Thursday, April 06, 2006

More on Wealth Inequality in the U.S.

by Tom Bozzo

Mark Thoma has a lot more on Federal Reserve economist Arthur Kennickell's new paper on changes in the distribution of wealth in the U.S. (incorporating results from the 2004 Survey of Consumer Finances), including a number of graphs showing various dimensions of the data.

Among the more interesting is this graph showing changes in the percentages of total wealth held in various portions of the wealth distribution. You have to go back to 1989 to see the richest 1 percent of U.S. households holding the same fraction of total wealth as the "upper-middle class" defined as the 50th-90th percentile group.

Another worthwhile read for visitors interested in the topic is this David Leonhardt article from yesterdays NYT on Henry Ford's radical idea that paying workers well was good for business. While Leonhardt manages to get EPI's Jared Bernstein to say, "You don't need an equitable distribution to have a sustainable recovery," Leonhardt appropriately notes that stagnant pay (and wealth) among large segments of the population has been associated with political instability in the past, and could well be again.

Chalk me up as wearing a furrowed brow on the question of the "sustainability" of the "recovery." I see lots of (political/social) capital consumption by the economic super-elites, but I've already been surprised at the time span over which the "it doesn't matter if you have money as long as you have stuff" narrative — the you-never-had-it-so-good story you hear from Tech Central Station flacks when news about the more-or-less dire financial straits of almost everyone has hit the mass media — has worked.

Go figure. Believers in Republican Jesus must be numerous indeed.
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