The Bush Years

Paul Krugman has a small item in his NY Times blog showing a graph from a recent paper by Emmanuel Saez, a UC Berkeley economist who specializes in tracking wealth & income.

What this shows is the strong growth in the portion of the economic pie seized by the elite. The top 12,000 workers take in 6% of all income in the US. That's out of a working population of 120,000,000. If everybody "earned" as much as this top one-hundredth of one percent, then instead of an average take-home pay of nearly $122,000, everybody would be taking home $73,500,000. I bet you are saying "but I don't take home $122,000, where did he get that number?" The total income in the US is $14.7 trillion and there are 120 million working. That's how. Also, don't get confused. The average per capita income is $48,000 because that divides the $14.7 trillion over 307 million people. Bottom line: the top 0.01% are so much wealthier than you, it's like they live on a different planet!

These mind boggling numbers show how a tiny number of ultra-rich skew all the numbers. Remember the joke. In a bar in Seattle the 20 people there have an average annual income of $60,000. In walks Bill Gates, and suddenly that number jumps to $300,000,000. Just one billionaire and suddenly the "average guy" in the bar is a $300 million-a-year guy!

Back in 1980 the top 0.01% were taking home 100 times as much as the average American. Now take home 600 times as much. That is the Reagan "revolution". That is "trickle down" economics.

The few setbacks in this ever rising trend of a bigger share of income going to the rich occur only during big economic crashes. In the graph, you can see the 1987 stock market crash, the recession of 1991, and the crash of 2000-2002 caused by the dot.com bust and the tech wreck. But those setbacks barely slow down the ever growing share of income going to the rich.

After the post-WWII trend of stable shares of the economic pie, the right wing propagandists convinced Americans that everybody would get rich if they encouraged entrepreneurship and let the rich keep a bigger share of their income! But that was a big lie. Incomes for the bottom 80% have stagnated over the last 30 years.

If you grow the economy, everybody gets more if all shares stay the same. If the economy does not grow, but the share going to the rich rises, then the poor have to eat less, get thrown out of their homes. There was anemic economic growth under Bush, so the rise of the share going to the rich from 2002-2007 meant everybody else got to tighten the belt. That's the kind of "economy" that Bush created.

Bush didn't go and tell the electorate that he planned to make the rich richer. He pretended his "tax cuts" were for everybody. He pretended that "growth" was going to be shared by everybody. But the reality is that during the rise of the right from 1980 until 2008, everybody except the tiny sliver at the top had to do with less because more was being given to the rich to "incentivize" them. Just like those hundred million and billion dollar "bonuses" going to the hot shots on Wall Street are meant to "incentivize" them. Ridiculous!

Here's Brad DeLong's response:

Time for a more progressive income tax, is what I am saying...