Even the Economist has finally to pay attention to America’s rising inequality – if only because it seems likely (at last!) to become an election issue. It is entertaining to see the hoops The Economist has to go through attempting to justify the fact that, “The wage incomes of the bottom 20% of households have barely grown in real terms since the mid-1970s”.
* “The proportion of Americans in poverty now stands at 12%; in Mr Krugman’s supposedly golden 1950s, it reached 22%.” This “good news” depends heavily on how you define poverty.
* “The combination of technology and globalisation has put many more erstwhile luxuries within the grasp of poorer Americans.” True for goods but not true for services. And anyway, advancing technology creates new needs and even new necessities – like Internet access, for example.
* “50-80% of the unfortunates in America’s bottom quintile push themselves into a higher quintile after 10 years” (well if you look at it the other way 20-50% of the bottom quintile are still stuck there after ten years).
* “America’s poorest are (in real purchasing-power terms) only a tiny bit worse-off than their peers in Sweden, Finland and Denmark”. It’s hard to read the chart I reproduce below but it looks as if Britain and Australia are the *only* countries among the 12 others surveyed whose poorest 10% were poorer than America’s 10%.
The “Economic Policy Institute”:http://www.epinet.org/ provided the figures for the chart and has other interesting statistical and policy information.