There is an interesting, well cited, and I think, even handed piece on income inequality in America 1970 to January 2010. It compares various measures of income inequality over time and comes to some conclusions. Among them:
- Absolute inequality in America is much less than it was at the turn of the century. Health care, entertainment, and class mobility are higher than they have ever been, which is good.
- However, income inequality of the top 1 percent with the rest of the country has grown since 1980. Because of the absolute improvement in quality of life that many Americans are seeing they do not frame political discussions in a "rich vs. poor" dynamic, and so do not address rising inequality.
- Most of the inequality in the country is due to the incomes of the financial sector. The richest 25 HF managers made more money in 2007 than the CEOs of all of the F500. The share of corporate profits owned by the financial sector has also recently exploded (to 41 percent this decade).
- The author surmises that this may be because of the financial sector's ability to "bet short on volatility" or in other words, assume no catastrophic tail risk to investments. Larger firms are able to use the threat of their collapse destroying GDP gains of the country to extract bail out payments from Washington.
Over all, I thought this was a very interesting read, and very well documented. Pretty damning of the financial sector.
Read the article here:
The Inequality That Matters