Are the Rich Getting Richer? No.
The claim that there is rising income inequality in the United State comes mainly from the work of Piketty and Saez, whose numbers were updated recently by Saez, based on IRS data. That claim has been challenged by Alan Reynolds, based partly on Current Population Survey data. There has now been a systematic attempt to reconcile data from these two measurements by Burkhauser, Feng, Jenkins and Larrimore, who report that, “Our results imply that, if inequality has increased substantially since 1993, the increase is confined to income changes for those in the top 1 percent of the distribution.” In other words, inequality hasn’t changed among the other 99 % of the population. (HT to Marginal Revolution.)
So what has been happening to the top 1 percent? According to Saez and Piketty, they received 23.5 % of all personal income in 2007. But Saez says that figure will drop to between 15% and 19% by 2010.
Very interesting.
I bet Paul Krugman hates this result. He seems to relish in the idea of rising inequalilty — probably so he can use it to bash capitalism.
Several of my board members are among those who went from centimillionaire to mere decamillionaire.
As someone who has built a company from an idea and made mid 7 digits – then seen it disappear when the stock market collapsed in 2000 – I’m not crying.
I think Krugman has no problem with capitalism, but he detests financial manipulation masquerading as wealth creation – as defined by Adam Smith.
Krugman hates the classical liberal ideal — a society in which people deal with each other on the basis of reason, persuasion and voluntary exchange and not on the basis force and fraud.
He is a collectivist through and through.
If the findings were the other way around it would be on the front page of the New York Times, above the fold.