I always like to say that we live in an <i>exponential meritocracy</i>, where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function.
I really like this analysis! Given this hypothetical income growth, what would the distribution of wealth look like today?<p>As far as I know, the distribution of wealth is even more skewed in favour of the rich, with some fraction of people at the bottom having 'negative wealth' i.e. more debts than assets. Wealth also seems to have a compounding effect, in that richer people have a higher savings rate and access to better investment opportunities. So would more equal income growth necessarily lead to a more equal wealth distribution, or are there other factors to account for?
Odd to see no discussion of gold. In 1971 the dollar began to float in relation to gold. For most people operating in the realm of dollars their net worth decreases as the dollar price deviates from gold. For wealthy individuals, most of their wealth is not in dollars but in property and equities. As the value of the dollar decreases, asset prices increase - great if you own assets, bad if you just own dollars.<p>Not that gold is the be-all, end-all of real money, but in the past when people owned dollars, they effectively owned a commodity with utility. Meanwhile, at the top, the wealthy are largely paid in equity with a much smaller portion of income in dollars.
Macro-analyses like this aren't particularly representative of any relevant point. For one thing GDP is a poor measure of the general increases of wealth. The US's pivot to services isn't represented in GDP since it only accurately measures physical production (Microsoft/Google/Facebook etc. aren't accurately represented). The actual increases that wind up going into salaries (particularly at the top half) are heavily impacted by these intangible aspects of the economy (so if you isolated this report to just Mark Zuckerberg you'd see billions in wealth but no growth to account for it). At the lower end of the income spectrum, you'd miss the growth of surplus labor. Only 25% of people in the US have an undergraduate degree or higher, and of the people that don't, labor participation is only around 49%. So seeing limited gains in the people who still have jobs isn't that shocking. Whatever general idea of "inequality" this shallow report is meant to convey isn't particularly instructive. Enough data is available to make more interesting analyses.<p>*edited for clarity
The analysis needs to be deeper to draw any conclusions. For example, ~7% of U.S. GDP in 2017 is "Digital Economy", which basically did not exist in 1975 and does not involve a lot of bottom incomers to produce.
A more apt comparison would be incomes vs. (GDP / size of labor force). Therefore GDP growth should always be higher than individual income if the size of the labor population is growing.<p>However, the article is more-so comparing how this number has changed over time, which should be even <i>more</i> accentuated if you make the population adjustment, since the population was growing faster in the baby boomer period.<p>The article is just presenting data, but if you're interested in why this phenomenon exists, research Bretton Woods and US inflation figures over the 20th century to the present.<p>Surprise: when you make your currency inflationary and wealth management becomes more complex than saving money in a mattress, those at the top will fare exponentially better than those at the bottom. Working class people shouldn't be forced to become "financially literate" to accumulate meaningful wealth (which is simply not realistic -- public market investing is game theory and some elements of it are zero-sum), but in today's society it's a prerequisite.
There is a huge definitional challenge here. For more on that see <a href="https://slatestarcodex.com/2019/02/25/wage-stagnation-much-more-than-you-wanted-to-know/" rel="nofollow">https://slatestarcodex.com/2019/02/25/wage-stagnation-much-m...</a><p>I seldom see addressed how they factor changes in group composition. If the 1% are a constantly changing bunch, the narrative is very different than if it's always the same group of people. I wonder if age composition also has something to do with it (I imagine retiree income differences are much more stark than at 30y)