Something There Is That Hates a Wall

and, apparently, it’s the “super-rich” whose incomes have run into one over the last few years:

The rich have been getting richer for so long that the trend has come to seem almost permanent.

They began to pull away from everyone else in the 1970s. By 2006, income was more concentrated at the top than it had been since the late 1920s. The recent news about resurgent Wall Street pay has seemed to suggest that not even the Great Recession could reverse the rise in income inequality.

But economists say — and data is beginning to show — that a significant change may in fact be under way. The rich, as a group, are no longer getting richer. Over the last two years, they have become poorer. And many may not return to their old levels of wealth and income anytime soon.

When I was a kid (after we lived down the street from the brothel but before I went away to college), we shared a property line with a very, very rich man who, as fate would have it, my father had known for many, many years, I think since the old 14th and Clark days when the two of them pitched pennies together. He was the founder of a very well known finance company whose name you might recognize.

This very, very rich man said two things that convinced me that I didn’t want to be very, very rich. The first was never use your own money. The second was “I never know where my next interest payment is coming from”.

I am inclined to believe that some significant portion of the growth in wealth on the part of the super-rich is not the result of hard work or talent but is mostly the consequences of changes in policies over the years, particularly in finance. Note that I’m not saying that all of the growth is because the system is rigged but that some of it is because the super-rich are canny players of the system (which may or may not have any social benefit).

The article cited above should be required reading for those who believe that we can have a healthy fiscal future through taxing the rich. Wealth is not a permanent state of being.

2 comments… add one
  • Hattip Link

    Well this “growing inequality” is of course bunk. It was much wider in the past.
    In a growing economy, if everyone’s wealth rises by 100% then there is “growing inequality”.

    If I make $100 dollars a year and you make$20, and we both double our income then I have made $200 and you have made $40.

    You are twice a rich as you were before, but there is “growing income inequality”.

    Folks that believe there is a real problem here should look at pre-capitalist societies, or they should look at the 19th century in this country.

    So it is mostly bunk. Moreover, it is really none of anyone’s business, provided the money is reasonably earned. Tis is just the same old Marxist agitprop, and it is particularly hypocritical coming out of the NYT.

    If someone want more money, go out and earn it. We really need to overcome this socialist propaganda that making money is intrinsically evil. It is not.

  • steve Link

    “In a growing economy, if everyone’s wealth rises by 100% then there is “growing inequality”.

    How about in an economy where everyone’s wages are stagnant except for those at the top? Of course the supply siders said that was ok because everyone’s net worth was increasing due to housing appreciation. That did not hold up well. That is the economy with which we are dealing, not yours where everyone doubled.

    “Moreover, it is really none of anyone’s business, provided the money is reasonably earned.”

    Good point. My concern is at least partially based upon how much that increase by the top few was earned. We know that productivity went up over the last decade, but wages were stagnant for almost everyone. We also know that it was the financial sector that had most of the growth. Did they earn that or was it just effective rent seeking being rewarded? IOW, in our country, does wealth equal power? I think yes. Concentrating wealth concentrates power. Do the wealthy want competition? History says no, that they will attempt to eliminate competition. What is the remedy? That is where the conversation should begin IMHO.


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