Liberal economist Emmanuel Saez has updated his much-referenced income inequality research. Here’s how the recovery is going after the Great Recession:In 2010, average real income per family grew by 2.3%, but the gains were very uneven. Top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery. Such an uneven recovery can help explain the recent public demonstrations against inequality. It is likely that this uneven recovery has continued in 2011 as the stock market has continued to recover...
1. So this isn’t exactly an endorsement of the Obama recovery is it? I mean, for 99 percent of Americans there has been no recovery, according to Saez...2. Saez embraces and promotes the back-to-the-1950s nostalgia economics of Obamanomics and modern liberalism: “A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II—such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.” Indeed, Saez thinks the top marginal tax rate should more than double to 80 percent...
[And j] ust what is the right level of inequality? And how much economic growth is Saez willing to sacrifice to get it? ... Let me repeat this bit from a 2008 study on income inequality from the Federal Reserve Bank of St. Louis:It is important to understand that income inequality is a byproduct of a well-functioning capitalist economy. Individuals’ earnings are directly related to their productivity. Wealthy people are not wealthy because they have more money; it is because they have greater productivity. Different incomes, thus, reflect different productivity levels. The unconstrained opportunity for individuals to create value for society, which is reflected by their income, encourages innovation and entrepreneurship. Economic research has documented a positive correlation between entrepreneurship/innovation and overall economic growth. A wary eye should be cast on policies that aim to shrink the income distribution by redistributing income from the more productive to the less productive simply for the sake of “fairness.”
The National Social Democrat Party -- and its court jester, Paul Krugman -- hardest hit.
New York Times staffers unhappy with management are letting publisher Arthur Sulzberger Jr. know it...