Member-only story
The Floor and Ceiling Approaches to Income Redistribution
A Brief Overview of the Current (And Potential) Regulatory Solutions To Address Income and Wealth Inequality in the United States
For months, governments around the world have been sorting through the economic devastation caused by the Coronavirus Pandemic, putting in measures in an attempt to spur a U-shaped recovery, and avoid what seems to be an inevitable K-shaped one. But there’s another, more sinister U that has been growing for decades, one that is not a sign of a healthy economy.
In the early 2000s, economists Thomas Piketty and Emmanuel Saez used a century’s worth of data to visualize income and wealth inequality over time. Their findings validated a sense of injustice what many had been experiencing: by 2013 the top 0.1% were collecting over 10% of the nation’s income. The top 10% earned 50% of the nation’s income. After a period of compression and growth of the middle class that began in the 1940s—due in part to the New Deal, financial regulation, progressive taxation, and World War II—modern American society had reverted to the way it had looked in the age of robber barons and monopoly tycoons. Inequality over time was U shaped.
