RortyBomb posts a lot of good stuff.
Suzy Khimm goes through the numbers here. I’m curious about occupations. I’ll hand the mic off to “Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data“ by Bakija, Cole, and Heim. This is the latest and greatest report on occupations and inequality. Here’s a chart of the occupations of the top 1%:
It boils down to managers, executives, and people who work in finance. From the paper: “[o]ur findings suggest that the incomes of executives, managers, supervisors, and financial professionals can account for 60 percent of the increase in the share of national income going to the top percentile of the income distribution between 1979 and 2005.”
I am highly amused that even doing well working at Microsoft doesn't get me into these rarified reaches. And that "deceased" is the same as "not working."
Elizabeth Warren's fantastic writing on how dual-income families barely scrape by now, with far less "frivolous spending" than in the 1970s:
Because it never gets old, Doug Henwood's fantastic insider book about the nuts-and-bolts of how Wall Street functions.Why does the over-consumption myth persist? Why does a story of misbehavior and irresponsibility win out over a story of hard-working people who get caught up in job losses, medical debts, and family breakups? Why is there no acknowledgement that financial misfortune is often a matter of bad luck, and that the long lines at the bankruptcy courts and the high rates of credit-card default have little to do with irresponsible spending?
One explanation is political. High-interest credit-card issuers and sub-prime-mortgage lenders operate only because a careful combination of deregulation and protective regulation permits creditors to charge fees and interest rates that would have landed them in jail less than 25 years ago. If millions of Americans believed that families were losing their homes because of deceptive marketing and oppressive contract terms, there would be a public outcry to change the regulations that favor banks over consumers. But as long as Americans believe that the only people in financial trouble are the spendthrifts, there is no reason to restrict the lenders. Everyone is getting just what he deserves.
Yes, that's right - Wall Street does not raise significant amounts of capital for businesses. It's almost entirely about the very-esoteric, third-removed process of giving a very small number of businesspeople a way to cash out when their businesses get really big, combined with retained-earnings-investment-by-proxy for everyone else.A highly romanticized corner of finance is the venture capital industry, which supplies funds to small, new firms, prominently though not exclusively in high-tech. Typically, money is pooled by institutions and rich individuals into partnerships under the management of a small expert team. The failure rate is high, but the successes can make it all worthwhile; everyone wants to hit the next Compaq. Rates of return run between 0% in bad years (like 1984 and 1990) to 60% in good ones (like 1980 and 1995), averaging around 20% since 1980 (Venture Economics data, reported in Mehta 1996). Many initial public offerings (IPOs) are designed to cash out the original investors; though some venture capitalists keep their money and even a management presence at companies once they go public, the idea is not to nurture a large portfolio of mature operating companies, but to provide finance and guidance at the embryonic stage. As important as that sounds, the venture capital industry is surprisingly small. In 1995, venture pools totaled $34 billion, down a bit from 1990’s $36 billion, and dwarfed by the stock market’s $8.4 trillion capitalization. Inflows of $4.4 billion exceeded new commitments of $3.9 billion — well under 1% of that year’s nonresidential investment — suggesting that the venture industry isn’t going wanting for funds (Venture Capital Journal, various issues). This looks like further proof that the outside financing of real investment, Wall Street’s advertised social role, is actually a rather tiny part of what the racket is all about.
Did you wonder how the exact stock prices they report get made? It's literally a tiny number of guys acting as the bartering intermediaries on the floor. It's truly dumbfounding.
Wall Street is probably the single biggest impact book I have on my shelf.In official mythology, the credit markets exist to collect the savings of households in order to lend to businesses that need other people’s money in order to make productive investments that allow them, and the whole economy, to grow. In some deep sense, this may be true; debts are claims on future growth in incomes, and under capitalism, the principal engine of growth is investment by nonfinancial corporations. But while such deep truths are not irrelevant, reality is a lot messier. Nonfinancial business accounted for just 22% of outstanding credit market debt in 1997, well under the 26% share owed by households, and just a bit above the 19% share owed by the U.S. government. These debts are not claims on future profits, but on future wages and taxes. Unlike business debts, there are no real income-producing capital assets offsetting these obligations.