush. Just for example;

    1. The majority of the shift has been due to what economists call the “superstar effect” (where technological advances cause the best performers in fields to reap the benefits of hugely expanded audiences/markets – think A-list entertainers, world-class athletes, and business innovators like the Jeff Bezoses and Marc Zuckerbergs of the world), which has caused a stratospheric rise for a very tiny group of people. For almost everybody else (well over 99%) the income distribution has remained pretty stable; there’s not a general trend here that noticeably affects large numbers of people.

    2. The Saez-Piketty data don’t take into account taxes or transferred wealth (like government subsidies and other assistance). Once you do, the apparent income inequality flattens considerably.

    3. Taking into account numerous factors that Saez and Piketty did not for purposes of the narrow question they were looking at, household incomes have gone up significantly in real terms in the last few decades.

    So the data turn out not to be so depressing. Something is cool after all!

  2. Anonymous, thank you for the clear statement of the line that the conservative American Enterprise Institute, among others, supports. I like the responses in comments on an AEI page [http://www.aei-ideas.org/2012/04/piketty-and-saez-vs-burkhauser-and-cornell-whos-right-on-income-inequality-and-stagnation/#mbl]. Such as one addressing your point two:

    Sorry but it seems to me that Burkhauser [the expert for the AEI at the url above ]is just playing semantics to save face. Is he really saying that so many middle class people are getting wellfare, medicare, and SS disability etc that it makes up for stagnant wages? I can’t believe he can say this with a straight face. Give me a break.

    I’m not sure what to say about the superstar effect, but I will note that some countries think their contribution to income inequality is pernicious, and tax them accordingly.

    Lastly, I note that you did not feel comfortable using your usual ID here. You should know that my earlier objections to posts of yours were based on content, not animus.

    Finally, did you check on the background of the woman who wrote the original post? Being a journalist doesn’t mean one has to have a superficial grasp of the issues.

  3. “The top 10 percent of earners took more than half of the country’s total income in 2012.”

    Do you think that this kind of income ratio is unfair and warrants some kind of redistribution to the bottom 90%? If so, consider this: Branko Milanovic estimates in his 2011 book that you need to earn above $PPP 18,500 per annum to have an income in the top 10% globally (and over $PPP 34,000 to be in the top 1%). And according to Milanovic’s 2009 working paper for the world bank, those whose income is in the top 10% receive 57% of global income. Given this, it seems very likely that those of us earning typical wages in developed countries – over $PPP 18,500 per annum – are in the same relative position with respect to the rest of the world that those with incomes in the top 10% within the US are with respect to the rest of the US population. Of course, there are different estimates of both what places you in the highest 10% in the world in terms of income and how much of the global income this group receives, but these estimates generally point to, at best, a similar level of global income inequality to income inequality within the US (the world Gini index was 0.61-0.68 in 2005, or around 0.5 when weighted by the population in the early 2000’s. Both of these estimates are worse than the Gini index of the US in the same period, which ranges from around 0.46-0.48, making global income inequality worse than income inequality in the US, despite the fact that the US is one of the worst countries in the world in terms of income inequality). So if people answer ‘yes’ to the opening question and are earning more than $PPP 18,500 per anum, then hopefully they’ll redistribute a good chunk of their income to the bottom 90%!

  4. I’m no fan of the American Enterprise Institute. However, it does seem to me it would be more credible to rebut what they say by giving some facts, rather than by repeating a commenter who gives no facts at all but simply says s/he finds the AEI facts hard to believe.

    Annie Lowry is an economics journalist. I don’t know what real expertise she has — if someone else does, please say so. Plenty of economics reporting is very inexpert. And Lowry does not appear to have a degree in economics.

    I’m not the Anonymous who posted the first comment, but the fact that annejjacobson obviously has a way of knowing who a poster is even when they don’t sign their name I find a bit jarring. (I am taking extraordinary measures to be sure I can’t be outed.)

  5. If the “apparent” inequality “flattens considerably” due to government assistance will #1 and #4 please post the relevant evidence? Do you mean the inequality between the middle class and the very wealthy flattens, or are all income levels “considerably” more equal? This is a very surprising claim…burden of proof should not be on the OP or the commenter she mentions.

    Also you are forgetting the government facilitates transfers both ways, such as corporate welfare and interest free treasury loans to financial services companies and so on and so on.

  6. Re 4’s comment: I didn’t say I knew who the poster is. I can figure out that some IDs used on the blog are from the same person, whoever that is.

    A post on a blog does carry some information, however. If I knew more about this sort of thing I might be able to identify a lot of people. I don’t know that much, but it’s pretty clear that a lot of people know a lot. So be aware.

    Thanks for your comment, David R L. I take the person I quoted to make a similar point, but obviously nothing like as clearly. In any case, we do need on blogs to allow appeals to likelihood and commonsense. That doesn’t mean we are always right, but it does mean that blog posts don’t have to be mini-term papers.

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