The rich, they are different—and invisible

Americans, as a rule, don’t take kindly to facts. We prefer our own version of the world to anything an academic would suggest otherwise. So, we embrace stories filled with ignorance and, regrettably, loathing of those who are different from whom we see in the mirror.

In his column this morning, Paul Krugman talks about the “invisible” rich. They are invisible because we completely lack any comprehension of just how wealthy they are or how they live, typically out of view to the Rest of Us.

So Americans have no idea how much the Masters of the Universe are paid, a finding very much in line with evidence that Americans vastly underestimate the concentration of wealth at the top.

Last week Neil Irwin told us about the rising inequality in America, which we fail to grasp. I was struck by several charts. Here’s an astounding one (from the New York Times):

Screen Shot 2014-09-29 at 11.30.52 AM


Over many posts I have discussed The Great Divergence, which began roughly during the mid to late 70s. Yet, we can see that the rich began accumulating an increasingly larger share of income since the end of WWII.

What may jump out at you in the above chart is the last column, which shows that the top 10 percent has actually grabbed over 100 percent of economic income. How is that possible? Because the Rest of Us (those in the bottom 90 percent) saw our wages decline during that same period.

But the bigger story, if you like, is that almost all of the income gains have gone to just a sliver of the top 10 percent. Here’s another chart from the Times:

Screen Shot 2014-09-29 at 11.37.50 AM

I have been reading my Piketty and Saez, so I am not surprised by these graphics. However, I must be in the minority. Krugman:

The latest piece of evidence to that effect is a survey asking people in various countries how much they thought top executives of major companies make relative to unskilled workers. In the United States the median respondent believed that chief executives make about 30 times as much as their employees, which was roughly true in the 1960s — but since then the gap has soared, so that today chief executives earn something like 300 times as much as ordinary workers.

Missed it by that much. Just an order of magnitude.

Robert Reich was in town over the weekend (Seattle). The P-I‘s Joel Connelly wrote about his visit here. He told his audience that we should not be taken in by the conservative rhetoric of the rich being “job creators.” They are not. Despite siphoning off more and more income and wealth, the rich are depriving the Rest of Us of decent wages, housing, and those things a healthy civilized society provides. Instead of investing their money in the economy, they’re hoarding it.

“American corporations are now sitting on over $2 trillion in cash that they don’t know what to do with,” Reich told his audience.

Krugman scratches his head:

But at least so far confronting extreme inequality hasn’t been an election-winning issue. Maybe that would be true even if Americans knew the facts about our new Gilded Age. But we don’t know that. Today’s political balance rests on a foundation of ignorance, in which the public has no idea what our society is really like.

FDR welcomed the wrath of the wealthy. We, the ignorant, worship them. That is, if we could find them.

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