Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

In October 2013 two French economists, one working in California, the other back in Paris, published the latest release of a long-running project on American inequality.14 Emmanuel Saez and Thomas Piketty were at this point not unknown. An earlier paper in which they mapped top incomes in the United States over the long run had yielded the “We are the 99 percent” slogan that the Occupy movement had used to such good effect.15 Nevertheless, the data they released in October 2013 were astonishing. From the latest round of tax releases they calculated that of the growth generated by the economic recovery since 2009, 95 percent had been monopolized by the top 1 percent. That tiny fraction of the population saw their incomes rebound from the trough of the recession by 31.4 percent.16 Meanwhile, 99 percent of Americans had experienced virtually no gain in income since the crisis. The data were subsequently revised to show a less extreme disproportion.17 But in 2013 the numbers were a sensation. The slow growth in GDP that worried Summers, in fact, hid two radically divergent realities. Whereas a tiny elite were doing extremely well, for average Americans the secular stagnation thesis that Summers advanced as a tentative academic hypothesis was simply the lived reality of the last forty years. Since America’s bicentennial in 1976, productivity growth, which drove overall economic growth, and the returns to labor in the form of household incomes had starkly diverged. The average A...