Sunday, September 28, 2014

THE RICH HAVE WON THE CLASS WAR*

The title of this piece is the famous Warren Buffet line given in 2011.*  A recent article shows just how dramatic winning the class war has been.**


The figure is the result of a study by Paulina Tcherneva .
An examination of average income growth [in the U.S.] during every postwar expansion (from trough to peak) and its distribution between the wealthiest 10% and bottom 90% of households reveals that income growth becomes more inequitably distributed with every subsequent expansion during the entire postwar period.  ***

Though Reaganomics didn't initiate the war by the rich, you will note the unusually large drop in 1982-1990.  After a small recovery for the bottom 90% during the Clinton years (coupled with a small drop by the rich), there is another huge drop in 2001-2007 during the Bush-43 years followed by yet another large drop during and since the Great Recession.  It must be said that some of the rich are beginning to be concerned about income disparity.

Obama has gotten though some tax reforms (e.g. increasing the top level back to where it was under Clinton.), but I don't know the effect yet.

By the way, the upper 10% in 2012 began at $77,500!****

* Warren buffet, CNN September 30, 2011: http://money.cnn.com/video/news/2011/09/30/n_buffett_class_warfare.cnnmoney/
** http://www.washingtonpost.com/blogs/wonkblog/wp/2014/09/25/this-depressing-chart-shows-that-the-rich-arent-just-grabbing-a-bigger-slice-of-the-income-pie-theyre-taking-all-of-it/?wpisrc=nl-wonkbk&wpmm=1
*** Tcherneva, Pavlina R., Reorienting Fiscal Policy: A Critical Assessment of Fiscal Fine-Tuning (August 1, 2013). Levy Economics Institute Working Paper No. 772. Available at SSRN: http://ssrn.com/abstract=2318045 or http://dx.doi.org/10.2139/ssrn.2318045 
**** http://en.wikipedia.org/wiki/Affluence_in_the_United_States

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