Total disconnect – new data on super rich by the Tax Justice Network

The Tax Justice Network has published a new paper some two weeks ago. Its conclusion starts like this:

This paper reveals for the first time that economic inequality is worse – significantly worse – than any known study of inequality has ever indicated. This is true probably for every country in the world, and for the world as a whole.

In the 30 years to 2010, the income of the top 1% in the US doubled while the top 0.01% quadrupled. In this period, incomes of the bottom 90% in the US fell by nearly 5%. Yet wealth data does not reflect the huge increases of income enjoyed by America’s richest earners. There is a “total disconnect”.

I think that this is very important information. Who earns what and who owns what should be information available to those who discuss these issues – which is the broader public. Only when the extent of inequality is known can economists try to understand what role it played in the ongoing financial crisis. I posted some short comments on this connection in October 2008 on this blog, and have rewritten The Fable of the Bees (Wikipedia) into a modern story. However, the paper was not published since – among other things – one of the co-authors couldn’t see how it would be relevant for today’s problems. So, for those interested in the effects of changes in the distribution if income/wealth on the macro-economy I refer to a paper written by my colleague Eckhart Hein last year entitled Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies (link).