There's our alarming income inequality. There's the even more dangerous wealth inequality.
And then there's the almost totally hidden inflation inequality, which until now wasn't even acknowledged.
In an era of wild inequality, sputtering wages, and rising rents and health-care costs, the American working class has had one consistent financial respite: “stuff,” broadly defined, is cheap. Sure, workers might not be able to afford a decent apartment, a college education, or sufficient elder care for an infirm relative, or to ever, ever get sick. But burgers, leggings, yard tools, bicycles, dishes, smartphones, soda—these items have become less expensive, thanks to big-box stores and internet retailers and imports from abroad.
Or perhaps not. A new analysis from a prominent group of economic researchers suggests not only that rising prices have been quietly taxing low-income families more heavily than rich ones, but also that, after accounting for that trend, the American poverty rate is significantly higher than the official measures suggest. Call it “inflation inequality,” a subtle, pernicious way that the fortunes of the rich and the poor have diverged.
When the Xavier Jaravel of the London School of Economics looked at the prices of the products purchased by the bottom income quintile and compared them to the prices of the products purchased by the top income quintile they found that poor families experienced an annual rate of inflation of 0.44 percentage points higher than that of wealthy families.
Now that doesn't sound like much, but in fact the impact is enormous.
Accounting for differential changes in prices would bump up the 2018 poverty rate by 8 percent—adding 3.2 million people to the ranks of the officially poor, and 836,000 people to the ranks of those in deep poverty. According to standard government measures, the real household income of the bottom quintile fell 1 percent from 2004 to 2018; using the new, inflation-sensitive accounting, it fell more than 7 percent.
If you ever heard a economist tell you that "there is no inflation", and you thought "in a pig's eye", well, it turns out that you were right.
You might be thinking "Who will speak out for the poor billionaires?"
Jim Cramer has bravely come to their defense.
“Income inequality is a real problem in this country … but the problem is not CEO pay. I think it might be everybody else’s pay,” Cramer said.
Right. We can't stop the CEOs from robbing their workers blind. That would upset the status quo.
“The way I see it, you need to look at CEOs like they’re great athletes. Any major bank in the world would happily top Jamie’s pay package if they thought they could lure him away,” the “Mad Money” host said,
Yeh, because we live in a meritocracy where everyone is paid according to their worth.
Except that this is utter bulsh*t.
Income inequality in the United States would fall drastically if people were compensated based only on their ability.
The fundamental reason that income inequality is extraordinarily high in the United States relative to other democracies is the disparities in power across groups.