Anthony Atkinson, an economist at Oxford University, has studied how several recent financial crises affected income distribution—and found that in their wake, the rich have usually strengthened their economic position. Atkinson examined the financial crises that swept Asia in the 1990s as well as those that afflicted several Nordic countries in the same decade. In most cases, he says, the middle class suffered depressed income for a long time after the crisis, while the top 1 percent were able to protect themselves—using their cash reserves to buy up assets very cheaply once the market crashed, and emerging from crisis with a significantly higher share of assets and income than they’d had before. “I think we’ve seen the same thing, to some extent, in the United States” since the 2008 crash, he told me. “Mr. Buffet has been investing.”
“The rich seem to be on the road to recovery,” says Emmanuel Saez, an economist at Berkeley, while those in the middle, especially those who’ve lost their jobs, “might be permanently hit.” Coming out of the deep recession of the early 1980s, Saez notes, “you saw an increase in inequality … as the rich bounced back, and unionized labor never again found jobs that paid as well as the ones they’d had. And now I fear we’re going to see the same phenomenon, but more dramatic.” Middle-paying jobs in the U.S., in which some workers have been overpaid relative to the cost of labor overseas or technological substitution, “are being wiped out. And what will be left is a hard and a pure market,” with the many paid less than before, and the few paid even better—a plutonomy strengthened in the crucible of the post-crash years.
(Source: The Atlantic)