4 November 2011

Revision ==> That should be the 99.9%

Paul Krugman recently wrote an excellent piece on income inequality titled "Oligarchy, American Style." The following is an excerpt from the last part of the article:

The budget office report tells us that essentially all of the upward redistribution of income away from the bottom 80 percent has gone to the highest-income 1 percent of Americans. That is, the protesters who portray themselves as representing the interests of the 99 percent have it basically right, and the pundits solemnly assuring them that it’s really about education, not the gains of a small elite, have it completely wrong.

If anything, the protesters are setting the cutoff too low. The recent budget office report doesn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, found that almost two-thirds of the rising share of the top percentile in income actually went to the top 0.1 percent — the richest thousandth of Americans, who saw their real incomes rise more than 400 percent over the period from 1979 to 2005.

Who’s in that top 0.1 percent? Are they heroic entrepreneurs creating jobs? No, for the most part, they’re corporate executives. Recent research shows that around 60 percent of the top 0.1 percent either are executives in nonfinancial companies or make their money in finance, i.e., Wall Street broadly defined. Add in lawyers and people in real estate, and we’re talking about more than 70 percent of the lucky one-thousandth.

But why does this growing concentration of income and wealth in a few hands matter? Part of the answer is that rising inequality has meant a nation in which most families don’t share fully in economic growth. Another part of the answer is that once you realize just how much richer the rich have become, the argument that higher taxes on high incomes should be part of any long-run budget deal becomes a lot more compelling.
The larger answer, however, is that extreme concentration of income is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?


Vancouver Voyeur said...

So how do we undo the damage done? Protesting is nice, but I don't think it's being all that effective. Voting different people into office doesn't work, because in order to get elected you need money for the machine to propel you into office, for media spots, and have to make deals. Has anyone come up with a plan to make the necessary changes?

Karlo said...

As you mention, the only way to make a difference at the ballot box would be to have some way of electing a candidate who wasn't bought and paid for. We need to have people post a basic platform on the internet, have everyone vote in a straw ballot, and then agree to write the person in for the presidential election.