Some Astonishing Numbers from an Important New Book

In my judgment, one of the most important questions about American society is the relationship or compatibility between capitalism and democracy -- the extent to which one threatens or precludes the other. Thus I was drawn to a new book by the Princeton political scientist Larry Bartels, which is described here and discussed here, and which has received a lot of criticism in the blogs of conservative economists, although (as best I can tell) mostly on fairly trivial and unpersuasive methodological grounds. One of them (Will Wilkinson) described the Bartels book as "Krugman for serious people." What I find most striking are the following numbers, which show that the usual descriptions of growing income inequality in the US since 1981 vastly UNDERSTATE the growth at the high end of the income distribution. For example, while the real income (that is, measured in constant dollars) of taxpayers at the 99th percentile doubled between 1981 and 2005 -- a much greater increase than for Americans below that level -- the real income of taxpayers at the 99.9th percentile TRIPLED, and the real income of taxpayers at the 99.99th percentile -- "a hyper-rich stratum comprising about 13,000 taxpayers" -- QUINTUPLED. Bartels argues that this growth was produced primarily by the tax cuts pushed by Republican administrations, and stresses that the fivefold increase was not the average for the 99.99th percentile, but "the LOWEST income of taxpayers in this group," so presumably the rate of increase was even larger for the wealthiest of this highest-income 13,000 households. For the three decades after World War II, "the REAL income cutoff for this hyper-rich stratum was virtually constant, but around 1980 it began to escalate rapidly, from about $ 1.2 million to $6.2 million by 2000" (constant dollars).