Wednesday, June 28, 2017

Twenty Percenters

David Brooks, the least crazy of the NYT conservative columnists, has been bashing the current GOP lately. His latest column accuses them of abandoning conservative principles. Not the critique I would make, but not without merit.

But I am not here to praise Brooks. His opening paragraph contains a familiar bit of right-wing BS.

There is a structural flaw in modern capitalism. Tremendous income gains are going to those in the top 20 percent, but prospects are diminishing for those in the middle and working classes. This gigantic trend widens inequality, exacerbates social segmentation, fuels distrust and led to Donald Trump.

This is the kind of technically true but profoundly misleading stuff that makes otherwise kindly liberals hate Brooks.

In fact, nearly all of the income gains have gone to a tiny fraction of the top 20%. It's pretty shocking just how sharp the income needle is. If we look at net worth, the results are even more dramatic. The minimum net worth for entry into the top 10% is well over twice that for the top 20%. Making the top 5% means having more than 4 times the wealth of an 80 percentiler, and for the top 1% you need 18 times as much. The truly wealthy in the top 0.1 % have 71 times as much.

The same trend appears throughout the net worth chart. The bottom decile has negative net worth, and the net assets at the 20th percentile are roughly equivalent to an old car and the clothes on your back. Jump to the 30th and that old car becomes a newish one. Going up a decile at any point usually involves at least a doubling of net worth.