econ final

Shut off from American wealth

half of Americans since 1970s

Monetary wealth

cash, value of home, retirement savings

nonmonetary wealth

health, education, low crime

wealth

accumulation of income not spent (real estate, retirement, etc)

quantile

every 20 percent

peu

primary economic unit-like a household

Pickettys main driver of inequality

r>g

wealthiest age groyp

65-74

What percent rural in 1870

75%

what percent rural now

14%

how has geographic location changed from 1870 to now

from mountains to mostly populated in CA

life expectancy change

45 to 78

Why is the US more inequal

tax structure

Racism

Social security net doesnt prevent poverty

Drug and prison increase poverty

best way to lessen global inequality

close the skills and technology gap

federal reserve system

central banks

Made by the federal reserve act of 1913

revenue act of 1913

introduced federal progressive taxation

16th amendment

how have taxes changed their proportion of gdp

10% in 1910, 30% after 1970

new deal policies that affect well being

social security and Medicaid

events and tech that affect iwd

financial crisis (Great Depression, recessions)

Ww1 and ww2

Tech

Role of property (Picketty)

what can increase tfp

improved management, processes or tech

broad changes that helped living standards

clean piped water

Vaccines

Leisure time

financial innovations that reduce risk

consumes credit (mortgages)

Insurance

new deal innovations that affect IWD

FDIC-bank failure protection

Rural electrification

the great leveler

violence

4 horsemen of leveling

mass mobilization warfare

Transformative mobilization

State failure

Lethal pandemic

top 3 ways people spend income tax

Housing, income tax, transportation

(Food is more important for middle and poorer budgets)

Irrepeatable inventions time frame

1870-1970

five connections

electricity, gas, telephone, water, and sewer

whats wrong with gdp

doesnt account for what’s personally important

Delay in price indexes

capital deepening

capital input to labor hours

isolation in rurality

difference in consumer credit in the north and south

north- credit culture, build honor

South- turned into debt and servitude

chattel lending

collateral is not object itself but legal title to object

department stores income by credit in 1920s

50-70%

first provider of installment loans

Us Government

Harrison act of 1800

25% home down payment and 4 installments

life insurance

raised household savings, domestic investment, fueled economic growth

homestead acts

railroad land

national labor relations (Wagner) act of 1935

8 hour work day

time and a half

new deal’s fair labor standards act

1900-70 high school graduation rate

6 to 80%

most rapid increase in four year education

1940-1950

GI bill

private wealth and inheritance from 1910-20

wealth fell by 2/3

Inheritance fell by 5/6

fall of capital income ration 1913-1950

low real estate and stock prices after war

Collapse of foreign portfolios

Very low savings rate characteristics of the time

Physical destruction of capital (buildings)

Low asset prices

achievements of Industrial Revolution 3

communications and information technology

what did the mainframe computer facilitate

credit cards, 1960s

What is a durable

product that lasts over a year

credit institutions and housing

rental turned to ownership

caloric intake

stayed consistent from 1800-2011

refrigeration

reduce perishable prices

Reduce seasonal price fluctuations

Increase item shelf life

Increase nutrition

the jungle

criticizes unsanitary/barbaric meat production

3 forces that push for higher wealth concentration

1. More income inequality

2. More saving rate inequality

   1. More rate of return inequality

savings for bottom 90%

3%

savings for bottom 9%

save 15%

savings for top 1%

save 20-25%

bottom 90% wealth distribution

70% income, 30% wealth

wealth share of bottom 90%

inverted u evolution

Low point 15% late 1920s (Great Depression)

Rising to 35% mid 1980s (rising home wealth and pension)

Drop to 23% in 2012 (increase in mortgage and debts)

Millionaire households

23 million

how many billionaires in the us

850

how many households have at least a million

18.4%

exemption on estate tax for inheritance

15 million

what percent of American wealth is inherited

60% picketty

who caused the debt

80% republicans

Gini coefficient

ranks wealth inequality 0-1

Kuznets inverted u curve

as economy develops inequality rises first then goes down

Stock of private wealth in US that is inherited wealth

35-60%

In picketty’s model when GDP rises faster than the return on capital investments, what happens?

Wealth tends to become more equally distributed over time

Savings rate of bottom 90%

10%

Savings rate of top 10%

20-30%

A major shift in consumption patterns over the past century

Greater share spent on food

Why is monetary wealth distribution a valuable indicator for economists because it measures

How monetary assets are distributed across the population

Approximately how many years has the current trend in increasing inequality of wealth in the US concentrated in the top 0.1 percent of the population has been going on?

45

Years when there was the greatest annual average productivity growth, which also translated into large wage gains

1920-1970

Approximate percentage of wealth currently held by top 1 percent of US

33%

2025 tax revenues

5,235 billion

Shares of federal spending by budget category

Mandatory (59%), discretionary (27%), net interest (14%)

Total defense spending (discretionary + non discretionary)

27%

Largest single spending category

Social security 22%

Different taxes people pay

Federal income tax

State income

Payroll

• social security

• Medicare

Capital gains

Sales

Estate/inheritance

Federal estate tax

18% to 40%, generally only applies to assets over 13.99 million in 2025

Historical highest marginal income tax rate

Above 90% world war 2, 92% 1945, Roosevelt

Major dips in marginal income tax rates

Revenue act of 1964, economic recovery tax act of 1981, tax reform act of 1986

Lowest tax cut

Reagan tax cut 1986, 28%

Current tax rate

37%

Effective rates of taxation

What people actually pay, always lower than simple tax rates

Who technically pays the most income tax

Top 15% (not 1%)

What does the BBB cost

4.5 tn in tax cut extensions, 150 bn defense, borders 129 bn

What does the BBB save

930 bn in Medicaid, 488 bn in green energy, food benefit 287 bn

Are taxes currently helpful to improving IWD

No, the currently are useful to funding beneficial programs for lower income people

Change in wealth distribution from 1989 to 2024

Top .1-1 percent grew in share, bottom 99% fell in share

How are taxes helpful for society in a non monetary way

Cleaner environment, access to better health and education

Why is ordinary income taxed more than capital gains taxes

Ordinary income faces multiple taxes (income, payroll, social security and Medicare) adds up to higher rate of taxation

How big is the difference between pre and post tax income distribution

very small

Options to use taxation more fully to achieve more equal IWD

Higher top marginal rates, wealth taxes, reducing tax evasion

Two main determinants of people’s priorities regarding the pursuit or non pursuit of wealth

Perceptions (affecting expectations for oneself)

Personal values (moral standards to which one ascribe)

What happens to health and social problems when income inequality is high

Worsen

How much more money do people think they need to be happy?

Two or three times more

What percent of people are living paycheck to paycheck

60%

Life expectancy and infant mortality

No change between 1779-1879, 215/1000 live births in 1880 (same for 300 yrs)

27/1000 by 1950

6/1000 by 2010

Clean water and sanitation

Pure food and drug act of 1906

Label harmful substances and ingredients

Transformation of hospitals

1870-1920

Repositories for the poor to clean places were medical care was provided