Income Inequality and the Death of Trickledown. By Hugh, who is a long-time commenter at Naked Capitalism. Originally published at Corrente. On September 12, 2012, the Census issued its report on Income, Poverty, and Healthcare Coverage in the United States: 2011. While the full report has some nice charts, one that was conspicuously missing was on income inequality. The data for such a chart was in the tables, and so I was able to construct the chart above from them. One feature that jumps out at you are how relatively flat mean income has been for the bottom 80% over the last 45 years and how much it has grown for the top 20%, from an already high baseline. If you look at the far left, in 1967, the income difference between the quintiles of the bottom 80% was remarkably similar, less than $17,000 between each group ($16,679 between the 1st (lowest quintile) and 2nd; $15,572 between the 2nd and 3rd; and $16,631 between the 3rd and 4th).
What is interesting is that the mean income of the top 20% increased $73,100 from 1967 to 2011. MILLIONAIRE'S ISLAND: A Simple Example Of Why 'Rich People' Don't Create Jobs. Wikipedia commons An unspoiled wilderness with no poor people. Paradise! As everyone in this country keeps blaming everyone else for our high unemployment rate, one assertion gets repeated so often that it is now regarded as fact: Rich people create jobs. Specifically, the argument goes, entrepreneurs and investors create jobs. So if we want to create more jobs, the argument continues, we need to cut taxes on entrepreneurs and investors--to increase their incentive to create jobs.
Now, I'm an entrepreneur, and Business Insider employs about 75 people, up from zero four years ago. Unfortunately, as I explained in detail here, this assertion is wrong: Entrepreneurs and investors actually don't create jobs, at least not by themselves. Without our generous readers and sponsors and dedicated team, all the jobs I "created" at BI would immediately cease to exist (including mine). To illustrate this, let's run through a simple example. Let's allow the 1% to take their savings with them.
Wikipedia. Wealth doesn't trickle down – it just floods offshore, new research reveals | Business | The Observer. The world's super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy. James Henry, a former chief economist at consultancy McKinsey and an expert on tax havens, has conducted groundbreaking new research for the Tax Justice Network campaign group – sifting through data from the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to construct an alarming picture that shows capital flooding out of countries across the world and disappearing into the cracks in the financial system. Comedian Jimmy Carr became the public face of tax-dodging in the UK earlier this year when it emerged that he had made use of a Cayman Islands-based trust to slash his income tax bill.
"These estimates reveal a staggering failure," says John Christensen of the Tax Justice Network. Banned TED Talk: Nick Hanauer "Rich people don't create jobs". Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs. 60 Minutes America's real job-creators...who can't afford to create any jobs. In the war of rhetoric that has developed in Washington as both sides blame each other for our economic mess, one argument has been repeated so often that many people now regard it as fact: Rich people create the jobs. Specifically, entrepreneurs and investors, when incented by low taxes, build companies and create millions of jobs. And these entrepreneurs and investors, therefore, the argument goes, can solve our nation's huge unemployment problem — if only we cut taxes and regulations so they can be incented to build more companies and create more jobs.
In other words, by even considering raising taxes on "the 1%," we are considering destroying the very mechanism that makes our economy the strongest and biggest in the world: The incentive for entrepreneurs nd investors to build companies in the hope of getting rich and, in the process, creating millions of jobs. She'd like to create jobs. And Hanauer explains why. Raise Taxes on Rich to Reward True Job Creators: Nick Hanauer. Dec. 1 (Bloomberg) -- It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop. Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe.
It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false. I’m a very rich person. Even so, I’ve never been a “job creator.” That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. Theory of Evolution When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. Inequality... Wealth and Income Inequality.
Trickle Down Economics.