Income Inequality

I recently read an article essentially defending income inequality insofar that it ran through a number of explanations as to why it was not holding the economy back.

First to put some statistics out there to see what we are talking about.

Real incomes of the top 1% in the US have almost tripled since the mid-1980's.  The share of income going to the top 1% has doubled from 1980 to today to approximately 23%.

The article blamed globalisation as one of the reasons the lower earners earned even less.  It went on to discuss that the off-shoring of high-paying semiskilled jobs was being replaced "with new jobs requiring relatively few skills such as those in education, health care and leisure"-my italics. 

I am not a specialist in leisure so can't really speak to that part of the sentence but I am apalled to see education and health care being classified as jobs requiring relatively few skills.

They next blamed declining marginal tax rates as a cause for an increase in income inequality. 

You think?!?

The next cause was the rapid expansion of the financial sector.  They did suggest that there is less evidence that rapid growth in executive compensation has played a significant role.  Those same executives that make up the 1%. 

Hmmm.

But the killer was that it went on to explain that theoretically rising income inequality should slow economic growth if the top 1% have a higher propensity to save then those in lower income brackets.  Yet the savings rate has fallen since the 1980's.

Now my experience is you can't save what you don't have. That might explain a declining savings rate, especially when coupled with a (still)high unemployment rate.

If I had been watching Fox News I wouldn't have been surprised- unfortunately I wasn't.