Tag Archives: OWS

Top 1% on a global perspective

We all know about the vast sums of money the top 1% earn in the US but what about other countries? A few weeks ago Brian Gaynor in the NZ Herald wrote a piece on this topic. Using the OECD report he showed that the top 1% have a much greater share of taxable income than 30 years previous.

From the table only the Netherlands has expereienced a decline in inequality. The biggest increase being the US – 10%. Most commonwealth countries have experienced increasing inequality – New Zealand’s top 1% earning 9% of total taxable income. Countries that have less of an inequality issue tend to be Scandinavian. The OECD has emphasised that there should be a strong emphasis on reducing inequality as well as promoting growth.

“Rising inequality is one of the major risks to our future prosperity and security. The main challenge facing governments is implementing reforms that get growth back on track, put people to work and reduce the widening income gap.”

It has been suggested that the main problem is that managers of companies have taken control away from the shareholders and are therefore allocating income between executives and non-executive employees.

Data backs up OWS claims

Here is a great graphic from the Economic Policy Institute in the US. The Occupy Wall Street protesters claims are backed up when you look at the graph below. Data is inflation-adjusted.

1979-2007:
Bottom 90% of households saw a 5% increase in income
Top 1% of households saw a 224% increase in income
Top 0.1% of households saw a 390% increse in income

The major increases happened during the Clinton Administration especially with the repeal of the Glass Stegal Act in 1997 – 0.1% and 1% incomes increased dramatically after this period. The drop in the % increase was no doubt due to the Dot Com collapse but picked up considerably with an aggressive expansionary policy from the US Fed after 9/11.

Do we have anything like this in NZ?

NZIER economist Shamubeel Eaqub stated that the wage income gap between high and low income has been broadly stable over the past decade and there is nothing in the figures to suggest massive increases in inequality or inequity.