4 ms·

It looks to me that QE3 was a huge part of that later uptick. its no surprise to me that if you juice the markets and inflate asset prices (mostly stock), that

It looks to me that QE3 was a huge part of that later uptick. its no surprise to me that if you juice the markets and inflate asset prices (mostly stock), that the richest benefit most. what was surprising to me is how bad actually making stuff did. I understand that juicing the markets might not benefit that, but it seemed as though QE3 actually hurt producing tangible things.

refurb 9y ago
Exactly. The distributions looks reasonable until ~2008, when things go wonky. That coincides quite nicely with the bottom of the equities market and the subsequent bull run. Also, something seems off. The animated chart is not data for a given year, it's for the last 34 year ending in that year. Since you're averaging growth over 34 years, the only way the top percentile can go from 3% growth (over 34 years) to 5% is if you average in really huge growth. Also, the 34 year measurement makes me suspicious. Seems like an odd time period to capture. Maybe if you made it 30 or 40 years the data isn't quite so compelling?
- joshmaker 9y ago
  From the article: > (The economists used 34-year windows to stay consistent with their original chart, which covered 1980 through 2014.)
- lorenzhs 9y ago
  I think it's more likely that 34 years were chosen because 1980 - 34 = 1946 makes sense for a post-WW2 analysis. The graph doesn't vary wildly for most of the time (most of the change is a fairly smooth motion), so it seems unlikely that 30 or 40 years would change the conclusion. Note that a sharp rise in the curve can also be explained by bad years dropping out of the 34-year window. This would probably explain the increases in the 1%'s weath around 1992 and 2003 (1958 and 1969-70 recessions, respectively). See https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...
- mcguire 9y ago
  Income inequality has been a visible problem for more than 10 years. Income Progress across the American Income Distribution, 2000-2005 (https://www.brookings.edu/testimonies/income-progress-across-the-american-income-distribution-2000-2005/ https://www.brookings.edu/testimonies/income-progress-across...) "Finally, incomes are growing less equal. Over the past quarter century Americans at the top of the income distribution have seen much faster income growth than people in the middle class. If average income grows 1% a year and top earners enjoy gains of 2% a year, many people in the middle and bottom will see their incomes grow much more slowly than 1% a year. Top income earners experienced sharp income declines in the last recession, but in the last couple of years their incomes have rebounded strongly. This reinforces the impression that the gains from prosperity have flowed disproportionately to people at the top rather than in the middle of the distribution." Income Gap Is Widening, Data Shows (https://mobile.nytimes.com/2007/03/29/business/29tax.html https://mobile.nytimes.com/2007/03/29/business/29tax.html) "Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows.'
elsewhen 9y ago
This article and the accompanying chart is specifically about _income_, not capital gains.
- lorenzhs 9y ago
  Income includes capital gains, not only wages. "Income is the sum of all the wages, salaries, profits, interests payments, rents, and other forms of earnings received... in a given period of time." Case, K. & Fair, R. (2007). Principles of Economics, p. 54.
  - elsewhen 9y ago
    none of those things in the list you supplied are capital gains. when i buy a stock at $100/share and i sell it later at $110/share, that gain is not a wage, salary, profit, interest, rent or any other form of earning - it is called a "capital gain".
    - maxerickson 9y ago
      Capital gains are considered income. In some jurisdictions they receive special tax treatment, but they are income nonetheless. For example, for the US, they are included in the "Adjusted Gross Income" calculated on a 1040 tax form, but the amount of tax on the income due to capital gains is calculated differently than the tax on wages. If you look at section 3 of the paper (which goes over their methodology), they explicitly talk about capital income: http://gabriel-zucman.eu/files/PSZ2017.pdf http://gabriel-zucman.eu/files/PSZ2017.pdf
TearsInTheRain 9y ago
The chart is measuring income growth not wealth growth so I would imagine QE probably isn't that large of a factor actually.
mcguire 9y ago
The line becomes flat around 1990, and the spike on the right appears immediately and grows quickly. Post-2008 looks like a fluctuation on that growth.

refurb 9y ago

Exactly. The distributions looks reasonable until ~2008, when things go wonky. That coincides quite nicely with the bottom of the equities market and the subsequent bull run. Also, something seems off. The animated chart is not data for a given year, it's for the last 34 year ending in that year. Since you're averaging growth over 34 years, the only way the top percentile can go from 3% growth (over 34 years) to 5% is if you average in really huge growth. Also, the 34 year measurement makes me suspicious. Seems like an odd time period to capture. Maybe if you made it 30 or 40 years the data isn't quite so compelling?

joshmaker 9y ago
From the article: > (The economists used 34-year windows to stay consistent with their original chart, which covered 1980 through 2014.)
lorenzhs 9y ago
I think it's more likely that 34 years were chosen because 1980 - 34 = 1946 makes sense for a post-WW2 analysis. The graph doesn't vary wildly for most of the time (most of the change is a fairly smooth motion), so it seems unlikely that 30 or 40 years would change the conclusion. Note that a sharp rise in the curve can also be explained by bad years dropping out of the 34-year window. This would probably explain the increases in the 1%'s weath around 1992 and 2003 (1958 and 1969-70 recessions, respectively). See https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...
mcguire 9y ago
Income inequality has been a visible problem for more than 10 years. Income Progress across the American Income Distribution, 2000-2005 (https://www.brookings.edu/testimonies/income-progress-across-the-american-income-distribution-2000-2005/ https://www.brookings.edu/testimonies/income-progress-across...) "Finally, incomes are growing less equal. Over the past quarter century Americans at the top of the income distribution have seen much faster income growth than people in the middle class. If average income grows 1% a year and top earners enjoy gains of 2% a year, many people in the middle and bottom will see their incomes grow much more slowly than 1% a year. Top income earners experienced sharp income declines in the last recession, but in the last couple of years their incomes have rebounded strongly. This reinforces the impression that the gains from prosperity have flowed disproportionately to people at the top rather than in the middle of the distribution." Income Gap Is Widening, Data Shows (https://mobile.nytimes.com/2007/03/29/business/29tax.html https://mobile.nytimes.com/2007/03/29/business/29tax.html) "Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows.'

elsewhen 9y ago

This article and the accompanying chart is specifically about _income_, not capital gains.

lorenzhs 9y ago
Income includes capital gains, not only wages. "Income is the sum of all the wages, salaries, profits, interests payments, rents, and other forms of earnings received... in a given period of time." Case, K. & Fair, R. (2007). Principles of Economics, p. 54.
- elsewhen 9y ago
  none of those things in the list you supplied are capital gains. when i buy a stock at $100/share and i sell it later at $110/share, that gain is not a wage, salary, profit, interest, rent or any other form of earning - it is called a "capital gain".
  - maxerickson 9y ago
    Capital gains are considered income. In some jurisdictions they receive special tax treatment, but they are income nonetheless. For example, for the US, they are included in the "Adjusted Gross Income" calculated on a 1040 tax form, but the amount of tax on the income due to capital gains is calculated differently than the tax on wages. If you look at section 3 of the paper (which goes over their methodology), they explicitly talk about capital income: http://gabriel-zucman.eu/files/PSZ2017.pdf http://gabriel-zucman.eu/files/PSZ2017.pdf

TearsInTheRain 9y ago

The chart is measuring income growth not wealth growth so I would imagine QE probably isn't that large of a factor actually.

mcguire 9y ago

The line becomes flat around 1990, and the spike on the right appears immediately and grows quickly. Post-2008 looks like a fluctuation on that growth.