| | | No IMF, market income is not ‘captured,’ it’s earned
Mark J. Perry | March 16, 2014, 11:01 pm
In a January 2014 International Monetary Fund (IMF) Policy Paper on “ Fiscal Policy and Income Inequality” the IMF staff make the following statement:
Over the last three decades the market income shares of the richest one-percent of the population have increased substantially in English-speaking advanced economies, as well as in China and India. For example, in the United States, the share of market income captured by the richest 10 percent surged from around 30 percent in 1980 to 48 percent by 2012, while the share of the richest one-percent increased from 8 percent to 19 percent. Even more striking is the fourfold increase in the income share of the richest 0.1 percent, from 2.6 percent to 10.4 percent.
Note the IMF’s use of the word “captured” when describing the share of market income that more accurately was “earned” or “produced” by the richest 10 percent of Americans. After all, the dictionary definition of capture is “to take into one’s possession or control by force,” which doesn’t accurately describe how the ever-changing top X percent of Americans ended up earning a given share of income in a given year. It should also be pointed out that the top 10% of “income pirates” who captured 30% of market income in 1980 were a completely different group than the “income pirates” who captured 48% of market income in 2012. And in fact it’s likely, given significant income mobility in America, that some of the bottom 90% of Americans, and maybe even some of the bottom 10%, whose income in 1980 had been “captured” by the top 10% had actually moved up and became part of the richest 10% of “income pirates” in 2012...
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