Summers says inequality costs average household $11,000 a year

By Dan Brooks in Politics versus Government 2 Comments
Former US Treasury Secretary Larry Summers

Former US Treasury Secretary Larry Summers

Former Secretary of the Treasury and gifted face-maker Larry Summers has calculated how much more middle-class households would make if the United States enjoyed the same income distribution it had in 1979, and the results are startling. According to his calculations, households in the bottom 80% of incomes would be making another $11,000 a year, on average, if we had experienced the same economy of the last 35 years without the growth in inequality. Households in the top 1%, on the other hand, would get $750,000 less. If you’re having a hard time wrapping your head around those two numbers, NPR’s Planet Money podcast has produced a helpful graph. Scroll down to see the whole thing—like six screens down.

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Friday links! Economic forces edition

By Dan Brooks in Friday Links 6 Comments

Graphs, graphs graphs! First of all, I don’t get punished for using a spectacularly uninteresting visual image for my header, because you are already looking at this page. All your hits are belong to us. Second, that image is actually totally interesting. Had I not cropped out the title, you would know that it plots the percentage of total US pre-tax income—including capital gains—garnered by the wealthiest one percent of earners. A lot of people have said that the interesting thing is its impressive upward trend right around 1980, when America began the long fight to make the Laffer Curve a legitimate conceptual instrument. I personally think the interesting thing is the locations of its two highest peaks, in 1929 and 2007, respectively. I’m not saying economics is a science, but maybe there’s some sort of principle at work there. It’s Friday, and today’s link roundup is all about weirdo economic phenomena, plus judo highlights and a book review. I’m not entirely stupid.

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Income distribution makes US resemble a Banana Republic

By Dan Brooks in Inequality 7 Comments

Ways this Banana Republic ad resembles the Republican Party: even the not-white people are really white.

In the aftermath of the phrase “the aftermath of Tuesday’s elections” almost passing out of use, the United States must now turn to its most pressing problem: our hideously unfair treatment of the rich. If TAoTE has taught us anything, it’s that the American people will not stand for socialized medicine, handouts for the poor or even many public schools. No—the common man has spoken, and he demands lower taxes for the rich and deregulation of their various petro-boilers and chicken confinements. As usual, the common man is distinguished by his generosity. For although the rich have suffered terribly since FDR, weathering gales of progressive income taxes and share-the-weatlh schemes, they now command a share of this country’s wealth normally seen only in third-world nations. According to Nicholas Kristof, who appears to be biting his lip in his new headshot, “the richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976.”

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