Income Inequality-Effects
Inside the Fight to Define Extreme Poverty in America
Kathryn Edin and Luke Shaefer showed that by 2011, there were 1.6 million U.S. households with children that, for at least part of the year, had cash incomes that put them below the $2 per person mark. The number had risen from 636,000 in 1996—a 152.9 percent increase.
‘Socialism for the rich’: the evils of bad economics The Guardian 6/06/2019
In both the US and the UK, from 1980 to 2016, the share of total income going to the top 1% has more than doubled. After allowing for inflation, the earnings of the bottom 90% in the US and UK have barely risen at all over the past 25 years. More generally, 50 years ago, a US CEO earned on average about 20 times as much as the typical worker. Today, the CEO earns 354 times as much. We adopt narratives to justify inequality because society is highly unequal, not the other way round. So inequality may be self-perpetuating in a surprising way. Rather than resist and revolt, we just cope with it. Less Communist Manifesto, more self-help manual.
The income tax cuts for the rich of the past 40 years were originally justified by economic arguments: Laffer’s rhetoric was seized upon by politicians. But to economists, his ideas were both familiar and trivial. Modern economics provides neither theory nor evidence proving the merit of these tax cuts. Both are ambiguous. Although politicians can ignore this truth for a while, it suggests that widespread opposition to higher taxes on the rich is ultimately based on reasons beyond economics.
