Cook's Parade of Inequaility

The the September 2006 issue of The Atlantic (yes, I get my magazines from the library) there is a piece by Atlantic editor Clive Cook about Jan Pen's 1971 book Income Distribution. As the exciting title may suggest, it is about the disproportionate distribution of wealth in Britain, or really applicable to any Western country.

Imagine an hour long parade were every participant's height is proportional to their height. If we were to begin with the lowest income first we would find people upside-down in debt and then microscopic. This would continue with dwarf sized people for most of the festivities. Only towards the end would you find average height individuals only to be followed at the last microseconds by giants of unimaginable proportions. So why the disparity?

The claim is made that after the second World War, income rose disproportionately as income went up, favoring the wealthy. Over thirty years median income rose just 11 percent while top income rose 617 percent. Labor's share of income is not trending up or down. What has changed is how much of their share goes to the top income brackets. This can be explained, apparently, through productivity.

Productivity is the single most important indicator of prosperity. So high earners are taking home the labor's share of productivity, and thus wages. America has a much more dispersed productivity, unknown why to me, which means that hairdressers and mechanics share in their prosperity more so than in other countries.

Interesting piece, and not the most interesting even in the whole issue.