A fascinating new study from Brookings Institute –
Income growth and
decline under recent U.S. presidents and the new challenge to restore broad
economic prosperity by Robert J. Shapiro
One particularly interesting highlight from Shapiro’s
study:
“Globalization and
advanced technologies also can contribute to rising inequality by increasing
the returns to capital. The connection is simple and direct: The top 20 percent
of American households own 93 percent of all U.S. financial assets, and the top
one percent own more than 40 percent of those assets. Moreover, when an
extended period of slow growth accompanies historically high returns to
capital, the combination can hold down income gains for many people. Yet, we
cannot limit or reduce the returns to capital without also weakening the
economy’s efficiency and capacity to innovate. Nevertheless, when those returns
are abnormally high, as they have been for some time, we can claim some of
those outsized returns to finance the initiatives to promote stronger growth
and greater income progress.”