Trickle-up economics

18 Mar, 2014 at 16:09 | Posted in Economics, Politics & Society | 2 Comments


Inequality continues to grow all over the world — so don’t even for a second think that this is only an American problem!

In case you think — like e. g. Paul Krugman — that it’s different in my own country — Sweden — you should take a look at some new data from Statistics Sweden and this (Swedish) video.

The Gini coefficient is a measure of inequality (where a higher number signifies greater inequality) and for Sweden we have this for the disposable income distribution:
SwedenGini1980to2011            Source: Statistics Sweden and own calculations

What we see happen in the US and Sweden is deeply disturbing. The rising inequality is outrageous – not the least since it has to a large extent to do with income and wealth increasingly being concentrated in the hands of a very small and privileged elite.

Societies where we allow the inequality of incomes and wealth to increase without bounds, sooner or later implode. The cement that keeps us together erodes and in the end we are only left with people dipped in the ice cold water of egoism and greed. It’s high time to put an end to this the worst Juggernaut of our time!


  1. I would connect the general trend with individual . . . opportunities. Specifically, I am thinking of the point made by Ian Welsh today.
    When it is possible for elites to skim off enormous sums from their positions of political trust (and I would say that the CEOs of major private enterprise enjoy positions of political trust as much as public servants of non-profits and government agencies and institutions), they will do it, and the corrosive effect must accelerate.
    We may be in a vicious, self-reinforcing cycle, and, yet, somehow, we are not making the connections between the general trends and the specific instances of policy shading, each driving the other. We use relatively passion-less language, featuring morally-neutral, abstract terms like “inequality”. As elites grab more and more, their skimming must become parasitical on the whole — there is no other way to draw off that much income, than by extractive domination and dis-investment. The re-distribution to the top, which in 1970, might have plausibly released more dynamic private investment, now must be feeding on public disinvestment to continue. That scenario doesn’t end well. Changing course — or more likely coping with the aftermath of further, partial system collapse — will require a moral analysis that motivates something more hard-edged than the nudges of neoliberal technocracy.
    The upheavals in Egypt, Thailand, Ukraine, Venezuela, Syria, Spain, etc., are a warning that the architecture of the global system is increasingly fragile, as the structures are undermined by this continuing upward redistribution.
    The very abstract way in which mainstream policy economics conducts itself — the DSGE models of macro being the most extreme instance — contributes to this inability to connect the general to the specific. A DSGE model has no descriptive referents, and that’s by design. The discipline, which ought to open our eyes to the implications of the evolving economic system instead blinds us.

  2. First of all the link to SCB appears not to work. Secondly while I can agree trickle down economy isn’t working (looking at USA data of middle income people there is no actual trickle down) the video link is quite biased information. Amount of wealh is probably a very bad indicator of social inequalities and isn’t good at predicting the amount of school, health care and other consumption goods/services are available to people at the bottom. While stories from greece public health care sound disturbing in the above post there is nothing to actually say that people in Swedish society at the bottom have inadequate access to school and healthcare. I think there is also a lack of explanation in the above post in what way the personal income is influenced by personal choice, i.e the theory of the deserving rich.

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