(Late) Monday Smackdown: Greg Mankiw Says: The Rich Get Poorer!: Hoisted from the Archives from Four Years Ago
I remember that at the start of my second semester of Ec 10--Principles of Economics--my section leader, the extremely sharp Rick Erickson, explained that it was very important to distinguish the trend from the business cycle. And, he went on to say, there were two types of economists: those who distinguished between trend and cycle, who he said you should listen to, and those who confused trend and cycle.
So, hoisted from my archives from four years ago:
...The incomes at the top of the income distribution have fallen substantially over the past few years.
According to the most recent IRS data, between 2007 and 2009, the 99th percentile income (AGI, not inflation-adjusted) fell from $410,096 to $343,927. The 99.9th percentile income fell from $2,155,365 to $1,432,890. During the same period, median income fell from $32,879 to $32,396. These recent numbers illustrate the broader phenomenon, discussed in this paper, that high-income households have riskier-than-average incomes...
This blue arrow is what Greg is talking about:
This red arrow is what Greg is not talking about:
Would you rather have an economic adviser who talks about the blue arrow or the red arrow?
Back in the mid-1970s, the rest of us paid 1% of our collective incomes to our top 0.01%--to our top 10,000--to incentivize the top 10,000 to do whatever things of general societal utility we pay the top 10,000 to do. Now we pay them, proportionally, four times us much. Do the top 10,000 today do whatever things of general societal utility they do more than four times better than their counterparts back in the mid-1970s did, thus making this increase in what we pay them for what we hire them to do a good deal for us? Or is it a bad deal for us?
