Just As I Suspected…

March 6th, 2012 at 1:43 am

According to inequality expert Emmanuel Saez, after falling with the financial bust, large captial losses, and the Great Recession, income concentration is back on the rise in 2010. 

We’ll see where this all goes–one year does not a new trend make–but as I wrote here, the notion that growth in the new business cycle would resume its end run around middle and low-end families was predictable.  All of the factors driving up inequality remain in place, most notably, high unemployment, and we know from profits data (way up), corporate balance sheets (way flush), and real paychecks of middle-class workers (way flat), that what growth has occurred hasn’t reached much below the top end.

If this expansion is to be one where growth is more than a spectator sport for average folks, we’ve got some serious policy work to do.  Specifics to follow…and yes, I know I’m whistling in the wind given our current crop of policy makers, but the pendulum will swing back, my friends.  The least we can do is be ready.

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3 comments in reply to "Just As I Suspected…"

  1. Michael says:

    I’m actually curious — why do you think the pendulum will swing back? It’s been 30 years, and both Democratic Presidents have made this worse, not better.

  2. James Edwards says:

    It seems to me that wage inequality is inextricably linked to two major technological advancements. The first is the obvious one, the Internet. But inequality happened long before that due to the most disruptive technology since the steam engine, Container Shipping. Taking these two technologies together means a disruptive technology of epic proportions. The advanced nations are seeing major structural changes, but have become very good at managing economies. Perhaps too good?

    The response to this by governments has been largely to treat these technologies as enhancements rather than game changers. This would not look like structural change in the classic sense because there is no sector gaining only most sectors losing.

    We have been coasting on low hanging fruit rather than asking the serious question “If India can do the programming and China can do the manufacturing and a dozen guys in California can do the design, what do we need everyone else for?”