America's economic recovery is encouraging to many, not least to advocates of 'plan B' – the debt-ballooning path of fiscal stimulus favoured by the British left. But leaving aside such trifles as Britain's financial stability, are they right to view US economic growth with such enthusiasm?
Not if they care about equality. Reason quotes from the findings of Emmanuel Saez – a UC Berkeley economist and "guru of inequality":
- In 2010, average real income per family grew by 2.3%… but the gains were very uneven. Top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery…
- …It is likely that this uneven recovery has continued in 2011 as the stock market has continued to recover. National Accounts statistics show that corporate profits and dividends distributed have grown strongly in 2011 while wage and salary accruals have only grown only modestly.
So, there you have it, the fruits of fiscal stimulus: 93% for the richest 1% and 7% for everybody else. This is, of course, just one year's data. But will the richest 1% be paying back 93% of the additional government debt accrued over this period?