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American Inequality:How Did We Get Here andWhat Can We Do About it?
Archon FungHarvard Kennedy School
#OccupyHarvard Teach-In
December 7, 2011
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Three Questions
• How F**ked Up Is It?
• How Did It Get to Be So F**ked Up?
• What Can We Do About It?
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How F**ked Up Is It?
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Very.
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$2M
$1.5M
$1M
$0.5M
AVERAGE HOUSEHOLD INCOMEbefore taxes
2007 dollars. Source: Congressional Budget Office
‘79 ‘83 ‘87 ‘91 ‘95 ‘99 ‘03 ‘07COURTESY OF:
BASED ON GRAPHS BY:
top 1%
top 20%
second 20%
third 20%
fourth 20%
bottom 20%
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Source: Congressional Budget Office, 2011
Growth in After-Tax Income, 1979-2007
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Top 1% Share, 1960-2007
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Distribution of Wealth
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Distribution of Wealth
■
■
■
■
■
Source: Michael Norton and Dan ArielyThursday, December 8, 11
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0
15,000
30,000
45,000
60,000
75,000
90,000
105,000
120,000
1945 1955 1965 1975 1985 1995 2005
($ 2
006)
GDP / Family
Median Family Income
Who Eats The Pie?
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Text
Source: Mother Jones MagazineThursday, December 8, 11
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How Did It Get So F**ked Up?
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Economics
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Economics
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Economics
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Politics!
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Dominant Explanation
Skills Biased Technological Change
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But...
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Mechanism for top 1% may be very different
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Who Is Top 1%?
0
10
20
30
40
1979 1993 1997 1999 2001 2002 2003 2004 2005
Composition of Top 1%
Executives, managers, supervisors (non-finance)MedicalFinancial professions, including managementLawyersComputer, math, engineering, technical (nonfinance)
Source: Source: Mike Konzcal via New York TimesThursday, December 8, 11
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Executive Compensation
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SBTC Should Be Global
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Top 1% in Anglo CountriesFigure 4. Plutonomy At Work: The Income Share of the Top 1% Has Risen Dramatically Since the Late 1970sin the U.S., the U.K., and Canada
5
7
9
11
13
15
17
19
60 63 66 69 72 75 78 81 84 87 90 93 96 99 025
7
9
11
13
15
17
19
USAUKCanada
Income Share of the Top 1%
Please see references 18, 4, 22 in the bibliography at the end of the report for the data underlying the chart. Estimates based on tax return data.Source: Citigroup Investment Research
Figure 5. Of Egalitarian Bent: The Income Share of the Top 1% Is Much Smaller and Is Not Rising as Much, Ifat All, in Switzerland, the Netherlands, Japan, and France
5
7
9
11
13
15
17
19
60 63 66 69 72 75 78 81 84 87 90 93 96 99 025
7
9
11
13
15
17
19
SwitzerlandFranceJapanNetherlands
Income Share of the Top 1%
Please see references 7,17,15,4 in the bibliography at the end of the report for the data underlying the chart. Estimates based on tax return data.Source: Citigroup Investment Research
See Figures 6 thru 11 for a panorama of plutonomy and egalitarianism.
6
Source: CitiGroup Investment ResearchThursday, December 8, 11
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Top 1% Elsewhere
Figure 4. Plutonomy At Work: The Income Share of the Top 1% Has Risen Dramatically Since the Late 1970sin the U.S., the U.K., and Canada
5
7
9
11
13
15
17
19
60 63 66 69 72 75 78 81 84 87 90 93 96 99 025
7
9
11
13
15
17
19
USAUKCanada
Income Share of the Top 1%
Please see references 18, 4, 22 in the bibliography at the end of the report for the data underlying the chart. Estimates based on tax return data.Source: Citigroup Investment Research
Figure 5. Of Egalitarian Bent: The Income Share of the Top 1% Is Much Smaller and Is Not Rising as Much, Ifat All, in Switzerland, the Netherlands, Japan, and France
5
7
9
11
13
15
17
19
60 63 66 69 72 75 78 81 84 87 90 93 96 99 025
7
9
11
13
15
17
19
SwitzerlandFranceJapanNetherlands
Income Share of the Top 1%
Please see references 7,17,15,4 in the bibliography at the end of the report for the data underlying the chart. Estimates based on tax return data.Source: Citigroup Investment Research
See Figures 6 thru 11 for a panorama of plutonomy and egalitarianism.
6
Source: CitiGroup Investment ResearchThursday, December 8, 11
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Political Causes
• Executive compensation policies
• That tie exec incomes to stock markets
• Deregulation of financial sector
• Tax policy (esp. capital gains and corporate tax)
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What Can We Do?
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Strategy 1
Social Democracy:Effective Demand
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Policies
• Tax and Transfer
• De-commodification
• social wages
• health care
• pensions
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Strategy 1I
Productive Democracy:Effective Supply
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Modes of ProductionLow Road High Road
Price Competition Value Competition
Sweated Labor Good training & equipment
Poor Labor Relations Productivity Partnerships
Economic Insecurity Continuous improvement
Minimal state Rich public goods
Rising inequality Higher worker incomes
Source: Joel Rogers, University of WisconsinThursday, December 8, 11
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Public Policy
“Help pave the high-road, block off the low road”
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Industrial Policy
• Real, relevant training
• Aligned standards
• Deliberative spaces for employers, workers, communities, governments to form productivity partnerships
• Even playing field for workplace governance
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Time to get to work.
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Occupy the truth.
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Educate.
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We have real choices.
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Occupy the future.
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