Chart of the Day

Via Ezra:

Thumbnail image for inequalitygraph.jpg
Ezra goes on to speculate about how this may be related to financial crises.  Given that the Washington Wizards are nominally my NBA team (I grew up going to quite a few games back when they were the Bullets), I love his analogy:

If you bet every year that the Wizards wouldn’t win the championship, you’d pretty much always make money. If everyone bet that way every year, everyone would pretty much always make money. If everyone borrowed lots of money so they could make bigger bets on the Wizards losing every year, they’d make even more money. But if the Wizards then won, everyone would then go bust, and they’d go bust all at the same time, losing lots of borrowed money, and wreaking untold havoc on the economy.

Well, not “untold.” That’s pretty much what happened in 2007. In this story, one of the things to watch for when we see very high levels of inequality is whether that money is coming from the financial sector. If it is, it probably means there are a lot of people on the same side of a bet. And if there are a lot of people on the same side of a bet, the prospects for a major financial crash are pretty good. Maybe not this year, or the next year. But eventually, even the Wizards win.

I’ll simply mention that I have a hard time seeing how the trend-line in this chart is anything but a bad thing for our nation.  We really need this to change.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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