Boom, Bust, and Inequality

Over the weekend, Niall Ferguson wrote in The New York Times:

[D]eregulation began quite a while ago (the Depository Institutions Deregulation and Monetary Control Act was passed in 1980). If deregulation is to blame for the recession that began in December 2007, presumably it should also get some of the credit for the intervening growth.

Part of what troubles people about this sort of thing, however, is that it’s not clear how much the intervening growth was really worth. Check this out from the CBO:


For the top one percent, that’s a pretty impressive period. For the next 19 percent, there’s something happening. But for the bottom 80 percent, there’s just very little going on in terms of real income growth. There was, however, pretty robust consumption growth fueled by the credit boom and declining savings rates. The current downturn is now threatening that and calling into question the sustainability and worth of the overall growth throughout the period.