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From the Wikipedia page

"The rich get richer and the poor get poorer" is a catchphrase and proverb, frequently used (with variations in wording) in discussing economic inequality. Its most common use is as a synopsis of a socialist criticism of the free market system (Capitalism), implying the inevitability of what Karl Marx called the Law of Increasing Poverty.

Was Karl Marx correct, do the rich get richer and the poor get poorer?

Is this true in the USA, for example?

  • It's called the vicious circle, if I remember correctly. Edit: en.wikipedia.org/wiki/… – Some Guy Jun 16 '12 at 12:29
  • Did Marx actually make any predictions for the U.S. economy? – Joel Cornett Jun 16 '12 at 15:52
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    @JoelCornett, I am not sure. He probably just spoke about Capitalism in general. "The Rich get richer, ..." is a common idiom though, that many people believe to be true. The U.S. is usually touted as having the biggest gaps in income between CEOs and the 99% (as opposed to Sweden and other countries that rate lower on the Gini index), so I thought that using the USA as a counter example to the rich always get richer, and the poor always get poorer was a good idea. Do you think I need a quote from Marx? – user1873 Jun 16 '12 at 16:24
  • Note that observing changes in the relative wealth of the quintiles (for instance) isn't enough to back up such a claim unless you can also show that there is negligible (or at least severely limited) churn between the quintiles. – dmckee Jun 16 '12 at 17:58
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    The rich get richer, and the poor get relatively poorer compared to the rich. – jjack Sep 28 '15 at 17:35
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Everyone gets Richer.

Growth in Real After-Tax Income from 1979-2007

Real Dollars 1979-2007

CBO finds that, between 1979 and 2007, income grew by:

  • 275 percent for the top 1 percent of households,

  • 65 percent for the next 19 percent,

  • Just under 40 percent for the next 60 percent, and

  • 18 percent for the bottom 20 percent.

But, you might say that the "gap" increased. Unfortunately, these numbers don't take into account individual people who might be rich, they only look at the group as a whole. The people who make up that group change over time. If you are rich/poor one year, it doesn't follow that you will continue to be so the next year.

It isn't true of individuals over time.

IndividualsQuintile-Distribtion

The table shows a high degree of income mobility over this period. Nearly 58 percent of households (i.e., 57.6 = 100 – 42.4) in the lowest income quintile in 1996 had moved to a higher quintile by 2005.

Middle-income taxpayers also did well with respect to mobility across income quintiles in the population. A much larger portion moved up to a higher income quintile (42.1 percent = 29.6 +12.5) than dropped to a lower quintile (24.6 percent = 7.1 +17.5).

The mobility of the top 1 percent of the income distribution is also important. More than half (57.4 percent = 100 – 42.6) of the top 1 percent of households in 1996 had dropped to a lower income group by 2005

It isn't true between generations.

Parent-Child Income Quintile

Since the transition rates in Figure 1 showed that 33.5 percent remained in the bottom quintile, that implies that 66.5 percent (100 – 33.5 = 66.5) exceeded the bottom quintile, as shown in Table 1.

... 38 percent of those whose parents were in the top income quintile remain in the top quintile.

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    Interesting point about the transition rates. I never would have guessed that. – Joel Cornett Jun 16 '12 at 15:58
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    -1, The first point, "everyone gets richer", is false since they don't take the inflation into account. The Congressional Budget Office reports an inflation between 1979-2007 of 185%. Therefore, only the top 1% seemed to get richer. I will remove the -1 if I missed the inflation factor (or the answer). – Zenon Jun 19 '12 at 2:20
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    @Zenon: "Real income" generally indicates that the figures have already been inflation adjusted, and indeed the "Document" link on the CBO page leads to a PDF that says "Income is adjusted for inflation using the Bureau of Labor Statistics’ research series of the consumer price index for all urban consumers (CPI-U-RS)." – dmckee Jun 19 '12 at 2:42
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    @BjarkeFreund-Hansen, "real" dollars are inflation adjusted by definition. – user1873 Jul 22 '15 at 2:59
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    @user1837 Yearly wages don't necessarily imply wealth. I'd want to compare value of accumulated assets less liabilities. A retired couple living in an expensive house they own is far 'richer' than a married couple living in a house of the same value that they just started paying the mortgage on, even though the former has no (or possibly negative) income, for example. – dtanders Aug 12 '15 at 21:37

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