The 1 percent vs. the .1 percent

Mickey Kaus Columnist
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The “1%” vs “99%” was always a political marketing gimmick when it came to talking about rising money inequality.  Based on casual empiricism (i.e. living) I  usually feel the real divide is something like the top 30% vs. the bottom 70%, in part because that financial divide seems to roughly coincide with a skills/education/taste/cultural divide.  Come now Emmanuel Saez and Gabriel Zucman to argue that, when it comes to wealth (as opposed to income)  the real divide isn’t between the top one percent and the 99 percent, but between the top one percent and the tippy top tenth of one percent, who are the only people who’ve been increasing their wealth share.  This has sparked a wave of mock concern for those who  are stuck in the mere 1%, but not the .1%.

Some (tentative!) questions:

1) Saez and Zuckman note right off the bat that:

“Income inequality has increased sharply since the 1980s yet surveys show modest increase in wealth concentration” ….

Why isn’t that the lede? (“WEALTH INEQUALITY NOT INCREASING THAT MUCH, STUDY SAYS.”) Sure, when Saez and Zucman–hereafter S + Z–look at their data they find that the top tenth-of-a-percent have pulled away, wealth wise.  (They used to have about 10% of the wealth; now they have about 20%.) But other than that, the changes in wealth aren’t as dramatic as the changes in income we’ve been reading about.

If so, is that good news? Not necessarily. Maybe that just shows the limitations of looking at wealth, as opposed to income.  After all, as S + Z note, the bottom 50% of Americans have pretty much always had effectively zero percent of the wealth, yet there have been significant changes in how they actually live over the decades.  Maybe income (and income inequality) is more important the wealth inequality–contrary to what has always seemed to be the conventional wisdom, which is that wealth is what really matters (if only we had good data on it). If you consume all your income, as the bottom half tends to do, then changes in income are what matter, no?

2) If you take out the share of wealth of the tippy top .01%, and look at the pie that remains, I bet the top percent increased their share of that pie.**  I suspect the top 10% has increased their share too. S + Z’s Power Point doesn’t quite tell us. But their data aren’t inconsistent with an image of  the whole income  distribution being pulled apart like taffy, though on a much slower schedule when it comes to wealth.

3) If the people in the top .01% change every year–and there seems to be at least some churn–how much does S + Z’s big statistic mean? If virtually all of them stay in the top 1%–though sometimes their portfolios have good years, sometimes bad years– maybe the “1%” is the right category after all.  Or”the 5%”. Or maybe we need a better measure–something like average wealth over ten years.

4) At some point, when you start paying more attention to statistical charts on relative wealth at the top than to how people actually live their lives, the whole exercise seems a bit sterile and fetishistic, no? Which is why I still think the proper focus is on social equality (how people treat each other–as equals or inferiors?) rather than the money distribution as rearranged by liberals and revealed in S + Z’s tables  (still  important to the extent that money differences affect social differences).


** — In fact they increased their share non-trivially even before the share of the tippy-top .1% is removed– see S + Z chart  headlined “Almost no recovery for the merely rich.” (Key word is “almost.”)  The chart shows those in the ‘top 1% to .1%’ range gaining share since about 1983, pretty close to when the “Great U-Turn” in income equality began.  That gain would be even greater with the share of tippy-top .1% removed from the pie.

Mickey Kaus