The 400 American households with the highest incomes also have enjoyed a much faster pace of income growth than the vast majority. And, because tax rates applied to their income have fallen by a third, their after-tax incomes grew substantially faster than their pre-tax incomes. The figure looks at inflation-adjusted pre-tax and after-tax income growth for the 400 top-income families between 1992 and 2007, based on new data recently released by the Internal Revenue Service. It shows that while pre-tax income grew by a staggering 409% over that 15-year period, after-tax income increased even more, by 476%.
The third line in the figure offers some perspective by showing the change in the pre-tax median household income over the same period, which grew just 13.2%. The median pre-tax household income for a family of four in 2007 was $50,233, while the top-earning 400 households earned a median $345 million, almost 6900 times as much income. In contrast, in 1992 the ratio was just a sixth as large, with the top 400 households having 1124 times as much income.
According to Ben Bernake, productivity growth is the source of improvement in living standards. That’s “Old Economy” and it is based on the illusion that monetary measures are accurate representations of living standards. I suppose that could be somewhat true, in aggregate, if living standards were really a function of money. Or, if money was stable. Or, if accumulated monetary wealth represented real lasting wealth, or future productive ability of real goods, or what we can purchase in a college education for our children and grandchildren. Perhaps if the hour of labor counted was an hour of satisfied employment with job security, a reasonable workload, a few moments for rest or reflection, a lack of harassment, no death by a thousand goals, the ratio might mean a little something more.
However, it is time to rescind that statement. It has become perverse. Now productivity growth means maintaining or growing output as measured in monetary terms while minimizing payroll and benefits. Add a dollar of sales and cut pension contributions and you get productivity growth. Raise prescription co pays and you get productivity growth. Increase salaries in the Executive Suite, offset with decreases in the ranks by the same amount plus $1.00, and you get productivity growth.
That is not productivity growth. Let no one say when GDP increases from its abysmal prior year levels, and employment is frozen, and real wages growth is negative, and gun shop sales are booming, that we had productivity growth. . . Read full article
The attack memo that changed America forever.
America’s Second Gilded Age has been scoured of its glitter, along with the platitudes that its town criers preached — “too much government,” “market infallibility,” and “prosperity forever.” The policies and ethical failures that sprang from this gospel are under intense scrutiny. After 30 years, the self-serving creed of a right-wing coalition of wealth and power — ideologues, promoters, corporate executives, and the American aristocracy of money – is under assault, its system failures increasingly apparent. Their ideology tantalized millions with the promise of “getting the government off our backs!”
The consequences of this readily marketable guff have led us to drastically altered economic circumstances — a ruinous drop in both stock values and ethical standards that has weakened the economy; far worse, a global loss of confidence in the American economic system, and in a pro-market administration that is squandering America’s good name and credibility among allies and friends . . . Read full article
Ed
