Archon Fung - Why Has Inequality Grown in America? What Should We Do?

American Inequality:
How Did We Get Here and
What Can We Do About it?

Archon Fung
Harvard Kennedy School

#OccupyHarvard Teach-In

December 7, 2011

Thursday, December 8, 11

Three Questions

• How F**ked Up Is It?
• How Did It Get to Be So F**ked Up?
• What Can We Do About It?


How F**ked Up Is It?


Very.


AVERAGE HOUSEHOLD INCOME
before taxes
$ 2M

top 1%
top 20%
second 20%
third 20%
$ 1.5M
fourth 20%
bottom 20%

$ 1M

$ 0.5M

BASED ON GRAPHS BY:

COURTESY OF:
‘79 ‘83 ‘87 ‘91 ‘95 ‘99 ‘03 ‘07
2007 dollars. Source: Congressional Budget Office


Growth in After-Tax Income, 1979-2007

Source: Congressional Budget Ofﬁce, 2011

Top 1% Share, 1960-2007


Distribution of Wealth


■
■

Distribution of Wealth ■

Source: Michael Norton and Dan Ariely

Who Eats The Pie?
120,000

GDP / Family
105,000

90,000

75,000
($ 2006)

60,000

45,000

30,000
Median Family Income
15,000

0
1945 1955 1965 1975 1985 1995 2005


Text

Source: Mother Jones Magazine

How Did It Get So F**ked Up?


Economics


Politics!


Dominant Explanation

Skills Biased Technological Change


But...


Mechanism for top 1% may be very different


Who Is Top 1%? Composition of Top 1%

40

30
Executives, managers, supervisors (non-ﬁnance)
Medical
Financial professions, including management
Lawyers
Computer, math, engineering, technical (nonﬁnance)

20

10

0
1979 1993 1997 1999 2001 2002 2003 2004 2005

Source: Source: Mike Konzcal via New York Times

Executive Compensation


SBTC Should Be Global


Top 1% in Anglo Countries
Figure 4. Plutonomy At Work: The Income Share of the Top 1% Has Risen Dramatically
in the U.S., the U.K., and Canada

19 Income Share of the Top 1% 19

17 17
USA
15 15
UK
13 Canada 13

11 11

9 9

7 7

5 5
60 63 66 69 72 75 78 81 84 87 90 93 96 99 02

Please see references 18, 4, 22 in the bibliography at the end of the report for the data underlying the chart. Estimates b
Source: CitiGroup Investment Research
Source: Citigroup Investment Research

Please see references 18, 4, 22 in the bibliography at the end of the report for the data underlying the chart. Estimat

Top 1% Elsewhere
Figure 5. Of Egalitarian Bent: The Income Share of the Top 1% Is Much Smaller and
at All, in Switzerland, the Netherlands, Japan, and France

19 Income Share of the Top 1% 19

17 Switzerland 17
France
15 Japan 15
Netherlands
13 13

11 11

9 9

7 7

5 5
60 63 66 69 72 75 78 81 84 87 90 93 96 99 02

Source: CitiGroup Investment Research
Please see references 7,17,15,4 in the bibliography at the end of the report for the data underlying the chart. Estima

Political Causes
• Executive compensation policies

• That tie exec incomes to stock markets

• Deregulation of ﬁnancial sector

• Tax policy (esp. capital gains and corporate
tax)


What Can We Do?


Strategy 1

Social Democracy:
Effective Demand


Policies

• Tax and Transfer
• De-commodiﬁcation
• social wages
• health care
• pensions


Strategy 1I

Productive Democracy:
Effective Supply


Modes of Production
Low Road High Road
Price Competition Value Competition
Sweated Labor Good training & equipment
Poor Labor Relations Productivity Partnerships
Economic Insecurity Continuous improvement
Minimal state Rich public goods
Rising inequality Higher worker incomes

Source: Joel Rogers, University of Wisconsin

Public Policy

“Help pave the high-road,
block off the low road”


Industrial Policy
• Real, relevant training
• Aligned standards
• Deliberative spaces for employers,
workers, communities, governments to
form productivity partnerships
• Even playing ﬁeld for workplace governance


Time to get to work.


Occupy the truth.


Educate.


We have real choices.


Occupy the future.


Archon Fung - Why Has Inequality Grown in America? What Should We Do?

Recommended

Recommended

More Related Content

Recently uploaded

Recently uploaded (10)

Featured

Featured (20)

Archon Fung - Why Has Inequality Grown in America? What Should We Do?