Home > Uncategorized > The Rich Are Getting Richer

The Rich Are Getting Richer

Post on December 19, 2007 by 37 Comments »

Let this post serve as a footnote* to Rob Schofield's excellent column on the increasing income inequality in America.  Read it.  Rob references the new data from the Congressional Budget Office report that shows, to no one's surprise, that the rich are getting richer.  From the same CBO report, I would like to highlight this data (from Paul Krugman's blog) which is the percentage gain in after-tax income from 2003-2005:

Bottom 20%: 2%
Next quintile: 2.4%
Middle 20%: 3.9%
Fourth quintile: 3.7%
Top 20%: 16%

Top 10%: 20.9%
Top 5%: 27.7%
Top 1%: 43.

As Krugman notes, this goes a long way towards explaining why the Bush Administration has not been given "credit" for their economic "success."  They have been very successful at concentrating wealth at the very top.  Presumably these fortunate few are the majority of the 24% of Americans who still "approve" of the job George Bush is doing.  Everybody else is just treading water, at best.

Why isn't there more outrage over the concentration of wealth for the top 1% of wage-earners?  Ignorance, mostly.  My favorite poll (from a David Brooks column, here) shows this:

The most telling polling result from the 2000 election was from a Time magazine survey that asked people if they are in the top 1 percent of earners. Nineteen percent of Americans say they are in the richest 1 percent and a further 20 percent expect to be someday.

I don't think this is the audacity of hope that Barack Obama keeps talking about.  This is not optimism…it is delusion.  There is a difference.

Now, before any right-wingers start describing bracket creep, or citing data from Heritage or Cato or AEI showing the rich are paying a higher percentage in taxes of government revenue than the rest of us…well, duh.  The share of all federal taxes paid by the top 1 percent grew, but only slightly more than half the rate of their growth in incomes because of the tax rate cuts.  Is it not possible to devise tax policy where the greatest income gains occur for the lower and middle classes…even if top wage earners are stagnant?  Just asking.

This fact is indisputable:   based on tax returns, the most recent data available show that in 2005 the top 10 percent, top 1 percent and fractions of the top 1 percent enjoyed their greatest share of income since 1928 and 1929.  This trend is not good for our democracy. 

 

Possibly related posts:

  1. Poverty extends its reach across NC
  2. Measuring Economic Hardship
  3. New poverty data highlight the need for a public response
  4. Families with Children Were Hit Harder by the Great Recession
  5. Top of the morning

This entry was posted in Uncategorized. Bookmark the permalink.

Comments (Closed):37

  1. Rob Schofield
    December 19, 2007 at 8:38 am

    Thanks, Steve, for helping to highlight these sobering numbers.

    It seems to me that our best chance (and probably only hope) for getting a handle on this situation is to re-double our commitment to public systems that will give a much larger pecentage of our children/future income earners a fighting chance (i.e., early childhood edcuation, health care, public schools and higher ed — paid for via a truly progressive tax system).

    In other words, a safety net (or perhaps, more hopefully, a trampoline?) targeted at our future. A system of guaranteed supports that preserves, indeed stimulates, the incentive to work hard and get ahead while helping to reverse our current and discouraging descent into a kind of “winners take all” society.

    To the extent we stick to the trickledown approach or some variation thereof, we will continue our long, slow slide. Rather than serving as a model for the developing world, we will begin to to resemble it — a kind of banana republic on steroids.

  2. Pirate
    December 19, 2007 at 9:00 am

    I suppose you guys would prefer a “government takes all” society in which politicians determine who the “winners” are?

  3. gregflynn
    December 19, 2007 at 9:08 am

    I thought the Administration was already determining who the “winners” are.

  4. Brian
    December 19, 2007 at 9:32 am

    Turner,
    I wonder what the share of income distribution is like at your office? Is there any income inequality between what you and your partners pay yourselves compared to what you pay your office assistants?
    Just asking.

  5. Jerimee
    December 19, 2007 at 10:04 am

    Brian, I suspect that the talented and dedicated folks who work at the Justice Center could secure higher paying employment within a week if that was a motivation.

  6. sturner
    December 19, 2007 at 10:35 am

    Brian…glad you asked.
    As “CEO” of my company (along with my 2 partners) we average 5 to 10 times the “average” medical office employee (front office staff, nurses, managers). That is with 7 years post-graduate training, at a minimum. The average CEO of a Fortune 500 company now averages about 400 times the average worker. Also, my personal financial risk is significantly greater if I perform poorly.

    Most physicians after-tax income has been flat or worse during the past 10 years. At my practice, we have continued to give our employees cost-of-living allowances yearly (at a minimum, often more). We have continued to limit their out-of-pocket expenses for health insurance, at significant cost to the partners. Reimbursement rates from private insurance does not even keep pace with the general rate of inflation, and lags far behind the medical inflation rate.

    So yes, Brian, if you want to use my company as an example feel free to do so. We are a for-profit corporation. The incomes at our company vary somewhat, but are a reasonable approximation of educational level and productivity. If the CEO’s today made 20 times what average workers in their company make (like they did at the start of the Reagan years), we would be a better country than we are today.

  7. Brian
    December 19, 2007 at 10:56 am

    “The incomes at our company vary somewhat..”
    Somewhat? Ten times the average office staff?

    C’mon, what happened to “social justice?” Why not equalize all incomes? Why not be a leader by example? You have the power to acheive in your office what you want to achieve for society. What are you waiting for?

    Also, you claim to be concerned about the “working poor.” However, I would be willing to bet your office hours are not very friendly to the working poor. Why force those that can least afford it to take time off work to see a doctor? Why not expand or change your hours to include weekends and weeknights so the lower-income patients don’t have to sacrifice time at work?

  8. Rob Schofield
    December 19, 2007 at 12:07 pm

    Notwithstanding Steve’s admirable willingness to share these details, the real issue here, of course, is the big picture.

    (And, as an aside, if we’re gonna’ go down this road regarding the treatment of employees, a much more interesting case study might be Variety Wholesalers. Perhaps one of you guys can run that down for us.)

    Anyway, no one is saying that there shouldn’t be rich people or that we need some kind of crude leveling. Economic policy can actually be a little more sophisticated than that. The trick is to find the right balance between the absurd and stifling stagnation of the socialist command economy and the wild, wild west/every man for himself “system” touted by the market fundamentalists.

    Right now, American is listing heavily in the direction of the latter and we are all worse off as a result.

  9. Brian
    December 19, 2007 at 12:21 pm

    “Anyway, no one is saying that there shouldn’t be rich people or that we need some kind of crude leveling. Economic policy can actually be a little more sophisticated than that.”

    Any ideas you care to share (aside from progressive tax rates and massive redistribution of wealth – both of which fit the “crude leveling” criteria)?

  10. sturner
    December 19, 2007 at 1:00 pm

    Rob’s right, Brian. You can make it about me personally if you like, but it certainly is irrelevant.

    Also, it makes you seem kind of pitiful.

    As to progressive taxation, most Americans not named Huckabee and not working in conservative think-tanks are comfortable with it. Changes in tax policy over the past 25 years have favored the wealthy, and the latest data confirm a historically high concentration of wealth at the top. I think that’s bad…you don’t. So be it. I’ll try to get my candidate elected and you do the same. Let the voters decide if a change is in order. That’s as it should be.

  11. Jerimee
    December 19, 2007 at 1:03 pm

    Progressive tax rates are crude leveling?

    Brian I don’t know what sort of affiliation you claim, but I can only hope that the Republican party continues to publicly promote raising taxes on middle income families in order to lower taxes on multi-national corporations.

    The basic idea is love your neighbor. I’ll let others speak to good policy.

  12. Brian
    December 19, 2007 at 1:12 pm

    “You can make it about me personally if you like, but it certainly is irrelevant.
    Also, it makes you seem kind of pitiful.”

    That’s rich coming from you. Remind me who posted the “conservatives are racists” gem. Nothing personal there. You’re also one who has not missed a single opportunity to substitute rational discussion with petty insults (check the threads, its obvious).

    At any rate, it seems obvious you are not able to defend your hypocrisy of wailing about income inequality while working next to people you make ten times the amount in income. The bottom line is that you want to impose “sacrifices” on those in society at the highest levels of income, while passing up the opportunity to do so yourself.

    Furthermore, “the latest data confirm a historically high concentration of wealth at the top. I think that’s bad..” It appears this statement rings true of your office. But apparently you don’t think it is bad enough for you to make any sacrifices yourself.

    If you think “a change is in order,” then lead by example. Until you do, you are guilty of blatant hypocrisy.

  13. Brian
    December 19, 2007 at 1:20 pm

    …and let’s forget you’re previous response to charges that you do respond with personal insults:
    “As to being a smart-ass…guilty as charged.”

  14. Brian
    December 19, 2007 at 1:21 pm

    “let’s forget” = “let’s not forget”

  16. gregflynn
    December 19, 2007 at 2:04 pm

    Brian, Either criticize Steve for being a socialist or criticize him for not being a socialist but please make a decision and stick with it. It’s obvious that Steve gets under your skin. You regularly burst in with witticisms like “This is a bizarre post – even for you Turner.” Tone down the personal animosity and we might have a discussion.

    The red-baiting is really really stale. If that’s all that’s left in your intellectual arsenal I guess Christmas is the most wonderful time of the year to shoot blanks about redistribution of wealth.

    Regarding “redistribution” of wealth, here’s where JLF/Civitas money comes from:

    Minimum population of 2,500 within 1 mile of the site.
    Minimum 25% African-American population within 5 miles.
    Median household income of $40,000 or less.

    For a family of 4 that’s just under 200% of the poverty level. Above that, no Super Dollar, or SCHIP, for you!

  17. Brian
    December 19, 2007 at 3:51 pm

    gregflynn,
    As posted previously, the “personal animosity” crown belongs on the head of sturner.
    Intersting how you charactize as “red baiting” the simple task of pointing out the hypocrisy of those that pay lip service to the “injustice” of income inequality, while living comfortably in their million-dollar homes. If earning more money than others is such a crime, Turner should turn himself in immediately.

    Moreover, I stand by the point that Turner has an opporunity to put his money where his mouth is and make personal sacrifices in order to “equalize” the incomes in his office. He claims the “concentration of wealth at the top” is bad, but seems to miss the irony of him making ten times the income of those he works with. Until he, and other “Lexus liberals” like him, take the lead and personally take a pay cut in order for his co-workers to “close the income gap,” then his arguments are merely “shooting blanks.”

  18. sturner
    December 19, 2007 at 4:55 pm

    Brian…at the risk of wasting more time swatting at gnats and giving your ideas more thought than they deserve, let me point out what should have been obvious to you…

    At no point have I or anyone on this blog advocated that everyone should be paid the same. In fact, I explicitly said I longed for the Reagan years where CEO’s only made twenty times the average worker.

    As to my workplace…my partners and I provide 25 full-time jobs, competitive wages, generous health and retirement benefits, a pleasant work environment, and opportunity for advancement based on merit. No apologies or hypocrisy. What have you personally done for the economy lately?

  19. gregflynn
    December 19, 2007 at 5:09 pm

    Brian, The fact that you take Steve’s general snark personally does not make it personal animosity. You are personally harassing Steve, personally.

    It is not necessary to be poor to address poverty any more than it is necessary to be sick to cure a disease. The 50′s were a period of prosperity and growth combined with equalization of wealth through taxation.

    Apparently you have some problem with the accumulation of wealth by people who don’t have any. The disparity in wealth doesn’t seem to bother you. Your response has been to attack the personal affluence of an articulate observer of that disparity.

    How would you attack someone who is not affluent who makes the same observation? Do you have an articulate defense of this disparity in wealth other than personal attacks?

  20. Brian
    December 19, 2007 at 5:33 pm

    gregflynn,
    Review previous threads, Turner has gotten quite personal.
    If you think accurately pointing out hypocrisy is an “attack” then so be it.
    As your comrade Searing once said “Progressive Pulse is not for the faint of heart.”

    sturner,
    Glad to see I finally got an admission from you that “I explicitly said I longed for the Reagan years” – me too!
    You don’t think all people should be paid the same – great, now we’re finally getting somewhere. What level of income inequality would be acceptable? Who should determine just exacly who should make what?

  21. gregflynn
    December 19, 2007 at 6:09 pm

    You didn’t point out hypocrisy. You made an accusation of hypocrisy based on a false premise of income equality that you yourself constructed.

    You also made an accusation of hypocrisy based on a false premise that lower-income patients don’t work nights and weekends.

    If you are continuously settling old scores I guess we can expect ad hominem ad infinitum, which is a short-cut to the Delete key. He has twice answered the question “What level of income inequality would be acceptable?” and you continue to ignore the answer.

  22. Dallas Woodhouse
    December 19, 2007 at 8:20 pm

    I am just glad their is a chance to move up unlike Cuba…Greg do you want cuba?

  23. Dallas Woodhouse
    December 19, 2007 at 8:21 pm

    Do you want their to be no chance at a greater life….I know you want everyone to be equal……equally miserable

  24. gregflynn
    December 19, 2007 at 9:34 pm

    Dallas, you obviously haven’t read my comments. If I wanted Cuba I’d be in Havana.

    I want everyone who is sick or injured to have early and easy access to health care so their conditions don’t become chronic or fatal or spread disease to other people.

    By letting people fall behind we are actually creating more opportunity? Nice spin.

  25. Ed King
    December 19, 2007 at 9:38 pm

    What would Jesus say? “It is easier for a camel to go through the eye of a needle than for a rich man to enter the Kingdom of God.” Matthew 19:24

  26. sturner
    December 19, 2007 at 10:10 pm

    Dallas…how about a chance to move up like in the Scandinavian countries. The Swedes have much greater social mobility than we do, as do most of the European countries. Why can’t we analyze what they do well…healthcare, childcare, education, social services, whatever, even progressive tax policies…and see if we can put an American spin on it and do it better. Are you so provincial that you can’t learn from how others succeed? That’s “American exceptionalism” at its worst.

    Greg is correct to remind us that you don’t have to be poor to address poverty. Take the presidential candidates…all of the major contenders, with the exception of Mike Huckabee, are multi-millionaires. Unless we “allow” a millionaire to discuss poverty, than it isn’t going to be discussed. Special salute to John Edwards, incidentally, for his courage on this subject. And no, I don’t care if his next haircut is $1,000 and his next house is 50,000 square feet.

    Finally, we have had no greater patrician in the White House than FDR, and no greater champion of the poor. The economic royalists of his day considered him a “traitor to his class,” and he welcomed their hatred. That’s my kind of guy.

  27. Pirate
    December 20, 2007 at 9:26 am

    gregflynn – “I want everyone who is sick or injured to have early and easy access to health care so their conditions don’t become chronic or fatal or spread disease to other people.” Do you really think the bureaucracy in this country can provide healthcare that is “early and easy”? LOL

    sturner – “The Swedes have much greater social mobility than we do, as do most of the European countries. Why can’t we analyze what they do well…healthcare, childcare, education, social services, whatever, even progressive tax policies…and see if we can put an American spin on it and do it better.” Dude, Sweden has approximately 3% of the population that the United States has. When it comes to centralized “socialist” planning, it should be obvious to anyone that it is much easier to manage 3 people than it is to manage 100 people. You guys like to point at small socialist countries and say “Hey, look how great that is!” but you totally ignore all of the problems they have. Keep in mind that in the US, the problems (i.e. the waiting to see a doctor, the economic distortions, disincentives) that exist, would be nearly 33 times worse than in Sweden. Perhaps even more than that due to the massive unforeseen problems that would occur from such a transition on a scale so massive.

  28. gregflynn
    December 20, 2007 at 11:00 am

    Let me repeat it for you since you didn’t seem to read it the first time:

    I want everyone who is sick or injured to have early and easy access to health care.

    I didn’t say government had to provide either the access or the healthcare.

    As I’ve said elsewhere, you are fighting your own shadow.

  29. Pirate
    December 20, 2007 at 1:10 pm

    Is this website not affiliated with NC Policy Watch? We are discussing public policy here right? You “want everyone who is sick or injured to have early and easy access to health care” yet you are NOT suggesting the government should be the means by which your goals come to fruition? How is this going to occur in such a manner that would suite your goals? The free market, perhaps? Deregulating the healthcare industry probably would lower costs and make access much easier but something tells me that isn’t what you are here to advocate…

  30. gregflynn
    December 20, 2007 at 2:08 pm

    The NC Rate Bureau ensures that North Carolinians have access to workers compensation, automobile and property insurance. For small businesses starting out the Rate Bureau may be the only resource for workers comp. insurance. The government does not provide the insurance but it makes sure it is available.

    Health care is somewhat more complicated because the government can also be a provider but the principle is the same. The government can make sure everyone has access to coverage but it does not have to be the provider of either the insurance or the healthcare itself, even though it can be.

  31. Eric
    December 20, 2007 at 7:56 pm

    there are no substantive arguments here. there is only a sniping match. on one side, people who think the government *can* be a force for good in society. on the other side, people who seem to believe that it can’t. this is stupid.

  32. gregflynn
    December 20, 2007 at 11:07 pm

    Premium subscribers have unlimited access to substance. Please feel free to contribute your own substantive arguments. With the solstice coming up we’re busy with the peaking snipe hunting season.

  33. sturner
    December 21, 2007 at 7:41 am

    How’s this for substance:

    1) Rescind the tax cuts on people making over $200,000.

    2) Tax capital gains the same as other income.

    3) Implement John Edwards health plan.

  34. anglico
    December 21, 2007 at 3:43 pm

    I’ve been out for a few days, but it’s reassuring to see somethings never change. I admire you guys for your willingness to engage the Puppets in honest discussion, but after reading this thread, it’s hard to make the case that it’s worth the trouble.

    You’re talking to folks who still believe Alan Greenspan was a savior when he argued for the free-market to regulate itself around high-risk mortgage lending.

  35. Pirate
    December 22, 2007 at 5:03 pm

    Eric, the difference is that one side doesn’t think that government should have limits and one side that believes there should be limits and protections for the sake of freedom.

  36. anglico
    December 23, 2007 at 2:24 pm

    That’s silly Pirate. I know of no one who believes the government should have no limits, just as only a few free-market extremists believe the government should have no role in protecting freedoms.

    The only question is where to draw the lines.

    You draw lines that say good health care (the freedom not to die from an illness that rich people can be saved from) is not something the government should get involved in.

    Then again, you probably think Bush’s war in Iraq has something to do with freedom, too. Right?

  37. Pirate
    December 26, 2007 at 12:17 pm

    I believe in the Classic Liberal definition of freedom (freedom from) whereas you obviously believe in the Rousseauian/Leftist definition of freedom (freedom to). It’s not really about drawing lines, it’s about perspective.

    In the Classical Liberal tradition (Negative Liberty) there is the belief that government should be limited to protect personal liberty so that each of us can be free to pursue happiness (life, liberty, property and all that jazz). To protect liberty, government should be limited to ensure we each have the “freedom from” coercion and barriers to happiness.

    In the Rousseauian or Leftist tradition (Positive Liberty) there is the belief that government should “force” men to be free. Government should be proactive in removing barriers (i.e. hunger, addiction, sickness) from people’s lives so that they can be free from their own desires and vice. Only when we are “forced to be free” will we have the “freedom to” participate in the social contract.

    It’s not about where the line is drawn; it’s about how we view the legitimate use of government. I’d prefer to live in a society where people are free from coercion and you would prefer to live in a society where people are free to live as they wish as long as they don’t do anything that is antagonistic to the needs of the collective.