US income gains since 1979

Here is an interesting graph from Paul Solman of PBS. The top earners in the US have disproportionately been rewarded from the last 30 years of right wing free-market policies – starting in the early 1980’s with the ideologies of UK Prime Minister Margaret Thatcher and US President Ronald Reagan. However the significant increase from 2002 can in part be due to deregulation of financial markets and a very loose monetary policy by the US Fed. Also, in 1999 the Gramm–Leach–Bliley Act effectively removed the separation that previously existed between investment banking which issued securities and commercial banks which accepted deposits – the Glass Stegal Act of 1933. The deregulation also removed conflict of interest prohibitions between investment bankers serving as officers of commercial banks.

Leave a Reply

Your email address will not be published. Required fields are marked *