In 2010, 93 percent of income gains went to the top 1 percent

Occupiers, here’s a relevant re-post from Ezra Klein of the Washington Post:


(Mike Konczal) In recent months, some commentators wondered whether the national conversation over inequality was coming too late. Early data suggested that the top 1 percent’s share of national income had dropped from 23.5 percent to 18.1 percent in the early years of the recession. “We don’t want to spend years focused on income inequality, only to learn that the financial crisis fixed it for us,” wrote the Atlantic’s Megan McArdle.

The latest update to Emmanuel Saez and Thomas Piketty’s income data suggests we need not worry. Timothy Noah summarizes:

 

In the first year of the recovery, 93 percent of all income gains went to the top 1 percent.

In other words, the very rich had a bad 2009, but an incredible 2010. Their share of national income bounced back to 19.77 percent. So inequality is marching upward once again. And there’s reason to believe this will keep going.

We mainly talk about income inequality, but wealth inequality matters, too. For most households, their wealth is in real estate. Those assets aren’t returning to pre-crisis levels anytime soon. But for rich households, their wealth is in financial assets, and those assets are recovering much more quickly.

Here’s more from Mike Konczal.

Growing Income Inequality Is Destroying Our Economy and the Middle Class

This morning, Alan Krueger, Chairman of the President’s Council of Economic Advisers (CEA), gave a speech at the Center for American Progress.  We can only hope that his remarks hopefully portend the administration’s actions with respect to future economic policy.  Here is a summary of his most salient points:

  • The difference in income growth between very wealthy and the rest of the population in the U.S. over recent decades is staggering, as illustrated by the following chart:
  • This gap is further underscored by contrasting income growth in post World War II decades with the numbers from 1979 through 2007:
  • The period from 1992 to 2000 was an exception, when strong economic growth and the policies of the Clinton administration led all quintiles to grow together again. All income groups experienced their fastest income growth in years. That there is nothing in these data to indicate that the tax increases in the early 1990s had any adverse effect on income growth. Had incomes grown since 2000 like they did in the 1990s, the median income would be $8900 higher than it is now:
  • The share of all income accruing to the top 1 percent increased by 13.5 percentage points from 1979 to 2007. This is the equivalent of shifting $1.1 trillion of annual income to the top 1 percent of families. Put another way, just the increase in the share of income going to the top 1 percent over this period exceeds the total amount of income that the entire bottom 40 percent of households receives. (emphasis added)
  • The evidence is clear that the economy performed more poorly after last decade’s tax cuts than it did after taxes were increased on top earners in the early 1990s. Across all businesses, job growth was much weaker in the 2000s than in the 1990s. Hence there is little empirical support for the claim that cutting taxes on so-called “job creators” has spurred income growth, business formation or job growth.
  • According to research by Karen Dynan and her coauthors, the top 1 percent of households saves about half of the increases in their wealth, while the population at large had a general savings rate of about 10 percent. This implies that if another $1.1 trillion had been earned by the bottom 99 percent instead of the top 1 percent, annual consumption would be about $440 billion higher. This would have resulted in a 5 percent boost to aggregate consumption over what actually occurred. (emphasis added)
  • A paper by international economists Torsten Persson and Guido Tabellini argued that in a society where income inequality is greater, political decisions are likely to result in policies that lead to less growth. A new IMF paper also finds that more equality in the income distribution is associated with more stable economic growth.
  • If we want an economy that builds the middle class, we can’t continue the type of policies that have exacerbated the rise in inequality and threatened economic mobility for the last thirty years. This means that we must adequately regulate excess risk-taking and corrupt practices in financial markets. It also means that we can’t continue tax policies that don’t generate faster economic growth or jobs, but rather increase inequality. Instead of going backwards, we should adhere to principles like the Buffett Rule, which states that those making more than $1 million should not pay a lower share of their income in taxes than middle class families. We should also end unnecessary tax cuts for the wealthy, and return the estate tax to what it was in 2009.  (emphasis added)
  • The evidence suggests that a growing middle class is good for the economy, and that a more fair distribution of income would hasten economic growth. Businesses would benefit from restoring more fairness to the economy by having more middle class customers, more stable markets, and improved employee morale and productivity.

“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.”

F. Scott Fitzgerald, The Rich Boy

Kudos to Ezra Klein of the Washington Post for his original posts and the others cited above for their work.  Also to Scott Fitzgerald for nailing down what rich people are really like long before I was born.

A Dark Day

Today, December 16, 2011, is a dark day in the history of the United States.  This morning the Senate passed on a vote of 86-13 (including yeas by both senators from the State of Washington and an earlier affirmative by our local congressman) a measure that codifies in U.S. law authorization for the President of the United States to order any person, including citizens of the U.S. and legal aliens, deemed by the president to be guilty of associating with certain terrorists groups, be arrested and held indefinitely without due process of law.  This is a heinous violation of one of the most cherished freedoms in Western civilization: the prohibition against imprisonment on the whim of a monarch or executive without some third party assent that actual legal transgression has occurred.  This is a tradition predating even the U.S. constitution, having been first codified at least as early as the Magna Carta in 1215.

For most of U.S history., you have been guaranteed a considerable number of rights when arrested.  If the authorities took you into custody, they had to tell you precisely why you were being arrested.  Within a short period of time, typically 24 hours, they had to appear with you before a magistrate and demonstrate to his or her satisfaction that there was ample evidence that you were probably guilty of a crime.  Even if the judge agreed, you also had the right to be free from jail pending trial, if necessary, by posting a bond appropriate to the magnitude of the crime for which you were accused.  This could only be denied if the judge determined you were a danger to the public or a significant flight risk.  All of these things could be appealed, and in any case you were entitled to legal representation.

If the president signs this bill, as I expect he will, this will no longer be true if one man – the President of the United States – decides you should be indefinitely detained.  All that is necessary is that he declare that you are in some way a supporter of an organization that, in his view, somehow can be construed as supporting terrorist groups.

Okay, no problem, right?  No one reading this worries that they could remotely considered as being associated with any terrorist organizations, right?  Think again.  If you’ve watched Fox News, listened to talk radio or visited Pamela Geller’s web site lately you know that there have been numerous attempts, however pathetic, to associate Occupy Wall Street with radical Muslims.  This type of innuendo is common in our society.  No matter what part of the political spectrum you occupy, you are susceptible, under vague legal mumbo jumbo such as exists in this law, to being associated with some group that can be interpreted as an “associated group” to terrorist organizations.

It is not hard to imagine a future president Gingrich or Bachmann or Perry or Santorum interpreting this law to apply to virtually anyone.  Think you’re immune?  How about if you’re a member of a militia or a private gun dealer who is perceived as having sold weapons that somehow wound up in the possession of a group perceived as “terrorists?”  Could a President Hillary Clinton or some equally frightful “ultra-liberal” bogeyman conceivably interpret this statute as applicable to your indefinite detention?  Before you dismiss it as “not a concern to you personally,” you had better think – long and hard – about that kind of power in the hands of someone whose judgement you might not trust.  Because it’s the nature of our democracy that, sooner or later, someone matching that description will be in a position to wield that power.  That’s precisely why the founders tried to make all such power subject to those “checks and balances” we all learned about way back in middle school.  And this law deliberately circumvents those measures.

There is admittedly considerable disagreement as to whether the nightmare I’m describing here – that citizens and legal aliens could be indefinitely imprisoned without due process – can actually play out.  The liberal publication, Mother Jones, says it can’t.  The New York Times editorial board and constitutional lawyer, Glenn Greenwald beg to differ (LINK  LINK  LINK).  But this controversy only serves to prove my point.  If anything, recent history is on the side of aggressive presidents having their way with constitutional issues when it comes to matters where they can claim the shield of national security.  At best, it could take many months or even years to judicially overturn even the most egregious abuses of this law.

No one man or woman in a constitutional democracy should ever wield such power as this law potentially bestows.  Not Barack Obama, not George Washington, and certainly not men like George Bush, Dick Cheney, Rick Perry or Newt Gingrich, nor any of the myriad pretenders who, given the fickle nature of the American electorate, might someday accidentally actually get elected.

At this point, we have greased the first step on the slippery slope to hell by planting the seeds of tyranny in the very statutes that govern our democracy.  Let us all hope that we can reverse that slide before the concept that a president can simply order people into jail becomes an accepted norm.