The major consistent findings are what in the colloquial is referred to as the “hollowing out” of the middle class as well as the tremendous increase in the income of the top 1%. The income of the latter relative to the 1st [poorest] quintile increased from a factor of 21 in 1979 to 51 in 2011. Growth of income and welfare in the U.S, (pdf) 1979-2011, John Komlos, Professor Emeritus, University of MunichIn a column, Professor Komlos shows that US census data shows that:
[T]he bottom 20 percent of U.S. households is underwater with an average net worth of -$32,000, that is, the debts of about 60 million people are greater than all their assets combined. If you combine the first and second quintiles of the wealth distribution, it’s apparent that 120 million people’s average net wealth is still below zero at minus $11,000. These facts about inequality can’t be whitewashed, 21 December 2015The essential lesson from all this is one that bears repetition: economic growth is not an end in itself. In our increasingly complex world we cannot rely on trickle-down economics to achieve our social goals. More explicit targeting of broad social and environmental outcomes is necessary. Social Policy Bonds are one way of setting such targets and ensuring that they are achieved efficiently.