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An August episode of “The Economic Show with Soumaya Keynes” featured an in-depth interview with Financial Times economic commentator Chris Giles, a journalist with a special interest in reshaping the way people think about income inequality.
“Everyone knows that inequality in America has risen a lot over the past few decades, partly thanks to the work of Thomas Piketty in his economic bestseller, Capital in the Twenty-First Century. But does everyone know that? A recent bombshell of a paper by researchers Gerald Auten at the US Treasury and David Splinter at the Joint Committee on Taxation, argues maybe not. They take aim at some of the basic assumptions made by Piketty and his collaborators, and they argue that US inequality did not rise as much as previously thought. Who’s right? How much has income inequality in America risen?” Keynes said as she started her show.
Giles was quick to differentiate between income and wealth inequality, which are two completely different things. “If you look at the raw data, coming out of tax returns. So this all comes out of Americans filling in their tax returns and assuming they are, for the time being, are true that they haven’t lied on their tax returns, then the top 1 per cent in 1960 had about 10 per cent of the total income, and in 2020 had about 20 per cent of the total income. So if you just look at those facts coming out of tax returns, that is what you get. And so you see this very big increase in inequality, just in the sort of broad facts,” he continued. (TAKE A POLL: Is the Government Doing Enough to Address Unemployment?)
There Isn’t Enough Data
Much of the data that dictates whether or not income inequality is rising can’t be accessed by people doing analysis, Giles argued. But the trend is clear: wealth is increasing while inequality is too. Men still earn more over their lifetimes, while geographies play a large role.
“The gap in incomes between richer places and poorer places has grown. Strikingly, geographic income inequality continued to climb in recent years even though many measures of overall income and wage inequality have narrowed somewhat as wage growth has been strongest for lower-wage workers,” the U.S. Department of Commerce wrote in June 2023.
But much of these data are also sparing, and they don’t take sentiment into account. So, how do you feel? (TAKE A POLL: Do You Feel Confident About the Current State of the Economy?)
How Do You Feel?
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