Decades of government intervention in the economy has depleted the middle class. The invisible tax of inflation has killed savings and continues to harm the middle class.
Emmanuel Saez, UC Berkeley’s mustard-sweatered “guru of inequality,” reveals [pdf] how poorly Americans in the much-discussed 99 Percent have been doing since the great Keynesian recovery began to sizzle in 2009:
In 2010, average real income per family grew by 2.3% (Table 1) but the gains were very uneven. Top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery. Such an uneven recovery can help explain the recent public demonstrations against inequality. It is likely that this uneven recovery has continued in 2011 as the stock market has continued to recover. National Accounts statistics show that corporate profits and dividends distributed have grown strongly in 2011 while wage and salary accruals have only grown only modestly. Unemployment and non-employment have remained high in 2011.
This suggests that the Great Recession will only depress top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s. Indeed, excluding realized capital gains, the top decile share in 2010 is equal to 46.3%, higher than in 2007 (Figure 1).
MacArthur genius Saez, who I’m sorry to find seems to have gotten attention from Reason only in the comments, is pecking away at the question of whether “falls in income concentration due to economic downturns” can be sustained. In English, that means that rich people lost much more than the rest of us in the 2007-2009 phase of the stagnation. If that trend could be sustained, Saez and other equalicists note, then the alleged growth of inequality might slow or reverse.
This doesn’t mean that the backward castes would get any richer, because in fact everybody is poorer. (Note that inflation means anybody who has seen 0.2 percent income growth since 2009 is already way behind.) It doesn’t even mean that the noble goal of making everybody equally miserable would be achieved. But apparently the masses will feel better about skipping breakfast, lunch and dinner if they know that the rich had to order a slightly cheaper brunch. That’s the theory anyway.
New evidence suggests there’s a reason why this economic “recovery” hasn’t felt much like a recovery. Figures from the Census Bureau’s Current Population Survey, compiled by Sentier Research, show that the “recovery” has actually been harder on most Americans than the recession from which they’ve allegedly been recovering.
According to Sentier’s report, the median American household income has actually fallen during the “recovery.” Not only that, but it has fallen even morethan it did during the recession. Gordon Green, former chief of the Governments Division at the U.S. Census Bureau and co-author of the report (with fellow Census veteran John Coder), says, “Real income fell by 3.2 percent during [the recession]. And during the recovery it went down by 6.7 percent.” So “income [has] declined twice as much in the recovery as in the recession itself.”