Study Suggests Recession, Recovery Have Not Left the Rich Richer

February 17, 2015
Steve Rose discussed findings from his ITIF report on the true impact of the Great Recession on the top 1 percent with NPR’s Jim Zarroli.

Measuring Inequality Trends During the Great Recession

February 17, 2015
| Blogs & Op-eds

In 2013 Emanuel Saez claimed that 95 percent of growth during the recovery from the Great Recession went to the top 1 percent. In reality though, the richest 1 percent of households saw their after-tax incomes decline by 27 percent from 2007 to 2011, the bottom 95 percent saw losses of only 1 or 2 percent. Therefore, contrary to the claims of some advocates, we should not abandon prow growth and innovation policies in favor of straight redistribution. By balancing innovation-centric policies with necessary reforms to strengthen the social safety net we can promote growth and provide support to the largest number of citizens.

Rise of the (Foreign) Machines

February 10, 2015
| Blogs & Op-eds

The United States does not lose jobs because there is not enough work to be done but rather because U.S. industry is not competitive with foreign producers. More robots will help fix this.

Here’s What the Tech Industry Says Were the 10 Dumbest Things that Happened in 2014

Venture Beat
Technological innovation is the wellspring of human progress. Despite this, a growing array of interests – some economic, some ideological – now stand resolutely in opposition to innovation.

How Companies Deal With Fear of Change

Christian Science Monitor
While many people believe they support progress, when it comes right down to it, many individuals are ambiguous, if not downright negative.

Our Automatic Assumptions about Automation

January 21, 2015
| Blogs & Op-eds

On the Daily Show last week, Senator Rubio argued that a higher minimum wage could cause employers to automate low-paying jobs out of existence. This is exactly what should happen.

Do the Benefits of Productivity Growth Only Go to the Rich?

December 16, 2014 - 9:00am - 10:30am
Information Technology and Innovation Foundation
1101 K Street, NW
610 A

Numerous books and research studies, most notably Thomas Piketty’s Capital in the Twenty-First Century, have argued that almost all the gains from increased U.S. Read more »

Was JFK Wrong? Does Rising Productivity No Longer Lead to Substantial Middle Class Income Gains?

December 16, 2014
| Reports

The runaway success of Thomas Piketty’s Capital in the Twenty-First Century has increased the discussion of growing income inequality and what, if anything, should be done to reduce it. In addition to the book, Piketty has worked with Emanuel Saez in producing a series of computations on changing American incomes. Their claims are stark and widely cited to the point where they have become the received wisdom: between 1979 and 2007 (the last year before the onset of the Great Recession), over 91 percent of income gains due to productivity growth since 1979 has been captured by the wealthiest 10 percent of the population. This left just 9 percent of the economy’s expanded output for the bottom 90 percent of the population who only managed a meager real income growth of 5 percent while GDP per person for all Americans, including the top 10 percent, was rising 74 percent.

Why does this matter? Because if it’s actually true that productivity no longer benefits most workers, then why should elected officials do the hard work of advancing pro-productivity policies like corporate tax reform, investment in science and technology, and the development of sector-based productivity strategies. Better to concentrate their efforts on policies to redistribute gains to the bottom 90 percent.

Piketty and Saez and other advocates of the message that productivity no longer benefits average American workers are wrong. Lower and middle class workers have gained and are likely to continue to gain going forward from increases in productivity.

If progressives want to help raise the incomes of average American workers, a robust economic growth strategy with a strong focus on the key drivers of productivity growth – technological innovation and digital transformation of the economy – will be critical. This does not mean that other strategies to ensure more equal distribution of that productivity (e.g. higher minimum wages, more progressive taxes, universal health care, and the like) are not needed to more closely match median and average income growth. But the lesson from this analysis is that progressives ignore productivity growth at their own peril, and more importantly, at the peril of average working Americans.

Thomas Piketty is Wrong: The Benefits of Productivity Growth Don’t Only Go to the Rich

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