IRS/CBO are not run by Piketty et. al.
Yes, but you want to understand what they did with the IRS data. Because they used averages to capitalize income streams and that really impacted the wealth numbers they come up with.
E.g., they capitalized the earnings of small businesses using very high multiples because they used a multiple for all businesses. So they said a business making, for example, $200K a year is worth roughly $1.4M. So a "7" multiple. I would say based on the bizcomps.com database that a business making $200K is probably worth more like $500K. So a "2.5" multiple. And that $900K difference matters.
Note: Saez and Zucman in a 2014 paper (I think it's 2014) estimate that to get into the top one percent, the threshold is about $4M. I'm fine to use that number. But exaggerating the value of small businesses (which is where a lot of the wealth of top ten percent and top one percent sits) by $900k makes the picture look different.
Another example where they did this? They used average interest rates to capitalize people's savings. E.g., if average interest rates are (say) 2%, they use that rate and the tax return interest income to determine what cash people hold. The problem with this "homogeneous return" assumption, which is what they call it, is it doesn't recognize that the top ten percent or top one percenter is investing in at least some junky stuff which pays a 4% rate and that the average person is just sitting on a modest amount of cash in a checking account. But look how this homogeneous return scrambles estimated values.
A top one percenter with $100K earning 4% (maybe the note from the person who bought his small business) earns $4,000 dollars in interest income. When that $4,000 is capitalized using a 2% average interest rate, Piketty, Saez and Zucman come up with $200,000 as the her or his cash holdings.
A middle income person with $5,000 in a combined checking and savings account paying .5% (half a percent), gets $25 a year in interest. But if you capitalize the $25 using a 2% interest rate, which is what Piketty, Saez and Zucman do, you get $1250 of cash.
So the real comparison is $5K versus $100K... but they've rejiggered the numbers so they come out $1250 versus $200,000.
I don't know if I said this before, but I don't think the anti-capitalists do this intentionally, I think they just let their confirmation bias get in the way of their math and error checking. Also, Saez and Zucman (and probably Piketty too) have been very complimentary of another economist, Zwick, who's gone more granular and used "heterogeneous returns" to get better estimates.
Note: Zwick lowers the threshold to the top one percent to about $3M based on better averages. I also think Zwick's multiples are still a little high... but now I'm getting into the weeds.
BTW, here are the actual IRS personal wealth stats summarized:
https://evergreensmallbusiness.com/irs-wealth-statistics-paint-fascinating-picture-top-one-percent/
An income distribution chart based on IRS data is in this link, that shows the rise in inequality without any scope of doubt:
https://www.cbo.gov/system/files/2018-11/54646-Distribution_of_Household_Income_2015_0.pdf
Look in the "trends" section.
Now, your challenge centers around the fact that using "lifetime" earnings even things out significantly. Would you agree that the "evened out" 1%-ers have it easier today than they had in 1960s?
I'm not sure I see your point... But as my blog post that I pointed to says, inequality shows up in the longitudinal wages data. At least for the US. Apparently it doesn't show up or show up the same way for the other countries where data is available. (This from last week's Economist, which talked about all the economists looking at wealth and income inequality: Piketty, Saez, Zucman, Zwick, Auten, Splinter, etc.)
But it's also arguable whether it's anywhere near as consequential as the anti-capitalists argue. Auten and Splinter say once you adjust for stuff one should adjust for, little growth in inequality shows up:
http://davidsplinter.com/AutenSplinter-Tax_Data_and_Inequality.pdf
(Note: I would not argue that the "bottom income" population has it worse! They don't, by any measures of consumption. But that is besides the point, inequality is the issue at question here)
So here I disagree with you. Which is maybe good to point out for a minute. If the economy can improve the lots of those who are most disadvantaged and beat up economically, I'm okay if for a time a billionaire has his or her yacht.
The other thing I see is the capitalist system, at least in the west, does a pretty good job of vaporizing the ultra-wealthy's balance sheet. Inheritance and income taxes, investment expenses and then high-living consumption pretty quickly grind down the wealth.
Here's a discussion of some of this research and a TLDR summary of a really fine research paper written by William Bernstein and a couple other fellows (politics spread across the spectrum):
https://evergreensmallbusiness.com/the-rich-get-poorer-the-myth-of-dynastic-wealth/Ummmm... You mean to say that advocating the same economic approach US followed before the Milton Friedman gang took over in the 1980's is "illogical"?
You remember the track record of 60's where the manufacturing boom was distributed quite effectively. A much-bigger-in-absolute-terms boom in digital economy has not, since 1980s!!
Any update in your logical/illogical distinction based on the above datum?
I didn't realize the Milton Friedman's gang took over. I also don't remember the 1960s as being a glorious manufacturing boom.
BTW, my geographical reality is Seattle based Boeing nearly crashed in the 60s... and the land of Microsoft and Amazon looks pretty good in the new millenium.
I am still curious on your argument challenging the notion that inequality has risen, something which I took to be as close to axiomatic as possible. Much more reading for me to do. Challenging assumptions is always good.
It's not really my argument. Peek at this:
https://www.economist.com/briefing/2019/11/28/economists-are-rethinking-the-numbers-on-inequalityAnd then see if you can get a full copy of the print magazine because there are several other balanced stories on the subject. (By balanced, I mean that the points of view of not just Piketty, Saez and Zucman are respectfully discussed and considered but also the points of view of Auten, Splinter, etc.)
BTW, this may just jack up your blood pressure, but I did a riff on Splinter's dissertion a couple of years ago talking about how people move into and out of the top ten and top one percent... also how people at least in our economy move back toward the mean.
https://evergreensmallbusiness.com/financial-planning-for-top-one-percent/Also, I may as well repost this link because it provides links to the Saez and Zucman and also the Zwick research papers referenced above:
https://evergreensmallbusiness.com/planning-for-the-warren-wealth-taxes/I'm not posting the Warren wealth tax thing to stoke conflict... only for the links to the economist research papers it provides.