Naked Capitalism reprints the article Exploding Wealth Inequality in the United States by Emmanuel Saez, Professor of Economics, University of California Berkeley and Gabriel Zucman, Assistant Professor of Economics, London School of Economics. Originally published at VoxEU

I pull a few snippets to give you a hint of the article content.

In other words, family fortunes of $20 million or more grew much faster than those of only a few millions.

When you hear top 0.1% or top 1% or top 10%, it may be hard for you to figure out where you stand.  Putting a dollar amount on the net value of your family fortune gives you a handle on where you stand.  If your family fortune is less than $20 million, you aren’t rich enough to be able  to expect to get much richer.  So now you know which side is your side in the class war.

Since the housing and financial crises of the late 2000s there has been no recovery in the wealth of the middle class and the poor. The average wealth of the bottom 90% of families is equal to $80,000 in 2012 – the same level as in 1986. In contrast, the average wealth for the top 1% more than tripled between 1980 and 2012. In 2012, the wealth of the top 1% increased almost back to its peak level of 2007. The Great Recession looks only like a small bump along an upward trajectory.

So now you can understand why the view of how well the economy is recovering is quite different if you are a Charlie Baker from what you see if you are a Martha Coakley.

There were several interesting graphs, below is the caption to one of them.

Today, the top 1% families save about 35% of their income, while the bottom 90% families save about zero (Saez and Zucman 2014).

Oddly, the authors talk about incentives for increasing savings.  Here is paragraph from the conclusion:

There are a number of specific policy reforms needed to rebuild middle-class wealth. A combination of prudent financial regulation to rein in predatory lending, incentives to help people save – nudges have been shown to be very effective in the case of 401(k) pensions (Thaler and Sunstein 2008) – and more generally steps to boost the wages of the bottom 90% of workers are needed so that ordinary families can afford to save.

If you read between the lines, maybe the authors are recognizing that incentives for saving will only help people at the top of the bottom 90%.  The rest of the bottom 90% don’t save because they are unable to, not because they don’t have motivation that can be enhanced by incentives.

Now back to some things from the body of the article.

Ten or 20 years from now, all the gains in wealth democratisation achieved during the New Deal and the post-war decades could be lost. While the rich would be extremely rich, ordinary families would own next to nothing, with debts almost as high as their assets.

I hear talk that Elizabeth Warren should not run for president until after Hillary Clinton’s term is over.  Since Hillary has a very weak understanding of these issues compare to the strength of Warren’s understanding, waiting another 10 years ordinary families would already have next to nothing or be  very close to being in that situation.

Progressive estate and income taxation were the key tools that reduced the concentration of wealth after the Great Depression (Piketty and Saez 2003, Kopczuk and Saez 2004). The same proven tools are needed again today.

This is a lesson that some young, self-declared Democrats haven’t seemed to learn in their study of history.

The Daily Kos has a fundraising page to support GOTV (Get Out The Vote).  To be fair to The Daily Kos, I ought to urge you to follow the preceding link before (or after) you watch this amusing video below.

I tend to squirrel away snippets like this to use when someone challenges me to show a single instance where Faux Noise has ever lied. This is not to say that Faux Noise has a monopoly on shoddy journalism. I just can’t stand it when people try to tell me that Faux Noise is the most truthful news source the world has ever seen.

The Daily Kos article Colorado Station Busts Megyn Kelly for Outright Lying; FoxNews Offers No Correction adds the video below to the mix.

Pacific Standard  – The Science of Society has the article We Are All Confident Idiots.  Turns out that the article is much more interesting than the off putting title and accompanying graphic would make you believe. It would be a shame if people are turned away from reading the article by the very teaser meant to attract them. One might even call that ironic, given the actual content of the article.

As I read the article, I copied down a few snippets that I found intriguing.

Because it’s so easy to judge the idiocy of others, it may be sorely tempting to think this doesn’t apply to you.

This reminded me that we should not be smug about how other people fall into this trap.  The title of the article did say that it applied to all of us.

In the classroom, some of best techniques for disarming misconceptions are essentially variations on the Socratic method. To eliminate the most common misbeliefs, the instructor can open a lesson with them—and then show students the explanatory gaps those misbeliefs leave yawning or the implausible conclusions they lead to.

Given my own feelings of the inadequacy of the Socratic method, I was almost ready to dismiss the article.  However, the quote does give a hint that the very implausible conclusions that the Socratic method leads to would insulate you from falling victim to the method.  My first and second impressions were both wrong.  In the end, this issue of the Socratic method is probably only a red flag for me.

For individuals, the trick is to be your own devil’s advocate: to think through how your favored conclusions might be misguided; to ask yourself how you might be wrong, or how things might turn out differently from what you expect. It helps to try practicing what the psychologist Charles Lord calls “considering the opposite.” To do this, I often imagine myself in a future in which I have turned out to be wrong in a decision, and then consider what the likeliest path was that led to my failure. And lastly: Seek advice. Other people may have their own misbeliefs, but a discussion can often be sufficient to rid a serious person of his or her most egregious misconceptions.

This is probably the best lesson you can learn from the article.  Which is not to say that reading the whole article to see how we get to this conclusion isn’t also very worthwhile.

Thanks to João Geada for posting this on his Facebook page.

New Economic Perspectives has the article Halfway There.  It discusses the implications of a NASA study and a WWF study.

If you graph this wildlife population loss, it looks uncannily similar to the graph-line of “Nature” in the HANDY Model: a point is reached where, suddenly, after a steady rise, or a gradual equilibrium, the graph-line of “Nature’s” population changes direction and begins to plummet. What is startling about the HANDY Model is that when this happens, the human populations of “Elites” and “Commoners” continue to rise, crossing the falling graph-line of “Nature.” This is called “overshoot”—the point where the human population begins consuming “Nature’s” resources faster than “Nature” can replenish them. The human population, after some period of “overshoot,” begins (of necessity) to collapse as well. The population of “Commoners” collapses first because the “Elites” are able, for a period of time, to thrive on their “Wealth.” In some iterations of the model, “Nature” recovers after the “Elite” population finally base-lines; in other iterations “Nature” fails to recover at all—the world becomes simply a wasteland, like one of those planets we keep investigating to see if it ever supported life.

This is a food for thought kind of article.  I am not claiming that these studies proved anything, or that we should jump right on it and change our behavior immediately as per the prescriptions in the article. The discussion of no-tillage farming and of a new kind of prosperity were very interesting.