Wednesday, March 26, 2014

Today's USA inequality FAQ

From The chartbook of economic inequality, here's economic inequality in the US:

From Self Help is no help for inequality | The Great Debate:
there is no evidence that neither children nor adults know less about financial matters today than they did in 1930, or 1950, or the late 1970s — when the U.S. savings rate was 10 percent. There is also no evidence they know more than in 2006, when the savings rate fell to zero. (Today is it about 4 percent.) 
To presume home-buyers put into predatory loans by mortgage brokers working for outfits like Countrywide Financial could have stopped the housing market implosion if they knew a bit more about balancing their checkbook is absurd. Just as absurd as thinking a high school class in money management could help someone two decades later decipher a 100-page, single-spaced mortgage origination document loaded with “gotcha” clauses.
From John Cassidy: Is Surging Inequality Endemic to Capitalism? : The New Yorker:
In the nineteen-fifties, the average American chief executive was paid about twenty times as much as the typical employee of his firm. These days, at Fortune 500 companies, the pay ratio between the corner office and the shop floor is more than two hundred to one, and many C.E.O.s do even better. In 2011, Apple’s Tim Cook received three hundred and seventy-eight million dollars in salary, stock, and other benefits, which was sixty-two hundred and fifty-eight times the wage of an average Apple employee. A typical worker at Walmart earns less than twenty-five thousand dollars a year; Michael Duke, the retailer’s former chief executive, was paid more than twenty-three million dollars in 2012. The trend is evident everywhere. According to a recent report by Oxfam, the richest eighty-five people in the world—the likes of Bill Gates, Warren Buffett, and Carlos Slim—own more wealth than the roughly 3.5 billion people who make up the poorest half of the world’s population.

...major companies are giving their top executives outlandish pay packages. His research shows that “supermanagers,” rather than “superstars,” account for up to seventy per cent of the top 0.1 per cent of the income distribution. (In 2010, you needed to earn at least $1.5 million to qualify for this élite group.) Rising income inequality is largely a corporate phenomenon.

...If ownership of capital were distributed equally, this wouldn’t matter much. We’d all share in the rise in profits and dividends and rents. But in the United States in 2010, for example, the richest ten per cent of households owned seventy per cent of all the country’s wealth (a good surrogate for “capital”), and the top one per cent of households owned thirty-five per cent of the wealth. By contrast, the bottom half of households owned just five per cent. When income generated by capital grows rapidly, the richest families benefit disproportionately. Since 2009, corporate profits, dividend payouts, and the stock market have all risen sharply, but wages have barely budged. As a result, according to calculations by Piketty and Saez, almost all of the income growth in the economy between 2010 and 2012—ninety-five per cent of it—accrued to the one per cent.