A world in which 1% equals 121%

ChangeinWealth

Source: Economic Policy Institute

Did you catch the latest figures on income inequality in America? Think Progress summarizes renowned economist Emmanuel Saez’s latest research, which found that the richest 1% of Americans captured 121% of income gains during the recovery. (Link updated.)

121 percent? Sounds like a mathematical impossibility, or at least Onion-like hyperbole.

But as it turns out…

How is it possible for the 1 percent to capture more than all of the nation’s income gains? The number is due to the fact that those at the bottom saw their incomes drop. As Timothy Noah explained in the New Republic, “the one percent didn’t just gobble up all of the recovery during 2010 and 2011; it put the 99 percent back into recession.”

Oof.

This report comes on the heels of several other reports that come to similar conclusions, including the Economic Policy Institute.

In addition to issues of fairness, these studies point at another, deeper implication: Income inequality begets further economic woes. Which begets more income inequality. Which…. well, you get the point.

OCPPtaxburden

Oregon Center for Public Policy

Here in Oregon, the Center for Public Policy points to our tax structure as one of the ways that income inequality in Oregon perseveres. (Check out their recent article, “Oregon’s Tax System: Poor and Middle Pay More than Rich.”)

3 Responses to “A world in which 1% equals 121%”

  1. Anonymous

    One cannot have over 100% of anything except change comparatives.
    You know this and even mention it. You post a figure of 121% of income increases anyway. Worse, when the cited NYT article that links through on clicking the offending phrase, past the expired registration notice, is actually located and consulted, it cites a figure of 93% of income increases to the 1% in America.
    So why this FOX level disinformation? Isn’t 93% enough to inspire anger?
    My first adult paycheck for a month was about $500. Forty years later, my last one was for about $5000. Did that result from my union taking $4500 a month from those still making $500? Of course not, it resulted from growth of skills and the luck of finding fertile, and represented, ground to apply them.
    I would not pick this language nit with you if the the fallacy did not do other damage. Your deceptive hyperbole damages our cause in two ways.
    First it implies an unsupported staw man that the income inequality in the U.S. is a result of dollar-for-dollar takings from the 99% in America. This is not so. The source of the increased wealth of the 1% did not result from such takings. It resulted from world economic growth outside of the US which is 50% owned by Americans in the 1%.
    They did not take what we had, they refused to share what they had. We paid for their ability to have it through reduced services and higher taxes on the 99%.
    Why not just say so?
    That transfer has been built into our tax code as a national goal -to varying degrees- since 1962, implimented in 1968. Politicians from Gephart to Wallace and Perot told us so. We voted for their opponents anyway.
    The proceeds from that growth were not shared with the American 99%. Those proceeds were however shared in the 2nd and 3rd world countries in which the growth occured and where it was re-invested, witnessed by the growth of middle classes throughout Southeast Asia, north an south Africa and Latin America.
    This is not the same thing as “taken from Americans.”
    Does that excuse income inequality world wide? Hell no! But stories such as this misdirect us away from the core problem.
    Perhaps, like me, you do not have the slightest idea how to fix the core problem. I understand that. It is brand new historically, Worse, it is complicated by robotic automation. A world of 7billion people only needs 2 billion of them as workers, and that second number is shrinking. GM lost 2/3 of its work force since 1970 and makes more -and better- cars domestically than it ever did. They are not alone and a “recovered” world economy with 50-70% unemployment is staring us in the face.
    Even so, we cannot decieve our way out of income inequality.
    That brings us to the second way such stories as this damage the cause we share. We look to sources such as you for the facts we need. We expect accuracy because we say we share moral values. We share your rage. But that puts a moral committment on you, the committment that is supposed to separate you from FOX.
    It is to remember that Justice can only rise on a foundation of truth.
    Anything else can not solve the problem.
    We do not know how to reach across international borders to reach our opponents’ wealth.
    I do not know how to fix that either, but departing from the facts only makes it worse.
    Sincerely,
    Tj Pfau

    Reply
  2. Alina Harway

    Hi TJ,
    I understand your concern about misreporting (just check out our Media Watch page!) but this looks to be a simple a case of an incorrect hyperlink.

    The first link in this article was supposed to link to the Think Progress article mentioned in the paragraph: http://thinkprogress.org/economy/2013/02/12/1579211/1-percent-121-gains/
    Instead, I mistakenly linked to an older piece, which is now outdated. Saez did report a 93% income gap in his 2011 report. But his newest report, published in January 2013, updated those numbers.

    You can read the whole analysis here (the 121% figure can be found on page 2): http://elsa.berkeley.edu/~saez/saez-UStopincomes-2011.pdf

    I will update the hyperlink in this piece.

    Reply
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