Inequality: Making the Point

“In the essay (opens in a new tab) that Marshall Steinbaum criticizes (opens in a new tab), I discuss findings (opens in a new tab) by Professors Thomas Piketty and Emmanuel Saez showing that market income inequality has returned to the peak last seen in the 1920s. In my essay I do not criticize those findings. In fact, in previous writings (opens in a new tab) I have strongly defended Piketty and Saez’s landmark research against criticisms by conservative commentators. Instead, my recent article makes two simple points.

“First, inspired by the recent publication of Piketty’s best-selling book, a number of people have described in a misleading way the implications of that book for the long-term trend in U.S. inequality. Many writers appear to misunderstand the limited concept of “inequality” that Piketty and Saez have estimated. Under a comprehensive income definition, inequality today is certainly below, and probably far below, its level in the 1920s.

“Second, contrary to a common claim advanced in many discussions of the Piketty-Saez estimates, real incomes of Americans in the middle and at the bottom of the income distribution have increased over the past 35 years. Although the growth in their incomes has fallen far short of the income gains enjoyed by the top 1%, it is simply wrong to say that all or nearly all U.S. income gains have been obtained by the top 1%.”