The New Reign of the Top One Thousandth
Ever since Thomas Piketty's coming out party, debate has raged in America over the implications of inequality of wealth and income. A new research paper shows just how much the extremely rich—the top tenth of the top 1%—have taken control since the 1980s.
Emmanuel Saez is one of the foremost economists studying the issue of inequality in America. He and Gabriel Zucman have released a new working paper that improves on past attempts to measure the growth of wealth inequality in our country. We knew that inequality has been getting worse since around the time Reagan took office, but this is a more exact measure of how much worse:
Wealth concentration has followed a U-shaped evolution over the last 100 years: It was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The rise of wealth inequality is almost entirely due to the rise of the top 0.1% wealth share, from 7% in 1979 to 22% in 2012—a level almost as high as in 1929. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality.
The Economist offers some further context:
In the late 1920s the bottom 90% held just 16% of America's wealth—considerably less than that held by the top 0.1%, which controlled a quarter of total wealth just before the crash of 1929. From the beginning of the Depression until the end of the second world war, the middle class's share of total wealth rose steadily, thanks largely to collapsing wealth among richer households. Thereafter the middle class's share grew along with national wealth thanks to broader equity ownership, middle-class income growth and rising rates of home-ownership. The expansion of tax breaks for retirement savings also helped. By the early 1980s the share of household wealth held by the middle class rose to 36%—roughly four times the share controlled by the top 0.1%.
Now, the share of wealth held by the top 0.1% and the share of wealth held by the bottom 90% have almost converged once again, something we have not seen in this country since the end of the Great Depression.
This is the outcome of all that America has done in the past 35 years. Think about that.