Assessing the divide between rich and poor
KAI RYSSDAL: Both President Bush and Fed chairman Ben Bernanke have addressed our twin economic gaps recently. Not the ones you might immediately think of, the budget and trade deficits. They were talking about wage and income disparities. Marketplace’s Steve Tripoli reports now on some new analysis that shows those gaps are widening.
STEVE TRIPOLI: University of California economist Emmanuel Saez says that the top slice of families really widened their income lead for the three years through 2005.
EMMANUEL SAEZ: Every year, the top 1 percent families have gained 10 percent. The remaining 99 percent of families have seen very, very small gain of only 1.2 percent per year.
It’s even more stark than it sounds. Because of that bottom 99 percent, only the top 9 percent logged any significant gains.
Saez says the best-paid 1 percent have also bumped up their slice of the nation’s annual income.
SAEZ: Their share of income has increased from about 8 percent in the 1970s to almost 20 percent today.
The top 300,000 Americans now earn as much income as the bottom 150 million.
By coincidence today, the libertarian Ayn Rand Institute released an article called “In Defense of Income Inequality.” Libertarians believe in an almost completely unregulated marketplace.
The article’s author, Peter Schwartz, says the growing gaps are the way markets should work.
PETER SCHWARTZ: The same reason that a computer costs more than a paper clip is the reason that Bill Gates makes more money than a janitor.
In other words, the people who add the most value deserve the biggest rewards — even if their slice of the pie keeps growing dramatically.
Schwartz rejected the often-heard argument that the growth in these gaps has accelerated to the point of unfairness. Those are envious egalitarians talking, he says. And he’s not using egalitarian as a compliment.
I’m Steve Tripoli for Marketplace.
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