Thursday, December 15, 2016

David F. Ruccio — Where does all the surplus go?

Where does all the surplus in the U.S. economy go?
Well, a large chunk of it is captured by the top 1 percent, whose share of national income almost doubled between 1970 and 2014—from 11 percent to 20.2 percent.
Equally interesting is the composition of that growing share of national income, which we can decompose thanks to new data from Thomas Piketty, Emmanuel Saez, and Gabriel Zucman....
Occasional Links & Commentary
Where does all the surplus go?
David F. Ruccio | Professor of Economics, University of Notre Dame

3 comments:

Matthew Franko said...

Savings is not surplus....

And the govt continuously raising the conforming loan limits doenst have anything to do with income...

Matthew Franko said...

Here:

https://www.fanniemae.com/content/fact_sheet/historical-loan-limits.pdf

so if somebody owned the same modest home for the last 36 years then they have an additional $317k or more "income" over that period...

Hasnt been raised since 2008 so you see this disparity flat-lining since 2008....

Magpie said...

@Matt

You wrote

Savings is not surplus....

And the govt continuously raising the conforming loan limits doenst have anything to do with income...


Ruccio did not mention the word "savings" once. Not once. Nor did he say anything about conforming loan limits.

What he did say is that the fraction of GDP going to the 1% is composed of several things: a return to capital (the different shades of green in the chart) and a return to their labour (the different shades of red): their managerial pay, which they establish for themselves in shareholders' meetings.

Decomposing GDP into wages and profits

Y = Wages + Profits

We know that Wages/Y has been falling. On top, and this is what Ruccio says, Wages/Y has to be further decomposed into a falling part going to the 99% and an increasing part, going to the 1%.