Wednesday, October 15, 2014


found a lot of other horrible people to agree that Piketty is WRONG, WRONG, WRONG about a claim he never in fact made about the cause of US wealth inequality as Marshall Steinbaum points out.  Steinbaum also summarizes the main findings on US income inequality of new research by Gabriel Zucman and Emmanuel Saez:
Zucman and Saez is a far more detailed empirical investigation of wealth inequality in the US than appears in Capital in the 21st Century. It documents several facts:

1. The wealth distribution has become significantly more skewed, with the top 0.1% owning in excess of 20% of total wealth. That number was between 5 and 10% in the 1970s.

2. Wealth concentration is due to several phenomena:

  • High labor incomes. Saez and Zucman document that a much larger share of labor income is accruing to households in the top 0.1% of the wealth distribution than was true in the 1960s. 
  • High savings rates by the wealthy. The authors provide further support for the declining asset position of the bottom 90% of the wealth distribution, including savings rates that dipped into negative territory for the entire boom of the 2000s. At the same time, the savings rate for the top 1% was around 40%.
  • Returns on wealth that increase in the stock of wealth. Saez and Zucman link individual capital income data with total wealth in each of nine asset classes from what's known as the Flow of Funds data. That enables them to determine a rate of return for each asset class. Because fractiles of the wealth distribution differ by their exposure to different asset classes, the authors are able to say that on average, the wealthier you are, the higher the return you enjoy on your wealth.

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