Sunday, October 23, 2011

PS to the Message (see below)

By Lewis Sage

Alexander Stille’s op-ed piece, “The Paradox of the New Elite,” in the Sunday Review section of the NYT (10.23.11), points – once again – to two salient points that explain exactly how frustratingly stacked the deck is.  In our increasingly stratified and calcified society, income and status buy access to income and status for a demographically diverse, but highly exclusive meritocracy.  We have heard, both here and elsewhere that the growth of American productivity has been captured by the top few percentiles of the income distribution and that the position of the median household has been eroding over the last couple of decades, so that the portion of gross income going to top 1% now approaches the 23% they controlled in 1929.  But Professor Stille’s second point is that upward socio-economic mobility – the carrot that used to make a winner-take-all society palatable to the not-yet-haves – has also been eroded.
For extensive background reading on the distribution of income and wealth in the US, Dr. G. William Domhoff’s page, Who Rules America? ( is an interesting starting place.  For those who may find UC Santa Cruz a little to the left of their own political persuasion, I’d suggest a quick stop at Kiplinger’s website to read Kevin McCormally’s “Where Do You Rank As a Taxpayer?” (October 13, 2011) (, where you can check out what it takes to make the top 1% according to the IRS.  At Kiplinger’s invitation, I entered a variety of hypothetical adjusted gross income (AGI) figures (none of them my own) and learned that an AGI of $66,200 puts one in the top 25%; $112,200 gets you to the top 10%; $154,650 is the cut-off for the top 5%; $343,930 is the threshold for the top 1%, with nearly 17% of the nation’s reported AGI.
Left or right, both sites end at the same place – and I quote Kiplinger – “For historical perspective, back in 1986, the top 1% of earners reported [only] 11% of all income and paid 26% of the income taxes; the lower-earning 50% made 17% of the income and paid 6% of the nation’s individual income tax bill.”  Today, the bottom 50% has 13% of the income and pays 2.25% of the income tax bill.  Makes you think.

Dr. Lewis C. Sage (AB Kenyon, PhD U. Maryland) likes intersections. Since 1991, he has taught Law and Economics, Mathematical Economics, and the Economics of Healthcare. A former Fulbright Fellow (Bulgaria 1995-6), he teaches an interdisciplinary Honors seminar, Enduring Questions, and is studying strategy in the NFL draft with faculty and students in Sport Management and Psychology. E-mail:

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This blog lives under the auspices of the Department of Economics whose mission has been to hold high the lantern beaming an "economic way of thinking" onto the world. Selfishness, rationality and equilibrium have been central to the teaching of an economic way of thinking rooted in the Renaissance. And, in this regard, the department has faithfully stayed the course. The intent of this blog, thinking out loud..., however, is to entertain exchanges which may challenge the centrality of economics as we teach it.