Monday, April 12, 2010

American inequality

Today's must-read: Business Insider's 15 Mind-Blowing Facts About Wealth And Inequality In America. The gap between the ultra-rich and everyone else is wider than it has been at any time since the Great Depression, and it is growing - unlike in other countries with proper redistribution regimes. The reason? Returns on stocks and bonds - overwhelmingly owned by the rich - have skyrocketed, while real wages have not increased for 50 years. Meanwhile, the rich are paying less tax than ever before, meaning they keep more of the windfall. The result is a divided society, with inequality at its highest level since the Gilded Age.

It would be interesting to see similar statistics for New Zealand. In order to debate inequality, we need facts. Unfortunately, its not something the government likes to talk about. Facts on income distribution are hard to come by, facts on wealth distribution even harder, and solid, up-to-date data on how these have changed in response to government policies rarer still (MSD's information on the effects of Working For Families being a welcome exception). And the result is that the issue is ignored and the government can airbrush out the many when discussing their inequality-boosting policies.

As this thread on Red Alert shows, many people are concerned about the changes in our society, particularly the erosion of the kiwi dream of home ownership. But at the moment its just an inchoate feeling that something is wrong. If we want to do something about it, we need to identify what is wrong and how it has happened before we can work on what to do about it. I suspect that that tale is a combination of successive tax cuts for the rich (which had significant effects in the 90's) and a property boom which primarily benefited the already wealthy. But it would be nice to see some solid data on it.

[Hat-tip: Kevin Drum]