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Sep30

Uneven Gains in Current Economic Expansion

Posted on Sep 30, 2014 by Eric Weaver

 

Economist Pavlina Tcherneva published new research on the growing gap in income inequality in America. Her chart, published in the Journal of Post Keynesian Economics, showing the data is burning up the internet / economics / Twittersphere. 

 

We are all by now aware of the rapidly increasing economic inequality in the U.S., but this chart illustrates just how far the process has accelerated of late.  Inequality is an inevitable byproduct of capitalism.  We have always had it and we always will.  In the past, however, economic inequality tended to decrease during times of economic expansion, with a greater share of new wealth going to those at the bottom. 

 

As the chart shows, however, this equalizing effect has been less and less powerful with each subsequent expansion, and now the trend has completely reversed.  The current recovery is the first one in modern history in which those at the bottom have actually lost ground, while those at the top continue to increase their wealth.  Everyone, no matter where they find themselves on the economic scale, should be worried about this! I, for one, am troubled. Deeply troubled. 

 

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