DAILY FACTOID: The Dispute About the Share of the top 1% of National Income.

 

Brad DeLong in a recent blog post described the conflict among economists regarding the estimated  increase in share of national income going to the top 1% of earners. The more conservative economists say that the increase is no more than 9% while the more liberal claim it may be as high as 15%. The real question in my mind is why should it increase at all? We are all citizens in the same economy. So why should one segment of the economy receive an ever increasing share of its total income. After all given that the total personal income of all Americans totals about 22 trillion dollars why should about 1 to 2 trillion of it be raked off by the top at the expense of the rest of us. In terms of national interest there is nothing that demonstrates that justifies them receiving a bonus over what they already make at the expense of all of us.

“As I understand things, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman (PSZ) have corrected some errors they made in calculating the top 1% after-tax-and-transfer income share that were pointed out by Gerald Auten and David Splinter (and others).

PSZ now think the top 1% post-fisc share has risen from 9%→15% over 1960→2019.

But Auten and Splinter are not satisfied, and claim the post-tax-and-transfer income share rose only from 8%→9%.

Now come Gale, Sabelhaus, and Thorpe (GST) to keep score. And I am here to score their score…

My conclusion: The numbers to keep in your head for the top 1% are: 9%→14.2%.

But—and all this is really important!—there is a bunch of uncertainty about levels and differences and about the difference between post-fisc income and what we would really like to measure that either substantially attenuates or substantially amplifies that rise in inequality. And I would bet on “amplifies”, but not with a great deal of confidence. And I would say that the sociology of inequality changes in America since 1960 is probably at least as important as the money flows, and that I get confused about it whenever I try to think about it…”