If this is correct, the long boom can continue a while yet.The HSBC paper looks at redistribution of income between countries rather than the distribution within them. There are, it argues, three puzzles.One is the weakening of the position of labour in the developed world - general labour, that is, not the top 1 per cent. Two things are responsible for this: the opening up of Eastern Europe and the entry of China on global markets; and the growing mobility of capital.The first means that workers in, for example, Western Europe have seen jobs shift to Eastern Europe and Asia. For some reason, people in continental European countries and Japan have been less able to generate this surge in income.Whatever the reasons, Citigroup argues that this process will probably continue. It also argues that the imbalances in the global economy, with the US running its huge current account deficit, are more sustainable than most people think.
And people move: there is a programme in France at the moment to try to persuade the rich to move back, as large numbers have decamped to Belgium and the UK.Then there is the perennial question about which way round any economic relationship works. In this instance have the US, UK and Canada achieved faster growth because of the surge in wealth of the rich, or has a fast-growing society created more opportunities to become rich? Probably a bit of both.My own view is that there are a group of high-earners in the English-speaking world who benefit greatly from globalisation because they can sell their services to a wider market: people in banking, the legal profession, parts of the media, key sports. It can't just be tax, because Canada is a relatively high-tax country, certainly vis-?is the US, and Switzerland is a low-tax one. The plutonomy - the US, UK and Canada - are economies powered by the wealthy The rest is continental Europe (ex Italy) and Japan.
The first group have seen a rapid rise in the wealth of the rich, and are growing fast on the back of their spending; the second group have not seen such a rise and accordingly are growing much more slowly.You can see something of this in the graphs. The contrast is obvious, though just why this should be so is less clear. In the US, the share of income of the top 0.1 per cent, top 1 per cent and top 5 per cent have all reverted pretty much to the relationship they had in the 1920s (first graph). Actually, the way in which this income is earned has shifted, as in the earlier period rents and interest income were more important than they are now; wages and entrepreneurial receipts now dominate the income of the rich.In the other two graphs, you can what has been happening to that top 1 per cent of incomes, on a rather shorter timescale, in the other economies.