The McKinsey study Poorer than Their Parents? offers a new perspective on income inequality over the period 2005-2014.
Based on market income from wages and capital, the study shows 81% of US citizens are worse off now than a decade ago. In France the figure is 63%, Italy 97%, and Sweden 20%.
The numbers for the US and France differ radically once transfer mechanisms like food stamps and Obamacare subsidies are taken into consideration.
Extent of Flat or Falling Incomes
The first set of numbers is easily believable. But the second?
Who believes 98% of the US is better off after transfer payments are taken into consideration?
The study also shows that 90% of French are better off than in 2005 taking into account government giveaways.
I do not believe those numbers. We would not see so mach anger in France, the UK and the US if those numbers were true.
The numbers in Italy, however, are easily believable. The study has some points that I do agree with.
Points of Agreement
Points 2, 3, and 5 explain Brexit and the rise of Donald Trump in the US, Marine le Pen in France, and Beppe Grillo in Italy.
As is typically the case, the article failed to discuss why?
The answer is the monetary policies of central banks benefit the wealthy and those with first access to money at the expense of everyone else.