CBO’s newest estimates confirm the long-term trend toward greater inequality, driven mainly by turbo-charged gains in market income at the very top of the distribution. The market incomes of the top 1% are extraordinarily cyclical, however. They soar in economic expansions and plunge in recessions. Income changes since 2007 fit this pattern. What many observers miss, however, is the success of the nation’s tax and transfer systems in protecting low- and middle-income Americans against the full effects of a depressed economy. As a result of these programs, the spendable incomes of poor and middle class families have been better insulated against recession-driven losses than the incomes of Americans in the top 1%. As the CBO statistics demonstrate, incomes in the middle and at the bottom of the distribution have fared better since 2000 than incomes at the very top.
Pointer from Greg Mankiw. Burtless says that the recession caused redistribution toward the bottom. Casey Mulligan says that redistribution toward the bottom did a lot to deepen the recession.
Increasingly, in reading these types of studies and reports, one may be possible by the very broad and almost “overuse” of
“RE” – distribution.
Much of what we are observing in terms of various “policies” are re-directions of distributions at the point of their origins, not after some original distribution has occurred. We are also observing divergence in access (deviations from open access) to the means of attaining distributions, both in consumption and by production.
Even in the case of taxation of incomes, a significant portion of what is taken from some is not in turn given to others. It is instead consumed or applied in programs of social engineering, environmentalism, cultural objectives, etc., with no direct (and usually very little in direct) “distribution” of benefits, let alone the income, to others.
“Redistribution” is an overused and often misapplied term.
That should have been. “One may be puzzled by…”