The rich are getting richer, but the Wall Street Journal wants to shoot the messenger. The John Bates Clark Medal is awarded by the American Economic Association to “that American economist under the age of 40 who is adjudged to have made a significant contribution to economic thought and knowledge.” The current winner is economist Emmauel Saez who provides an enormous service updating statistics on how much the richest people in the country have compared to everyone else. (Peter Orzag, one of Obama’s top economists, praises Saez here.)
Although, the richest 10 percent of Americans has, indeed, done well — they got 49.7 percent of all the income in 2007 (latest data available) and that was the highest level since 1917 — it is the uber-rich that did best. The largest growth in incomes is among the top 1 percent! Saez shows that the bottom 99 percent of incomes grew less than 1 percent per year from 2002–2006 while the top 1 percent experienced five times that growth. Therefore, in the economic expansion of 2002-2006, the top 1 percent captured almost 75 percent of all income growth. The wealth distribution is worse. Saez finds, from the Forbes 400 data, that only the super–rich have experienced significant gains relative to the average over the last decade.
I don’t think people understand just how horribly concentrated wealth and income have become, and there’s an obvious tie to the rapid growth of finance as a share of GDP.
The finance “wizards” have used the real economy as a platform for making obscene amounts of money, and now we see that they also have threatened the well-being of the American and world economies in the process. And they were allowed to do this because we didn’t regulate them.
Berkeley economist Brad DeLong points out Saez has been denounced by the ‘Wall Street Journal’ editorial page as “a rock star of the intellectual left.” So a winner of the Clark Medal — which is the most prestigious award economists have in the field for people under 40 — is considered a fringe leftist by the Journal. Just more evidence of how wildly out of touch with reality the right has become, so vicious and unproductive they are in their criticism.
