politics of envy?

Paul Krugman quotes Lane Kenworthy's analysis of U.S. income growth since World War II here. The chart shows GDP per capita growing quite steadily, almost quadrupling in sixty years. Median household income matches that curve closely from 1945 to about 1980, at which point it slows down dramatically, becoming completely flat from 2000 to the present. In other words, between 1945 and 1980, a rising tide really did "float all boats"; since 1980, GDP has continued to grow at the same pace as before, but the median American household has seen almost none of that growth.

Another Krugman column presents another interesting graph: a plot of income inequality (as measured by the Gini coefficient) against intergenerational social mobility (as measured by a correlation between your father's income and yours). Each point represents a 1985 snapshot of a different country. There's a fairly clear trend: the higher the Gini coefficient, the less social mobility you have (i.e. your father's income is a pretty good predictor of yours). Great Britain is above the line -- it has less social mobility than one would expect from its income inequality -- and Japan is below the line, with more social mobility than one would expect. The U.S. in 1985 was near the top of both scales (income inequality and social immobility), and the U.S.'s income inequality today is substantially higher than in 1985, suggesting even less social mobility.

Although this post points out some problems with the Gini coefficient as a measure of income inequality.