The top 1% are different. Yes, they own more financial assets.

Lawrence Mishel’s recent piece on inequality includes a very telling graph:


We see that the second half of the 1990s  is the first prolonged period when the top 1%’s income soared above that of the college educated in general; it coincided with the dot-com boom/bubble. We see a similar takeoff during the mid-2000s housing bubble and stock boom. In the market corrections/crashes that began in 2000 and 2007, we see the top 1%’s advantage mostly, but not completely, disappear. 

A combination of stock options, stock-market-based bonuses, and “Takes money to make money” seems to be at work here. The graph seems to be at odds with the common argument (Greg Mankiw’s?) that the top 1% deserve all they get because they are so much more productive, as it seems doubtful that their superior productivity deserts them in bad times.

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3 Responses to “The top 1% are different. Yes, they own more financial assets.”

  1. democommie Says:

    I think that the “argument” is just another of the many lies that are promulgated by the 1% or their toadies.

    • Ranjit Says:

      Highly probable. Economic theory tells us that in competitive labor markets (a big assumption in itself), the most productive people should earn the most. It doesn’t tell us that having more investment income than the next guy simply because you had more money to invest in the first place means you are more productive. When top salaries and bonuses become tied to the stock market, then the “they earned it” argument gets harder to make.

  2. Mark E. Says:

    What I get from the graph is simply that the assets of the rich don’t falter as much in a down economy as they have in at least the recent past. Hard to get true reform if they are largely isolated from the swings of the market that are largely of their doing.

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