Inequality in the United States

Nicholas Kristof makes an excellent point about wage inequality in the US, which according to the CIA factbook linked below is actually worse than both Kenya and Uganda–which is crazy to me, because Kenya is a terribly stacked society with a tiny upper class controlling enormous resources and an enormous lower class with almost no resources. Granted, the lowest class in the US can’t be very well compared with those living in dire poverty in Kenya and other places, but inequality in the US is only raising.  To listen to Tea Party rhetoric, one would think the bottom 50% that doesn’t pay federal income tax is somehow getting all these unfair breaks from the system, but the opposite is true:

The frustration in America isn’t so much with inequality in the political and legal worlds, as it was in Arab countries, although those are concerns too. Here the critical issue is economic inequity. According to the C.I.A.’s own ranking of countries by income inequality, the United States is more unequal a society than either Tunisia or Egypt.

Three factoids underscore that inequality:

¶The 400 wealthiest Americans have a greater combined net worth than the bottom 150 million Americans.

¶The top 1 percent of Americans possess more wealth than the entire bottom 90 percent.

¶In the Bush expansion from 2002 to 2007, 65 percent of economic gains went to the richest 1 percent.

As my Times colleague Catherine Rampell noted a few days ago, in 1981, the average salary in the securities industry in New York City was twice the average in other private sector jobs. At last count, in 2010, it was 5.5 times as much. (In case you want to gnash your teeth, the average is now $361,330.)

More broadly, there’s a growing sense that lopsided outcomes are a result of tycoons’ manipulating the system, lobbying for loopholes and getting away with murder. Of the 100 highest-paid chief executives in the United States in 2010, 25 took home more paythan their company paid in federal corporate income taxes, according to the Institute for Policy Studies.

Living under Communism in China made me a fervent enthusiast of capitalism. I believe that over the last couple of centuries banks have enormously raised living standards in the West by allocating capital to more efficient uses. But anyone who believes in markets should be outraged that banks rig the system so that they enjoy profits in good years and bailouts in bad years.

The banks have gotten away with privatizing profits and socializing risks, and that’s just another form of bank robbery.

Article: America’s Primal Scream

1st Image: Thomas Piketty and Emmanuel Saez (via The New York Times)

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