Inequality’s pernicious twin is our growing cultural divide

By Don Peck – I enjoyed reading Reuters’ textured survey of the nature of inequality in America, and how government shapes it, shrinking the gaps between us through some of its actions and widening them through others. One comes away from the series with an appreciation for the complex blend of factors — federal policy, technology, unevenness of educational opportunity, the evolution of the market — that has helped propel some of us to where we are today, while failing to lift others. more> http://tinyurl.com/cvcfvge

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The biggest driver of income inequality: capital gains

By Suzy Khimm – A new report (pdf) from the Congressional Research Service — the nonpartisan public policy branch of Congress — takes a closer look at the drivers of income inequality between 1996 and 2006, the last period of moderate economic growth before the latest boom-bust cycle.

Changes in income from capital gains and dividends were the single largest contributor to rising income inequality between 1996 and 2006. Changes in tax policy also made a significant contribution to the increase in income inequality. more> http://is.gd/j2YuPz

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2011: The Year that Income Inequality Captured the Public’s Attention

By Isabel V. Sawhill – The year 2011 will be remembered as the year when the idea of income inequality migrated from seminar rooms in colleges and think tanks to Zuccotti Park and main streets across America. According to a CBS/New York Times poll, at the end of 2011, two thirds of Americans agreed the nation had too much inequality. The Congressional Budget Office reported that after-tax income for the top 1 percent had tripled since 1979 while that of the bottom 80 percent had declined.

As we head into an election year in 2012, the debate is likely to intensify. Democrats will argue that higher taxes on the wealthy are needed to put deficits on a more sustainable path over the longer term. Polls show that the public does not like higher taxes but makes an exception in the case of the wealthy, lending substantial support to the Democratic view. The Occupy Wall Street movement deserves credit for putting the “one percent vs. the ninety-nine percent” on the national agenda. more> http://is.gd/tnfW4T

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Income Gap Dooms Supercommittee

BOOK REVIEW
The Big Sort, Authors: Bill Bishop and Robert Cushing.
Polarized America: The Dance of Ideology and Unequal Riches, Authors: Nolan McCarty, Keith Poole and Howard Rosenthal.

By Peter Orszag – A new study provides a hint about one possible force behind this political segregation: Americans are increasingly choosing to live near people in their own income bracket. According to research by Sean Reardon and Kendra Bischoff of Stanford University, in 1970, almost two-thirds of American families lived in middle-income neighborhoods. By 2007, only 44 percent did. The share of those living in a poor neighborhood, in the same period, more than doubled, from 8 percent to 17 percent. So did the share living in an affluent neighborhood — from 7 percent to 14 percent.

As Reardon and Bischoff conclude, “The increasing isolation of the affluent from low- and moderate-income families means that a significant proportion of society’s resources are concentrated in a smaller and smaller proportion of neighborhoods.” A separate study, by Tara Watson of Williams College, concluded that trends in income inequality can fully explain recent increases in economic segregation. more> http://is.gd/y9eOuS

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