Percentiles (repost from 2011)

by John Q on June 3, 2018

I’m reposting this piece from 2011, as a prebuttal of arguments like this. I give a bit more detail here.

One of the most striking successes of the Occupy Wall Street movement has been the “We are the 99 per cent” idea, and more specifically in the identification of the top 1 per cent as the primary source of economic problems.

Thanks to #OWS, the fact that households the top 1 per cent of the income distribution now receive around 25 per cent of all income (up from 12 per cent a few decades ago) has been widely disseminated. The empirical work on tax data that produced this evidence, done most notably by Piketty and Saez, has been slowly percolating into the mainstream consciousness, but “We are the 99 per cent” has hammered it home with surprising speed.

Even more surprisingly, the analysis as it relates to the 1 per cent has been almost unchallenged by the organized right. Having spent decades denying the obvious growth in inequality, and of the wealth and power of the super-rich, the right has implicitly conceded to reality on this point.

Their response to ‘We are the 99 per cent’ has been the snarky claim that ‘We are the 53 per cent’. This line is based on the lame and long-refuted WSJ ‘lucky duckies’ talking point, that low-wage workers ‘pay no income tax’. It is, of course, true that many workers don’t pay the tax called the Federal Income Tax’ , but they do pay the Social Security payroll tax, which is a tax on wage incomes, not to mention sales taxes and many others. By contrast, capital gains, the preferred income source of the ultra-wealthy, are not subject to payroll tax and attract only half the standard rate of the Federal Income Tax.

What’s more interesting to me is the 53 per cent number, redolent of the Buchanan-Nixon plan to ‘tear the country in half and take the bigger half’. It stands in stark contrast to the hypocritical complaints of Republican politicians about class warfare and turning Americans against each other. The fact that anyone could see this slogan as clever politics is an indication of the costs that are eventually incurred in the creation of a hermetically sealed thought bubble like that of the US right.

Coming back to reality, I’d like to think a bit about the relationship between the 1 per cent and the remaining 19 per cent of the population in the top quintile (that is 20 per cent). Most if not all of the bloggers here at CT fall into the latter group. Given our lamentable lack of market research, I can’t say much about readers, but a reading of the comment section suggests that most of our readers also belong to this group.

The top quintile as a whole commands the great majority of US income, and virtually all financial wealth – few households outside this group own much beyond their homes and perhaps some money in a pension fund. It follows that any significant improvement in public services, or in the position of the unemployed and poor, must be funded by higher taxes on the 1 per cent, the 19 per cent or both.

The 19 per cent also have a disproportionate political weight, since they are much more likely than Americans in general to register, vote and engage in political activity. So, it makes a big difference whether, as as implied by ‘We are the 99 per cent’ their interests are aligned with the mass of the population or with the top 1 per cent.

Until quite recently, I would have (and did) argued against this view. The top quintile as a whole has done very well over the past few decades, and (despite some silly claims to the contrary), high-income earners have mostly voted Republican, in line with their economic interests. Certainly there are plenty who don’t vote their interests, but that is also true of many people in the top 1 per cent, not to mention bona fide billionaires like Buffett and Soros.

There was always an argument in terms of enlightened self-interest or class-interest, that it was better to give up a bit of (pre-tax and post-tax) income to maintain a stable and relatively egalitarian society. But in an individualistic society like that of the US such arguments don’t go very far.

As far as policy is concerned, my implicit assumption, formed in a relatively egalitarian society, was that taxes imposed only on the very rich might be satisfying but couldn’t raise a lot of money. So, for example, I dismissed Obama’s focus on ending the Bush tax cuts for incomes above $250k (roughly, the top 2 per cent). In the ‘Trickle Down’ chapter of Zombie Economics, I looked mainly at the top 20 per cent (or sometimes 10 per cent) of the income distribution rather than the top 1 per cent.

I’m now much more sympathetic to the ‘99 per cent’ analysis. First, a closer look at income growth figures suggests that, while the 19 per cent have enjoyed rising incomes, they’ve only barely maintained their share of national income. The redistribution of the past three decades has gone from the bottom 80 per cent to the top 1 per cent.

That suggests the possibility of a policy response in which the main redistributive thrust would be to reverse this process. This would almost certainly involve higher tax payments, but this would be offset by the restoration of public services, which are in economic terms a ‘superior good’, valued more as income rises. The top 1 per cent can buy their own services, and are largely unaffected by public sector cutbacks, but that’s not true of the 19 per cent.

Another important factor is the growth of economic insecurity. The myth of the US as a land of opportunity for upward mobility has been replaced by Barbara Ehrenreich’s Fear of Falling (another good source on this is High Wire by Peter Gosselin). Even if people in the top 19 per cent are doing well, they are less secure than at any time since the 1930s, and their children face even more uncertain prospects.

Finally, there is the alliance of the 1 per cent with the forces of rightwing cultural tribalism. The 1 per cent can only rule by persuading lots of people to vote against their interests, and that requires a reactionary and anti-intellectual agenda on social, cultural and scientific issues. As a result, educated voters have increasingly turned against the Republican Party.

I don’t want to make too much of this last point. As Allan Grayson said during his memorable takedown of PJ O’Rourke recently, the 1 per cent own the Republican Party outright, but they also own much of the Democratic Party, and can rule satisfactorily through either. Also, having a college degree isn’t the same as being educated – Tea Party supporters are more likely than the average American to have a degree, and college-graduate Republicans are even more prone to various delusional beliefs on issues such as climate change.

Nevertheless, taking account of all the factors listed above, even the most comfortably affluent members of the professional class, looking at the alliance of plutocrats and theocrats arrayed to defend Wall Street could reasonably conclude that it was in their own interests to support the 99 per cent and not the 1 per cent.

We are therefore (surprisingly to me) suddenly back in a situation where a progressive movement can reasonably claim to act in the interests of a group that is (I’m quoting Erik Olin Wright from memory on the Marxist conception of the working class0
(a) the overwhelming majority of the population
(b) responsible for nearly all the productive activity (as against the 1 per cent’s incomes drawn from a parasitic financial sector)
© economically desperate or at risk of becoming so.

Can all of this be sustained? I don’t know, any more than anyone else. But #OWS has already achieved things that most people would have regarded as impossible a month ago, and for the moment at least, the momentum is still growing.



oldster 06.04.18 at 12:33 am

That Atlantic nonsense came pre-refuted by its own cover.

It shows a baby wearing a onesie with a Yale logo on it. You know: you filthy 9.9 percenters are going to lock in your children’s place in the permanent aristocracy by sending them to Yale.

Which is…totally innumerate. Yale enrolls about 1500 new students every year. Every year, about 4 million Americans reach the age of 18, i.e. the age to be enrolled as first-years at Yale. So the Yale population is roughly 0.04% of the population. Not 9%. Not 1%. Roughly 1/25th of 1 percent.

The Atlantic wants to brow-beat its audience–i.e. well-to-do non-oligarchs–so that they will continue not to see that the oligarchs are stealing America from under their noses.


John Quiggin 06.04.18 at 7:13 am

@oldster As your pseudonym suggests of you, I’m really feeling like an oldster these days. The same zombie errors, endlessly over and over again

Your numbers are right, of course. As it happens, the whole of the Ivy League along with Stanford, Chicago and the elite liberal arts colleges educate about 1 per cent of the population, pretty much the children of the 1 per cent.

Yet to read most US commentary, you’d imagine that these are the central engines of post-school education, and that their doings are of vital importance to all.


engels 06.04.18 at 8:14 am

Interesting analysis. I think the quote you want is from GA Cohen

The communist impression of the working class was that its members
1. constituted the majority of society;
2. produced the wealth of society;
3. were the exploited people in society; and
4. were the needy people in society.
There were moreover in the same impression two further characteristics consequent on those four. The workers were so needy that they
5. would have nothing to lose from revolution whatever its upshot might be;
and because of 1 2 and 5 it was within the capacity (1 2) and in the interest (5) of the working class to change society so that it
6. could and would transform society.
We can use these names to denote the six features: majority production exploitation need nothing-to-lose and revolution.


Peter T 06.04.18 at 9:22 am

How much of the 19 per cent is made up of clients of the 1 per cent? People whose careers depend on the favours of the top? Mid level executives, administrators who owe appointment to the board, people like that?


Z 06.04.18 at 9:51 am

For reasons already discussed here (for instance in the Dream Hoarders thread), I’m squarely in the Thomas Frank, Richard Reeves, Matthew Stewart camp on this question, for the following reasons ordered in increasing importance.

1) The co-dependency effect. Even if the top 5% or 9,9% or 20% (excluding the top 1% or 0,1%) have not really increased their relative size of the share of wealth, a good part of their material well-being, career and opportunity proximally depends on what happens to the 0,1%. International comparisons on how for instance a lawyer at a private firm, a surgeon at a private hospital, a programmer in a computer start-up, a financial analyst at an investment bank or an academic at a high-end university live in France (in which these occupations are either rare or decoupled from purely private wealth by various institutional arrangements) and the US makes this point perfectly clear to me.

2) The leverage effect. Even in a society as plutocratic as the US, the top 0,1% cannot quite buy elections outright, so they require an electoral lever, and the top whatever percent provides that. Think about why for instance the tripartite system charter schools/decaying and segregated public schools/private schools persists (and probably is being strengthened) compared to a strong public initiative.

3) Far most importantly, economic inequalities are just a part of the story and probably the least important one. To exaggerate with the intent of overcorrecting, I would say that they are an epiphenomenon. The real action is in the education level. For the first time in the modern history of education (defined conventionally as starting with the Protestant Reformation), people in Western countries are not catching up. Once mass primary education got started, it consistently increased until it reached virtually everybody. Once mass secondary education, the same. This is not happening with higher education (which is indeed increasing but which has had a negative second derivative for about 40 to 20 years depending on the countries). That is genuinely new. With each new generation under this new regime, a genuine divide within the society is getting deeper (roughly the divide between those born in 2018 from parents and grand-parents with a higher education diploma and the rest). The whatever % and the top 0,1% fall on the same side of this divide.

All this, but especially the last point, doesn’t mean that the whatever % and the top 0,1% should naturally embrace the same political movements or such strict politically deterministic social world-views. It just means that according to a very important criteria – the one which better explains the current dynamic of advanced societies – they indeed share an important trait.


John Quiggin 06.04.18 at 10:59 am

@5 (and relevant @4)

(1) The cases you describe are presented as being at the top end of the professions, probably in the first or second percentile. Try replacing them with say, a family law practitioner, a doctor in a country hospital, an academic at a second-tier university and so on, still well inside the top quintile. Their relation to the 1 per cent is more like that of a skilled worker to a factory owner than one of co-dependence.

(2) This is just restating the point of the OP. Whether the top 1 per cent can prevail depends, to a large extent on whether they can hold the support of the next 9 or 19 per cent

(3) is broadly true of the US, but not of Australia, where the proportion with a post-school qualification has risen steadily over time

My impression is that the US is atypical, but I don’t have good data.


bianca steele 06.04.18 at 12:22 pm

From discussions elsewhere, I’ve concluded that a lot of people who went to the nationally recognized “best” high schools (public and private taken together) in the US overestimate how much of the population those schools serve. They realize it isn’t 20%, but believe it’s from 10-15%, when in fact it’s at most 4%.

The bright side is that this probably means people who don’t go to the “best” high schools are more likely to get into the professions than those people estimate. It’s just that they don’t notice such people exist among their colleagues and classmates.

The perception that the entire society (and economy) is geared to the 1% is almost certainly out of date but the appearance that it matters really, really a lot is maintained by cultural institutions like the Atlantic.


Z 06.04.18 at 12:32 pm

The cases you describe are presented as being at the top end of the professions, probably in the first or second percentile. Try replacing them with say, a family law practitioner, a doctor in a country hospital, an academic at a second-tier university and so on, still well inside the top quintile

I highlighted the part that I’m reacting to. Yes, the relevant category is not simply a percentile: it is a combination of income, education (top of the educative spectrum vs. lower) and location (dynamic urban areas vs. neglected ones). So indeed, if you are a doctor in the a country side hospital, you’re probably on the threshold of belonging to the group I’m thinking about, because you might score relatively high on the first two metrics but low on the third. Same with the concept of family law. Whose family are we talking about here? Depending on the location and average income there, that could make a huge different, I would think. But even taking all of this into account, and even though I find the “We are the 9,9% slogan” funny, I personally think that the relevant category is top 5% (and not lower). At this level (with a wealth of 2,4 million, 25 times above the median wealth in the US, according to the Atlantic article), you are not talking about an academic in a second-tier university.

(2) This is just restating the point of the OP. Whether the top 1 per cent can prevail depends, to a large extent on whether they can hold the support of the next 9 or 19 per cent

Yes, but what I meant to convey is that the actual strategies selected by the top 5% (say) is to keep those below down. It is easier to put your children in a private school and to maintain the public system rotten than to rise standards everywhere, for instance (the sociologist Agn̬s Van Zanten has a nice catch phrase of broader application: for the top 5%, it is easier to change school than to change schools Рsame goes with the society at large). In that sense, the top 5% minus the top 0,1% is on the side of the top 0,1% (if one wants to frame this in terms of sides), not because they are manipulated by the top 0,1% but through their own internal dynamic.


Z 06.04.18 at 12:36 pm

(3) is broadly true of the US, but not of Australia

To me that point is the crux of the matter, so I wrote a separate answer (with the inherent limitations of a blog comment).

1) The important divide does not run between any post-secondary diploma versus no post-secondary diploma but rather firstly between +3 completed versus below, and secondly again between +5 completed versus the rest

2) Under this criteria, it is in fact Australia that is rather exceptional, though not unique (the former WASP English colonies minus the United States are broadly following the same trajectories); not coincidentally (to me) these countries (Australia, New-Zealand, Canada) are remarkably politically sane compared to their counterparts elsewhere.

3) As you suppose, the US is indeed also singular according to this criteria, but only in the fact that it achieved a substantial proportion of higher education much sooner than other countries and then plateaued much earlier; not coincidentally (to me), the US also went through the neoliberal/plutocratic xenophobic alternation much sooner than its counterparts.

4) Finally, a real and serious international exploration of this criteria would actually carve out a number of groups. Very broadly (and bearing in mind that I type from memory, not having the actual data under my eyes), you get Trumpland, where higher education has stalled, inequalities are insane, health criteria are mediocre to abysmal and fertility is high (US R-voting states as flagship, the US has a whole as representatives), the Protestant Utopia, where higher education is increasing, fertility is resisting and health is outstanding (Sweden and New-Zealand as flagships, Norway, Finland, Australia, New-Zealand as members), the Protestant Purgatory, where higher education is increasing, health is excellent but fertility has collapsed (Austria and Japan as flagships, Germany, Switzerland, South Korea as members) and the Catholic hell, where higher education has stalled and fertility has collapsed (Italy and Spain as flagships). Somewhere ambiguous with respect to these categories are France (torn between the Catholic Hell and the Protestant Utopia depending on the metric, and the region) or Canada and Scotland (halfway between Protestant Utopia and Protestant Purgatory). The exact response (in the physical sense) of a society to the change in educational structure depends highly on the group this society belongs to (society, not nation, because there are of course important regional variations, with for example Bretagne/Pays-de-Loire well in the middle of the Protestant Utopia whereas Corsica has descended in Catholic Hell long ago).

So yes, if we want to be serious, all of this should be discussed.

In very rough first approximation, the institutional and social framework devised for all these societies at the time of the universalization of secondary higher education (with the accompanying unifying effect) is under considerable stress under the new makeup (with the accompanying dissociating effect), and in many respect the very rich, very highly educated, very dynamic top 5% participate in the same movement as the ultra-rich, while the below 50% of +3 not completed or below in less dynamic areas are being left behind to vote M5S and take opioids.


SamChevre 06.04.18 at 1:20 pm

I am inclined to agree with Peter T and Z: I think the interests of the 19% are more aligned, at this juncture, with the 1% than the 80%.

Three reasons I think that:
1) The recent US tax reform, which sharply raised taxes on the top 10% and slightly raised taxes on the 80th-90th percentiles. The reaction from the media and from the Democrats, which I would take as representing the top 20% in this case (since the impacts to the lower-income portions of the Democratic coalition is minimal), to those individual income tax increases was overwhelmingly hostile.
2) The industry breakdown. It’s not that my interests (as a finance professional) are that aligned with those of my CEO. It’s that a key structural change that’s needed to get back to a historical income distribution is to reduce the importance of finance (and education) in the economy, and that will hurt everyone in the industry, not just the people at the top. (It’s like the skilled labor and factory owner situation: there are possible reforms that shift income between the two, but having the factory shut down is bad for both of them.)
3) Family structure: very roughly, the top 20% is the group where assuming children have two-parent homes, and it’s the same two parents it has been all along, is very likely to be right. (Moving that line up from a top 80% to a top 20% characteristic is the most significant social change of the past 50 years.)


M Caswell 06.04.18 at 1:24 pm

“an academic at a second-tier university and so on, still well inside the top quintile”

I wish!


bob mcmanus 06.04.18 at 2:12 pm

Reading E P Thompson, useful for transitional periods

The 99% are always making tradeoffs, they give something to capitalism and get something back. Class Consciousness is born when the contradiction between interests and ameliorations becomes unbearable, and undeniably attributable to capitalism and capitalists. CC starts with alienation, pointing at the bad guys, and noticing other people pointing, and then forming a collective. Ain’t no classes don’t name themselves.

Post-Foucault, post-feminism, I see a lot more power and agency, dispersed much more widely, than many analyses. It is not only the directors, producers, and actors that capital must negotiate ideological representations with, but I think the gaffers, set decorators, and carpenters have limits that must be negotiated with each layer above and below them to maintain efficient production in late capitalism. And same in every industry. Not much power, lose most battles, but still feel like they have influence.

Recognition, representation. It is about who feels they have influence, who feels listened to, who feels represented, who thinks they are somewhat free. These maintain capitalism, the ones who have more to lose than their chains.

The foregrounding of complicity is necessary to create the consciousness of agency and power while also naming an enemy for the sake of solidarity.


Taj 06.04.18 at 2:25 pm

JQ @2, according to this 2017 survey, around 17% of Ivy League students are from the top 1% of families. 68% are from the top 20%.

Disproportionate of course, but “the Ivy League along with Stanford, Chicago and the elite liberal arts colleges educate […] pretty much the children of the 1 per cent” seems like a clear overstatement.


Giles 06.04.18 at 4:01 pm

The top quintile as a whole has done very well over the past few decades, and (despite some silly claims to the contrary), high-income earners have mostly voted Republican, in line with their economic interests.
It’s true that higher educational attainment, not income, correlated more strongly with voting for HRC in 2016. But the split among higher earning households was nearly even between Clinton and Trump. Compare that with, say, 1980, when Reagan got 2/3 of the vote of incomes over $50,000. Frank traces the moment to no later than the McGovern Commission in 1972 that the Democratic Party aimed to be the party of white collar meritocrats. Safe to say it’s mission accomplished.

First, a closer look at income growth figures suggests that, while the 19 per cent have enjoyed rising incomes, they’ve only barely maintained their share of national income. The redistribution of the past three decades has gone from the bottom 80 per cent to the top 1 per cent.,
Yes, redistribution has gone from the least wealthy to the very wealthiest (whether you use 1% or .1% to define “very wealthiest”). But, by merely maintaining their share, the top 10-20% has also pulled away from the bottom 80-90%. See Figure 1 at the Atlantic piece. The “falling behind” phenomenon is not theoretical to the bottom 80%.


Ebenezer Scrooge 06.05.18 at 12:02 am

Paul Krugman likes to locate his villains in the top 0.01%, or maybe the top 0.1%. Most of the top percentile merely consists of the well-paid brain-dogs of the plutocracy.


faustusnotes 06.05.18 at 1:45 am

Regarding the education issue, I don’t think it’s only because education hasn’t continued to improve over time. I think also technological change and the globalization of modern times means that the baby boomer generation (as a shorthand for “older people”) are uniquely under-educated for the challenges that we face. These people broadly speaking graduated from high school into good jobs in well-protected industries, when the only global problem they had to deal with was nuclear disarmament and when heirarchies were well-regulated. Since then environmental and health issues have moved to the forefront of the problems we have to solve, along with the issues of global trade, and these require pretty advanced education. I think it may be the case that the baby boomers are the first generation in the democratic era whose education leaves them unable to understand the problems they have to vote on, because the world has changed so much since they left school. Their inability to cope with these problems I think also leads them to be desperately insecure about other issues (commonly perhaps summarized as “identity” issues like migration and race relations). This might also explain why the education divide in voting is important now. This is probably even more significant in Trump and Clinton and Sanders’ generation, when many people could leave school with just a middle-school education and get a job for life (as my father did), only to be automated out of it in the 1980s and 1990s by a technology that they could not have dreamed of when they were in their apprenticeships.


Howard 06.05.18 at 2:06 am

I’m getting close to retirement age, and I realize that the (by my standards relatively modest) inheritance (about $500K) from my parents is allowing me to retire “early” by as much as 5-10 years.

And I look to my children (in their 30s) and I realize that they could probably expect to inherit 2-4 times that amount. What that means (regardless of where they are in the 2018 income distribution) is that they are essentially “rich”. One of my children works at a fulfilling (but not “high paying”) job in a private high school; the second has moved to South America where he lives (simply but without anxiety) on about $3000 per year as a teacher of Americans/Europeans studying abroad.

My children have “luxurious” lives in the sense that they pursue their heart’s desires. I see their high school/college friends (from more or less the same socio-economic group) in this way: some have Wall Street jobs that put them in the top 1%; others have much lower paying jobs; but none of these young people is living “hand-to-mouth” and making life/career decisions based on the need to pay bills or save for retirement.

I think this is what my parents (who worked hard and saved hard and spent parsimoniously throughout their lives) wanted for their children and grandchildren. I think it is in the back of my mind when I consider when I can “afford” to retire. But I don’t (and my parents didn’t) really want their offspring to be the idle rich.

So (I know I’ve gone on too long) my point is: It’s not just the top 20% or 1%, or whatever, as a snapshot of income distribution this year. Rather it’s the fact that there is a class structure emerging (one that did not exist in the largely rural economy of the 1800’s and early 1900’s US) in which the children of the (say) top 20% have a life that is qualitatively different from the children of the (say) bottom 53%. That qualitative difference is not measured by comparing the incomes of individuals, or even the wealth of individuals, but also needs to include their expected inheritance.


John Quiggin 06.05.18 at 2:40 am

@9 I’ve been pushing the need for universal post-school education in Australia for some time. There are some big institutional obstacles, such as a sharp division between vocational and “higher” education, but progress is being made, I think.

I’m not clear on the terms +3 and +5. Could you spell that out.


Z 06.05.18 at 8:34 am

Howard @17 It’s not just the top 20% or 1%, or whatever, as a snapshot of income distribution this year. Rather it’s the fact that there is a class structure emerging […] in which the children of the (say) top 20% have a life that is qualitatively different from the children of the (say) bottom 53%. That qualitative difference is not measured by comparing the incomes of individuals, or even the wealth of individuals, but also needs to include their expected inheritance.

Yes! Precisely (and of course, I will hammer in the point that the expected inheritance is not solely or even primarily material wealth; a child’s expected educational achievements are as much a part of it).

John Quiggin @18 I’ve been pushing the need for universal post-school education in Australia for some time.

I’m skeptical. Not of course of the fact that it would be desirable, but of the fact that it is achievable within a time-frame short enough to mitigate the deleterious effects of the emerging class structure Howard described above or the dissociating effects I alluded to. First of all, I suspect that educational achievements are heavily influenced by factors outside of political deliberations, so I don’t think a country can will itself into a significantly more educated one in a short period. So OK, maybe in your own Australia, Japan or Sweden, you might be able to go this way (and sure, I support it), but I doubt it can be done in other countries before the upper class wrecks it (its incentives and capabilities to block educational progress of the children of those below in order to ensure that their own children will end up on top are just too high). Or put in a slightly different form, despite the lofty talks of new economy, human potential, innovation and intelligence, the political reality in many countries (the US, France, Italy, the UK… but indeed maybe not Australia) is not the one you suggest, it is the programmed and engineered deterioration of the educative capability of the general population. (Of course, I’m logically consistent: I no more believe that the politically planned deterioration of education can significantly hinder educative progress than the politically planned improvement can significantly enhance it. The significance of that political fact – of the abysmal failure of colleges in the US, for instance, with nothing done to remedy the problem – is not so much the results. Its significance is that it shows how the upper class behaves politically when faced with a problem that doesn’t really concern it, and the answer is often “make it worse” and “let it rot” at best).

It seems much more feasible to me on the short term and actually within the hands of a suitable political coalition to ensure decent minimal standards of living for anyone, independently of educational level, market desirability or the general economic dynamism of where you live. Specifically, instead of mass redistribution of education of the form you suggest, mass redistribution of wealth and jobs from the very rich and highly educated to everyone else (as Jerry Vinokurov wrote once “If your proposed politics don’t include putting a firm floor for how low one can fall, then you should logically expect anyone with means to do everything they can to avoid falling, because the fall is potentially bottomless. And that’s exactly what happens.”). Now, I know well that you John support the combination of a UBI and a Job guarantee, so you are of course very familiar with such political proposals.

I’m not clear on the terms +3 and +5. Could you spell that out.

Sorry about that. I meant three (or five) years of higher education after the completion of secondary education (and by +n completed, I mean that these n additional years have led to the successful completion of a given program). Something like a bachelor and master respectively, in many countries. Empirically, it seems that the statistically most significant social and political wedge in many current societies is between those at the level of +3 completed or above and all the rest (with a subsidiary separation between those at the level of +5 completed or above and the rest).


Faustusnotes 06.05.18 at 9:21 am

Z, while I agree that society should be finding ways to guarantee everyone can live on their income regardless if educational level, that doesn’t solve the problem of people being too ignorant to function in the modern world, for which we need guaranteed post school education. But more than that we need to reach those who entered the workforce in a less educated time. There is a big role for lifelong education here. I think the government should see it as an opportunity when people are automated out of a job:”thanks for your contribution, now you’re free! Here’s a voucher to help you pick up all the schooling you couldn’t get back in your youth! Spend the next 10 years catching up on high school and higher education!”

“Upward mobility” through education is a Ponzi scheme. We need education to be about helping people be ready for full civic engagement. Separately, society should be organised to ensure everyone can lead a fulfilling life regardless of their work. As we head towards a post scarcity economy this shouldn’t be impossible. But we’ll never get there if the bulk of our older population are so ignorant that they keep voting for the destruction of everything they built.


mpowell 06.06.18 at 3:57 pm

The idea that the interests of the top 20% are coupled to the top 1% or top 0.1% in the private economy is ludicrous to me, especially based on my experience working in proximity to the knee of this income curve. Programmers, lawyers and surgeons make more in the US than in France, but so do nurses and teachers. The US is simply a wealthier society. The only story that makes sense here is that the super-managers in the US are delivering so much extra value that everyone else is also benefiting. I don’t think that’s the story anyone around here is aiming to push.

If the political interests of the top 20% are aligning with the top 1%, it is because, first, we have lost imagination on how to tax the wealthiest members of our society at more aggressive tax rates. Income tax progression tops out around 300-500K in income. There is a donut hole in AMT such that depending on deductions, income from 200-800K can be taxed at a 35% marginal rate while above this level it is taxed at a 28% rate. And that doesn’t even get to the point that the biggest earners take a lot of their income as capital gains which is not even subject to the regular income tax scale.

The second problem is that even if you taxed the 1% more aggressively, there is still not that much revenue to raise here and if you want to budget for more social spending it will be necessary to tax the top 20% (and perhaps even further down the distribution) more broadly. This will tend to align the political interest of the top 20% and the top 1% on public spending. But given the intrinsic political clout of the top 20%, I would really not recommend as a political strategy binding these two groups together more than they already are.


Dr. Hilarius 06.06.18 at 4:53 pm

I don’t know the income ranges in the top 1% and the next 19% but suspect there to be a vast difference between those at the lower end of the first quintile and the top 1%. What the top 1% have that the lower end 20% lack is security. I know many two-income professional families whose combined income certainly puts them in the top 20%.

Despite this, in the USA, the security net is so frayed that these families are well aware they are one accident or illness away from losing everything. A mid-career attorney I know suffered a stroke. Unable to work (he did not have private disability insurance) and faced with huge medical costs he had to sell his home and spend down his assets to get care. Soon his kids were doing a GoFundMe campaign to get him into a better nursing home.

Some of the striving for more income isn’t driven by wanting to buy a more luxurious car or a bigger home, it’s wanting to have more security against financial disaster and falling into poverty. Living in a deep blue region my sample is biased but I don’t encounter many well-off-but-not-filthy-rich identifying with the 1%.

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