Unequal inequality

Jul 21, 2014 22:03 UTC

At the Upshot over the weekend, Tyler Cowen writes that Americans’ view of income inequality is too narrowly nationalistic. Instead, he says, we should “preface all discussions of inequality with a reminder that global inequality has been falling and that, in this regard, the world is headed in a fundamentally better direction.” Basically, rising incomes in growing economies like China and India should outweigh the inequality concerns of countries (like the U.S.) where increasing exports are causing incomes at the top to rise. “While Chinese growth has added to income inequality in the United States, it has also increased prosperity and income equality globally,” he says.

A global reduction in income inequality is great, says Ryan Avent, but Cowen’s piece misrepresents the heart of the American argument against income inequality. It isn’t about globalization; instead, it’s about lax financial regulation, subsidies to big banks, low tax rates for the rich, and the appearance that political persuasion can be bought. Further, he says, even if American inequality is benefiting the poor in other parts of the world, “few voters are content to have their economies run as charities.”

There are two distinct issues here, says Dan Little. First, there’s “income distribution within an integrated national economy,” then there is “extreme inequalities of per capita GDP across national economies.” The are two fundamentally different things. Branko Milanovic and Christoph Lakner put out a paper in May that took a look at the latter type of inequality. This curve shows global growth over the last two decades along the income spectrum.


The takeaway here is that life has gotten a lot better for the global middle class — this is particularly true in Asia — as well as the top one percent. But life hasn’t gotten that much better for the 75th to 99th percentiles of the global income distribution. “The ‘losers’ were predominantly the people [from the ‘rich world’] who in their countries belong to the lower halves of national income distributions,” say the authors. The trough of that chart? That’s middle America. — Shane Ferro

On to today’s links:

Plutocracy Now
Russian billionaires are panicked and trying to get their money out of the country – Bloomberg
For context, how Russian state propaganda has spiraled out of control – Julia Ioffe

“China has become indebted before it has become rich.” Debt-to-GDP is over 250% – FT

“As supply [of bear-bile] dwindles, prices rocket” and criminal gangs hunt more – The Economist
The new subprime boom: car loans “focusing in the riskiest borrowers” – DealBook

Carmelo Anthony, technology investor – WSJ

Billionaire Whimsy
Carlos Slim thinks the work week should be three days long – HuffPo

Does a generational shift explain wage stagnation? – Bloomberg

Study Says
New Yorkers are not leaving the city for the land of lower taxes – NYT

A novel way to defend your $2.6 billion fraud: cite the Harvard Business Review – Bloomberg

Data Points
“In 1978 the Bee Gees accounted for 2 percent of the entire record industry’s profits” – The Paris Review

MORNING BID – Spending concerns and car sales

Jun 4, 2014 12:54 UTC

Coming data on same-store sales will help illuminate whether the modest upward tick in prices is something that is being replicated throughout the economy and signalling a stronger overall economy or perhaps one that remains more weighted to the most wealthy in the United States. According to Thomson Reuters data, Costco is poised to post the strongest same-store sales figures among the retail chains, though its 4.6 percent estimated increase would fall short of the 5 percent rise a year ago. The figures have a bit less utility than in the past given the likes of Wal-Mart stopped supplying this data years ago, but you work with what you have. Either way, it’s notable that the discounters have been weak this year – a sign of lackluster spending outlooks for lower income Americans.

The lower-income sector has seen its share of economic growth diminish over recent years, a trend that has been accelerated in part by the weakness in housing prices in most parts of the economy, poor overall demand and lack of spending among all but the upper tier of consumers, and no real growth in wages — though this morning’s data on productivity and labor costs does show finally some wage growth.

Meanwhile, the weakness in Sotheby’s stock price in 2014 does suggest on some levels that the luxury brands, and the wealthiest Americans who drive the speculative spending excess in the economy, may be waning as quantitative easing finally recedes, as strategists at Bank of America-Merrill Lynch pointed out.

Auto sales were strong in May, boosting hopes for economic growth.

Auto sales were strong in May, boosting hopes for economic growth.

The car sales figures were encouraging in some ways – the seasonally adjusted annual rate of 16.77 million vehicles now sits at a level not seen since 2007, though it’s disconcerting that it has taken this long to return to such a level. But solid figures for compact cars – sales of the Chevy Cruze were up 40 percent from a year ago, and it’s got a starting manufacturer’s price in the mid-17K range – would at least show some confidence among auto buyers looking for economical vehicles. Other big gainers were the Toyota Corolla (there seems to be some kind of dictum that every block has one of those), the Nissan Sentra (avg starting price around 16K) and the Toyota Camry, another perennial favorite among American buyers. Along with the usual big pickups, those were the biggest sellers, and year-to-date the Cruze and Sentra are showing the strongest growth.

Whether it can turn into something more long-lived is unclear at this point. Purchases of big-ticket items are a usual harbinger for steady, ongoing growth, but various hiring indexes – including Morgan Stanley’s Business Conditions Index – show employers still a bit on the fence even as overall conditions improve.

The Morgan Stanley index is a bit undermined by recent data out of the National Federation of Independent Businesses showing seven months in a row of employers increasing hiring, which Jack Ablin of Harris Bank says “could be an early indicator that labor prospects are rebounding.” It remains to be seen – the NFIB’s notoriously cranky surveys still note that the biggest problems facing small businesses are in order A) taxes and B) regulation. Those two factors tend to be the things businesses complain about the most in the early- and mid-cycle of an economic recovery (as the cycle improves, regulation recedes as a concern, and when recession hits, lousy demand takes over).

What we know about income inequality: Unions on the decline

Mar 7, 2014 18:00 UTC

There are a lot of things that “explain” inequality. Technology, finance, societal, and cultural changes have all played their part. In this series, Counterparties takes a look at the various things that correlate with rising income inequality in order to ascertain how we got to this economy and where we might go from here. For story tips/comments/complaints email us at Counterparties.Reuters@gmail.com.

In February, the United Auto Workers lost a fight to unionize workers at a Volkswagen plant in Tennessee. The vote was taken as a symbol for all organized labor in the South — particularly because Volkswagen was tacitly supportive of the unionization movement.

Shortly after that, Evan Soltas set off a debate by questioning the long-term viability of organized labor in the US, and what that means for inequality.

Union membership in the US was at 11.3% in 2013 — and only 6.7% for private sector workers. That 11.3% figure has tumbled from 20.1% in 1983, when BLS started putting out official data. Going further back, union membership is at its lowest since the Great Depression.

The idea that declining union participation is a factor in increasing inequality has been around for a while. Harvard economist Richard Freeman has been writing about it since the 1970s. In 2003, David Card, at Berkeley, along with Thomas Lemieux and W. Craig Riddell at the University of British Columbia, wrote a paper testing unions’ effects on inequality in the US, the UK, and Canada.

Card lays out the problem from an economics perspective: while unions lead to higher wages for unionized workers (typically about 5-15%), they may also depress the wages for non-unionized workers. Even when taking that into account, the researchers found that unions do make wages more equal for men (though not for women*). It then follows that the decline of unionization has led to increased inequality in the US.

It’s hard to tell just how much, but Card has a guess. I reached out to Card this week, who said that his analysis in an interview with the Minneapolis Fed, while several years old, still holds:

My results suggest that the decline in unionization is a small but noticeable part of the overall increase in inequality for men over the past 30 years—maybe 10 to 20 percent of the total. It was most important for workers at the middle of the wage distribution … As unionization has gone away, there has been some downward drift in the level of wages (relative to the top skill groups) and an opening up of wage inequality in sectors like trucking and manufacturing. Both effects are important, but they’re only a small part of the overall trend.

When I asked Card how the Great Recession had affected this phenomenon, he chuckled. “There are no unions,” he said (I assume only slightly hyperbolically). The manufacturing industry in the US has fallen continuously in the 2000s, he noted, and “the Great Recession put a stake through the heart of it.”

In his argument, Soltas assumes this conclusion to be true. The question for him, then, is can anything replace them? “Since the decline of unions,” he says, ”the U.S. political system has done a poor job of sharing prosperity with workers — and since unions aren’t a real option going forward, we have to look for other ways to build employee bargaining power.”

Not everyone is in agreement that unions are dead, though. Michael Wasser, at Jobs With Justice, argues it is broken labor law that stands in the way of union growth, and, further, that unions play an important political role on the left that Soltas doesn’t account for. Therefore they can, and should, grow again. Michael Hiltzik asks where labor reforms are supposed to come from, if not unions. Daniel Altman suggests that “to stop the erosion of labor’s bargaining power, action at home would not be enough; workers would have to act at the global level.”

Kevin Drum, however, agrees with Soltas that unions are dead — and he’s pessimistic about the options to replace them: “no one on the left seems to have any serious ideas about what this countervailing power might be now that labor is a shadow of its former self.”

The demise of organized labor in the US isn’t a new idea. But it remains an important one for understanding the changes our economy is undergoing. Unions have historically been an equalizing force that bolstered the middle class, both economically and politically. The demise of them leaves a hole in the American political economy that, if not filled by unions or something else, will likely lead to an even more unequal society.

* This is a little outside of the scope of this piece, but the other part of the paper’s finding is that unionization doesn’t have an effect on the equality of wages for women. The authors posit that’s because of the nature of the different kinds of unionized work that men and women tend to do: traditionally unionized male occupations like truckers and auto workers get a lot of income benefits from unions above what they would make doing the same thing as a non-unionized worker. The salaries of traditionally unionized female occupations, like teachers and nurses, tend to be, first, higher because they generally require a bachelor’s degree, and more institutionalized. The unions are therefore less necessary for equalizing pay.

Previously in this series:

What we know about income inequality: Better marriages may mean more inequality
What we know about income inequality: America’s disappearing ‘middle-skill’ jobs and falling wages

from Data Dive:

What we know about income inequaliy: America’s disappearing ‘middle-skill’ jobs and falling wages

Feb 12, 2014 19:30 UTC

There are a lot of things that “explain” inequality. Technology, finance, societal, and cultural changes have all played their part. In this series, Counterparties takes a look at the various things that correlate with rising income inequality in order to ascertain how we got to this economy and where we might go from here. For story tips/comments/complaints email us atCounterparties.Reuters@gmail.com.

America is losing middle class jobs -- and middle class pay. Not only are "middle-skill" jobs disappearing as routine tasks become computerized (think everything people do in the television show "The Office"), but that job loss has contributed to stagnating wages, according to a recent paper by Michael Boehm of the University of Bonn.

This chart shows the changes in US employment shares by type of occupation since the end of the 1980s. The paper used two different measures, the National Longitudinal Survey of Youth (NLSY) and the comparable years and age group in the more standard Current Population Survey (CPS):

For this chart, the high-skill occupations comprise managerial, professional services, and technical occupations; middle-skill occupations are things like sales, office/administrative, and production occupations; and low-skill occupations include food, cleaning, and personal service occupations.

What Boehm found is that this erosion of middle-skill jobs is correlated with a similar erosion of middle-skill pay. This chart shows how wages were expected to grow back in 1980 (blue line), and how wages actually grew (red line):

Here's what Boehm says this mean:

What emerges unambiguously from my work is that routinisation has not only replaced middle-skill workers’ jobs but also strongly decreased their relative wages. Policymakers who intend to counteract these developments may want to consider the supply side: if there are investments in education and training that help low and middle earners to catch up with high earners in terms of skills, this will also slow down or even reverse the increasing divergence of wages between those groups.


Previously in this series:

What we know about income inequality: Better marriages may mean more inequality

from Equals:

What we know about income inequality: Better marriages may mean more inequality

Feb 7, 2014 21:51 UTC

There are a lot of things that “explain” inequality. Technology, finance, societal, and cultural changes have all played their part. In a new series, Counterparties takes a look at the various things that correlate with rising income inequality in order to ascertain how we got to this economy and where we might go from here. For story tips/comments/complaints email us at Counterparties.Reuters@gmail.com.

Matt O’Brien wrote a good post last week on how the classic 1989 romcom When Harry Met Sally explains inequality. I’ll let him explain:

Working men and working women of similar education and income levels bond and marry over similarities—movies, art, paprikash—rather than the differences that defined traditional marriage (he works/she cleans). This new arrangement promises a better world, but it has increased inequality.

O’Brien mostly references a new working paper on assortative mating written by Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos for the National Bureau of Economic Research. It looks at marriages from 1960 through 2005, comparing the levels of education of each partner.

The researchers found an increase in college graduates marrying college graduates, and high school graduates marrying high school graduates. Fewer people are marrying across education levels. This corresponds with an increase in the Gini coefficient (a way to estimate inequality) to 0.43 in 2005, from 0.34 in 1960.

Put another way, this rise in income inequality among households in the US is explained by the end of “Cinderella marriages” — the ones where women (traditionally) “marry up” above their parents’ class, James Pethokoukis writes. “Doctors no longer marry nurses, they marry fellow doctors or others of comparable education level,” he says.

Peter Orszag says this is a good example of the complexities that make fighting inequality so hard. He writes, “If income inequality is being driven in part by changes in marriage patterns, what can anyone do about that?”

Further, do we want to do anything about it? The increase in assortative mating also correlates with the number of women going to college and graduate school, an option that really wasn’t available to to them in 1960. Marriages in the mid-twentieth century were about division of labor: the man worked outside the home, the women kept the house and took care of the children.

That’s changed. As O’Brien says, people now marry because they’ve found a compatible life partner, someone they enjoy sitting down and watching Netflix with after a long day at work (for both of them). The correlated inequality (causation is hard to prove here) doesn’t seem worth giving that up.

Unity and inequality

Jan 28, 2014 23:12 UTC

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The most common complaint about the annual State of the Union speech, Jeff Shesol writes, ”is that it is a laundry list, which is an insult to laundry lists”. President Obama will deliver his sixth tonight.

Inequality will reportedly be a major portion of the speech. Mark Thoma writes that Obama will talk about “ladders of opportunity” instead of focusing directly on inequality “to avoid being accused of waging class warfare”. Jason Linkins points out that Obama has begun focusing on inequality only recently, but that could work to his advantage if he plays it the right way: “the fact that Obama is a Johnny-come-lately to the topic has an upside — he won’t have to be the one desperately trying to point out the problem”.

Annie Lowrey reports that the president will also talk about “promise zones” (previously known as “enterprise zones”), or regions that “will garner renewed attention from Washington”, meaning being prioritized for new federal spending. While the plan seems to have bipartisan support, Lowrey notes that “past enterprise zones have a modest track record. Many seem to have no effect. Others seem to simply subsidize business investment that would have already taken place”.

The president is also expected to announce an executive order to raise the minimum wage for federal contract workers starting in 2015, from $7.25 to $10.10. While the number of workers it will affect isn’t known, Jared Bernstein calls it a great idea, writing that it will reach, “for example, maintenance and food service workers in national parks, museums, and army bases”. Brad Plumer has a good rundown of how the President’s proposal will work. Notably, this is not a proposal to raise the minimum wage overall — the President tried that last year and it stalled in Congress.

Perhaps the most interesting part of the speech will be Obama’s announcement that many big companies have signed a pledge to stop discriminating against the long-term unemployed. The administration has published a set of best practices for companies committed to hiring the long-term unemployed, which essentially asks that companies don’t use long-term unemployment as a shortcut to reject applicants. Jonathan Chait says Obama is trying “to create a new kind of social norm in hiring”.

John Cassidy says that “sadly, Republicans in Congress are likely to resist almost all of [the President’s] agenda—just as they have done for the past three years”. Instead of focusing on what Obama will say, Cassidy points to ten ideas Obama is unlikely to mention, like guaranteed basic income or abolishing public schools, that he thinks are radical enough to actually make a dent the problem. — Shane Ferro

On to today’s links:

Billionaire Whimsy
Just because you’re rich doesn’t mean your policy ideas make any sense – Matt Yglesias

State of the State of the Union
“Full employment”: the two words Obama needs to say tonight – Mike Konczal
In terms of “I”and “we”, Obama is “more or less in the middle of the pronominal pack” – Language Log
Economic inequality in 17 charts – Noah Chestnut

The iPod is dead, long live the iPhone – The Verge

The $950 billion farm bill, in one chart – Brad Plumer

A lot of major companies are moving factories back to the United States – NPR
Rebuttal: the industrial rebound is a myth. New US manufacturing jobs just aren’t that good – Steve Rattner

Unintended Consequences
How a law to stop US companies from dodging taxes ended up enriching CEOs – Bloomberg

A guide to the long list of loony things Tom Perkins has done and said – Nitasha Tiku

So Hot Right Now
“Cocoa prices are soaring” – Quartz

Medium raises $25 million – Recode

Just an FYI
Performance reviews are terrible for everyone – Jena McGregor

“Project Transform” continues to transform Barclays employees into ex-Barclays employees – Reuters

Northwestern’s football players want to join the United Steelworkers union – ESPN

Follow Counterparties on Twitter. And, of course, there are many more links at Counterparties.

Poor choices

Nov 27, 2013 22:03 UTC

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Recently, John Cassidy posted six charts presented by various researchers from the launch of the Washington Center for Equitable Growth, a new think tank that will fund research into inequality. “Taken together, the pictures convey a good deal of what we know about inequality”, he writes. However, he also says that there’s plenty we still don’t know, particularly about the relationship is between inequality and growth.

The Economist says the most revealing of these charts is the one from political scientist Janet Gornick, which shows that the US about on par with other OECD countries in pre-tax income, but is the most unequal after taxes. In an interview last year, Gornick argued that it’s not just about how much the US spends on social programs, but how that money gets spent. “I don’t think that Bill Gates needs a Social Security check, but we need him to be a Social Security recipient”, she says.

In launching the WCEG, former Bill Clinton chief of staff John Podesta wrote, “evidence remains thin on how worsening inequality affects these economic components: how it may alter demand for goods and services, or hinder entrepreneurialism, or undermine our political or economic systems.” The center’s purpose, Podesta says, is to study how growth and inequality are linked.

There’s also been some recent discussion on how inequality impacts economic choices. Cardiff Garcia has an excellent post on the effect that poverty has on decision-making. He points out a tidbit from Sendhil Mullainathon and Eldar Shafir’s book Scarcity: “being poor, for example, reduces a person’s cognitive capacity by more than going one full night without sleep”. Going through a number of studies, books, and first-hand accounts, Garcia concludes that “any traditional notion of ‘tough love’ or ‘getting tough’ on lazy poor people that blames them for their lots in life while downplaying their socioeconomic context is, to a first and second and third approximation, bullshit”. Garcia wonders whether this is a lens through which macroeconomists should look more often.

Chris Dillow writes, “I suspect that pretty much all the differences between our incomes are due to luck; a capacity for hard work is also a matter for luck. We do not ‘deserve’ our economic fate, and only the most witlessly narcissistic libertoon could claim otherwise”. The Epicurean Dealmaker, in response, says,

When discussing such matters, I think it is important not to conflate the concept of luck—which is normally defined as the confluence of happy (or bad) chance with the opportunity to exploit (or inability to avoid) it—with simple chance. I do not think most people would consider an illiterate hot dog vendor overhearing the conversation which led Markowitz to portfolio theory an instance of luck.

– Shane Ferro

On to today’s links:

The Fed
If the Fed doesn’t taper, there won’t be much MBS to trade – Sober Look

Morgan Stanley and Citi weren’t going to let JPMorgan hire all the princelings – WSJ

Jockin Mike D to my dismay: myth-busting Goldieblox v the Beasties – Andy Baio

Growth Industries
There’s now a boom in subprime, securitized loans for small businesses – Lynnley Browning
America’s next big rip-off: Cars are the next subprime surge – David Dayen

Stagnation — and how our beliefs are shaped – Chris Dillow

Right On
Paul Steiger on why US reporters now need protection – ProPublica

How the end of the one-child policy will reshape China’s economy – Project Syndicate

Long Reads
How to waste a crisis – Mike Konczal

Two-word investment outlooks – Reformed Broker

Old Normal
“Mr Feld started out at Goldman as a messenger in the mail department making $624 a year” – DealBook

Mario Batali ordered 200 pairs of orange Crocs – Eater

“Area list-maker too good for Steve Cohen” – Dealbreaker

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Lifeline guarantee

Nov 13, 2013 23:02 UTC

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Swiss voters will soon take up the question of whether the country’s citizens should have a guaranteed basic income of 2,500 Swiss francs ($2,800) per year, after a grassroots campaign came up with the 100,000 signatures required to hold a nationwide referendum. Annie Lowrey reports that this idea — giving every living adult a check every month regardless of their employment situation — is gaining popularity, even in the United States. “Certain wonks on the libertarian right and liberal left have come to a strange convergence around the idea,” she writes.

In the 1970’s, a small town in Canada actually tried a guaranteed basic income. Lowrey reports. “Poverty disappeared. But other [effects] were more surprising: High-school completion rates went up; hospitalization rates went down. ‘If you have a social program like this, community values themselves start to change,’ [health scientist Evelyn] Forget said.”

Matt Yglesias has been calling for a GBI for a while, as it is “it’s much more flexible than a minimum wage”. He says it also does away with the “sloppy enforcement” and the “weird loopholes” of the current safety net. Paul Krugman argues that a basic income might be a solution for the increasing numbers of people whose jobs are being replaced by robots. Izabella Kaminska says he may be right. “’If the fight is between capital and labour, and capital is winning, it seems subsidies in the form of some basic type of income may be called upon”, she says.

Chris Dillow gives the argument for a GBI from the right:

A CBI [GBI] acknowledges the importance of individual responsibility. It says that being old or a parent of a large family are no reasons for you to get extra income, because these are circumstances that are foreseeable and chosen.

If the CBI is sufficiently generous – a point I’ll come to – any hardship that remains is due either to free choice or to (insurable) bad luck. It’s therefore no business of the state.

Matt Bruenig did the math on how much a GBI would cost. In a followup article in the Atlantic, he concludes that guaranteeing an income of $3,000 a year would cut the poverty rate in half — although it is unclear if he takes into account the effect of cutting social programs.

Danny Vinik calculates that giving Americans a basic income equal to the poverty line, which is just under $12,000 for a one-person household, would cost $2.14 trillion per year. He revises that down to $1.2 trillion if you assume welfare programs like food stamps, housing vouchers, and the Earned Income Tax Credit are no longer necessary. — Shane Ferro

On to today’s links:

103 different ways to reduce the deficit — even if we don’t really have to right now – Brad Plumer

A girl with a lemonade stand helped transform the definition of a corporation – Steven Davidoff

An argument that a bond fund crash is looming – Paul Amery

New Normal
How shadow banking is plugging a lending gap in the economy – Sober Look

In banking, it’s “the human beings who are taken out behind the woodshed and shot first” – Epicurean Dealmaker

EU Mess
A top ECB official opens the door for European quantitative easing – WSJ

Primary Sources
Janet Yellen’s prepared remarks are pretty much what you’d expect – The Fed

Occupy Wall Street spends $400,000 and cancels $15 million of Americans’ personal debt – Guardian

Why AA isn’t catching on in Russia – Boston Globe

Right On
“The two biggest welfare queens in America today are Wal-Mart and McDonalds” – Barry Ritholtz

Data Points
Textbooks are crazy expensive, and terrible books – Mark Perry

Lauded economist declares that people are different – Bloomberg Businessweek

The most basic, culturally universal element of language: “huh” – The Atlantic

Follow Counterparties on Twitter. And, of course, there are many more links at Counterparties.

from Data Dive:

The great economic reshuffle

Oct 28, 2013 14:43 UTC

Branko Milanovic, the lead economist at the World Bank's research department, has a new paper out on global income inequality (the paper was first spotted by John McDermott). Among other things, Milanovic compares the change in global income from 1988 to 2008:

He writes:

Global income distribution has thus changed in a remarkable way. It was probably the profoundest global reshuffle of people’s economic positions since the Industrial revolution. Broadly speaking, the bottom third, with the exception of the very poorest, became significantly better-off, and many of people there escaped absolute poverty. The middle third or more became much richer, seeing their real incomes rise by approximately 3% per capita annually.

And yet, those in the 75th to 90th percentile of the income distribution -- including "many from former Communist countries and Latin America, as well as those citizens of rich countries whose incomes stagnated" -- haven't seen the sort of gains that the bottom half and the top 1% have.

Milanovic's paper sheds light on the role location plays in global income distribution. He writes: "If most of global inequality is due to differences in location, can we treat location, and thus citizenship, as a rent? Is citizenship— belonging to a given country, most often through birth—something that gives us by itself the right to greater income?"




Incoming inequality

Sep 11, 2013 22:01 UTC

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The top 10% of Americans take home 50% of the pie, making American incomes the most unequal they’ve been since the 1920s, according to updated research from Emmanuel Saez and Thomas Piketty. Even if you exclude capital gains, that number only drops to about 48%. The top 10%’s share of the economic pie has been increasing steadily since the 1970s.

Here’s one of the study’s scariest charts:

Annie Lowrey has more on what she calls a “new gilded age”:

The income share of the top 1 percent of earners in 2012 returned to the same level as before both the Great Recession and the Great Depression: just above 20 percent, jumping to about 22.5 percent in 2012 from 19.7 percent in 2011.

Lowrey says that last year’s gains have been fueled by a run-up in the stock market — the richest 10% of households, she writes, hold about 90% of total American stock wealth. As Dylan Matthews points out, it’s important to note that the Piketty and Saez study looks at pre-tax income, and doesn’t take into account benefits or the redistribution effects of the tax code.

On Monday, Jared Bernstein suggested a main reason why labor’s share of income is falling: persistently high unemployment. Increasing wages for the 99%, he says, “takes getting rid of the persistent slack in the labor market, which in turn means policy makers must plot a course toward full employment”. Tom Edsall has a roundup of what, if anything, government’s can do about income inequality.

But what if we’ve got the causes of income inequality all wrong? India’s newest central bank governor, Raghuram Rajan, made an interesting point in an article last year, arguing that the current rise in income inequality resulted “not primarily because of policies favoring the rich, but because the liberalized economy favored those equipped to take advantage of it”. And those people just happened to be (surprise) the rich. – Shane Ferro and Ryan McCarthy

On to today’s links:

Everything you need to know about Apple’s new cheap-but-not-that-cheap iPhone – Ben Walsh

“Terrifying”: bankers react to the “leftist tenor” of NYC’s Democratic primary – NYT

Tina Brown and the Daily Beast are parting ways – Peter Lauria
“Tina Brown in a Chelsea restaurant right now, yelling into the phone” – Andrew Kaczynski

The Volcker Rule fight: years of arguing over trading definitions and the location of meetings – WSJ
SEC interviews Greg Smith about the Volcker Rule. The agenda – SEC

Take a Bow
The Treasury’s self-congratulatory guide to its financial crisis response – Treasury.gov

The parka that will make you invisible to drones – Wired

“Reproductively speaking, our species will no longer be expanding” – ValueWalk

Data Points
The social cost of carbon – Eduardo Porter

From 2001: Colson Whitehead’s incredible 9/11 piece – NYT

Remembering Wynne Godly, the late economist who predicted the crisis – Jonathan Schlefer

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