Tokyo
The American press is heavily covering
the story about diverging incomes in the U.S.. Some of my friends are
talking about the same thing here.
So I'll explain. The U.S. is in the longest strongest sustained period of economic growth in its history. Longest, strongest ever. All incomes are going up, on net, some faster than others.
Every eighteen months Americans (and illegal aliens) are adding more total wealth to their pockets than the total wealth all the Chinese in China earn in a year. We add an amount equal to their total income.
So where does that gigantic increase in national wealth go?
First it becomes income for individuals
and corporations, then it goes into investments. For the past four
years it has not gone into the U.S. stock market. Most of the
individual income has gone into housing ... trillions of dollars
including home improvement. Most of corporate wealth is converging
in bigger U.S. companies and investments overseas. America is a
golden goose laying eggs faster than we can pick them up.
Income distribution is changing slightly, more of the new wealth is going to the top of the income stream. Let me state a fact: neither you, I, nor any economist or scholar has any viable idea on how new national income gets distributed. Nobody really knows how or why. Incomes diverge in periods of rapid national growth and converge during static periods. Nobody has an even modest explanation, much less an explanation based on data. Income distribution is measured by the Gini index.
I wrote a blog last year and mentioned
the Gini index. Gini is a measurement of income distribution; nearly equal distribution is a low number, highly unequal distribution is a high number.
On a global chart of Gini indexes: “the top of the chart would have Japan and the industrial nations, with the U.S. at the bottom of the major industrial nations and the list would continue on down with the former communist nations all the way at the bottom joined with Latin American countries, the third world and at the very bottom, the underdeveloped nations. Income inequality is worse as economic development lags.”
Japan, with the most even distribution of income on the planet, is experiencing the same Gini changes that we in the U.S. are experiencing.
The U.S. has the lowest Gini of a major industrial nation but is the driving economic force on the planet. Those are facts. All else is speculation and moralizing.