Here’s what the pattern looks like according to Miles Corak, the source of Krueger’s data (enlarged version here). The vertical axis in the chart is immobility; lower means more mobility. The horizontal axis is income inequality a few decades earlier.

Nations with lower income inequality tend to have more intergenerational mobility, and the association is quite strong. There are concerns about the data. But suppose the data are accurate, and suitable for testing this link. What does the association depicted in this chart tell us about the magnitude of inequality’s impact? How much would reducing income inequality in the United States help?

For most, the aim isn’t high intergenerational mobility per se; it’s low inequality of opportunity. Mobility serves as an indicator (not perfect, but not bad) of equality of opportunity.

Money ought to be good for children’s opportunity. Kids growing up in households with higher incomes are more likely to have good health care, low stress, learning-centered preschools, good elementary and secondary schools, extracurricular activities that promote cognitive skills and earnings-enhancing noncognitive traits, and access to a strong university. It would be surprising, therefore, if inequality of parents’ incomes did not contribute to inequality of opportunity among their children.

But how large is the effect? After all, money isn’t the only thing that matters; a good bit of our abilities and motivations when we reach adulthood stem from nonmonetary influences such as genetics, in-utero developments, our parents’ habits and behaviors, and peers. Also, there are diminishing returns to money; beyond a certain point, more parental income probably helps only a little, if at all.

Yet the graph suggests a large impact. Apart from data concerns, is there any reason to question this? I think so. First, let’s set aside the low- and middle-income countries (Argentina, Brazil, Chile, China, Pakistan, Peru, Singapore). Mobility processes in these countries may or may not be comparable to those in the rich nations. Next, notice that inhabiting the lower-left corner of the chart are the four Nordic nations: Denmark, Finland, Norway, and Sweden. These countries have been providing affordable high-quality early education to a substantial portion of children age 1 to 5 for roughly a generation. James Heckman and Gøsta Esping-Andersen, among others, have argued that early education is perhaps the single most valuable thing a society can do to equalize opportunity. These countries also feature late tracking in elementary and secondary schools and heavy subsidies to ensure college is affordable for all. These public services, rather than low income inequality, might be the chief reason the Nordic countries have such high intergenerational mobility.

What would that imply for the cross-country association between income inequality and intergenerational mobility? As the following chart shows, if we leave out the Nordic nations the association is still there, but the countries are widely dispersed around the line, suggesting weaker grounds for confidence that the association is a strong one. (For the statistically inclined, the r-squared is .47 with the Nordics included and .16 without them.)

Is it possible, then, for a country to have high income inequality but also low inequality of opportunity? John Quiggin is skeptical. He suggests the UK experience has debunked this “third way” notion. I’m not so sure. Imagine a rich nation with America’s income inequality and Nordic public services: affordable high-quality early education, K-12 schooling with late tracking and equal funding, and widespread access to good-quality universities. And perhaps also comprehensive prenatal care. Would its opportunity (mobility) structure look more like America’s or more like Sweden’s?

But, some will respond, you can’t get those services if income inequality is high. The rich will block the heavy taxation needed to fund them. Maybe. But income inequality has been rising in Sweden. In fact, in the late 1990s and mid 2000s the top 1%’s share of income (including capital gains) in Sweden was about the same as in the 1970s United States (see figure 7 in this paper by Atkinson, Piketty, and Saez). So far this hasn’t undermined Swedish taxation, though it’s probably too soon to draw any firm conclusions.

Suppose income inequality continues to rise in Sweden but its public services hold up. Will Sweden’s intergenerational mobility a few decades from now look like ours does today? I’d predict no. I suspect opportunity-enhancing programs can overcome a good bit of the harm done by income inequality.

That’s not to say we shouldn’t also try to reduce income inequality. I think we should. The point is that if we want to reduce inequality of opportunity, reducing income inequality isn’t the only way, and perhaps not even the best way, to do it.

1. Should we legalize marijuana?
2. Are humans causing dangerous climate change?
3. Should same-sex marriage be legal?
4. Is rising income inequality a serious problem?
5. Are Americans overtaxed?
6. Should we promote gender equality?
7. Why are some of us red and others blue?
8. Is party polarization bad?
9. What drives government policy?
10. Is big business ruining America?
11. What should we eat?
12. Are American universities failing?
13. Free trade or fair trade?
14. What should we do about immigration?
15. When should we intervene abroad?

A few other worthwhile recent reads on these topics:

Jared Bernstein’s blog

CBO, Trends in the distribution of household income

Center on Budget and Policy Priorities, A guide to statistics on historical trends in income inequality

OECD, Divided we stand: why inequality keeps rising

Scott Winship, Mobility impaired

Miles Corak, The decline of the American dream

Reihan Salam, Understanding America’s income mobility problem

Mike Brewer and Liam Wren-Lewis, Why did Britain’s households get richer?

James Plunkett, The potential for female employment to raise living standards in low to middle income Britain

Between 1979 and 2007, inflation-adjusted hourly wages for Americans at the median and below were essentially flat. Household incomes in the lower half increased, but not very much. Both wages and incomes for many ordinary Americans trailed far behind growth of the economy. At the same time, the earnings and incomes of those at the top exploded (see here, here, here, here).

One story sometimes told about the 1980s, 1990s, and pre-crash 2000s links these two developments to offer an optimistic verdict on the evolution of living standards for America’s lower half. The story goes something like this: A winner-take-all economy reduces income growth for low-to-middle Americans. But it nevertheless produces a substantial rise in living standards for them. It does so by increasing financial incentives for inventiveness and hard work, which yields leaps in consumption that aren’t reflected in the price data used to measure changes in the cost of living.

To put it more precisely, the story has four parts:

1. Returns to success soared in fields such as entertainment, athletics, finance, and high tech, as well as for CEOs. These markets became “winner-take-all,” and the amounts reaped by the winners mushroomed.

2. For those with a shot at being the best in their field, this increased the financial incentive to work harder or longer or to be more creative.

3. This rise in financial incentives produced a rise in excellence — new products and services and enhanced quality.

4. These improvements haven’t been satisfactorily captured in the price index by which we assess changes in the cost of living. Watching Michael Jordan or LeBron James play basketball is a qualitatively superior experience relative to what came before in a way that isn’t reflected in the price of a ticket or of a cable TV subscription. Similarly, the Macintosh, iPod, iTunes, iPhone, and iPad are so different from and superior to anything that preceded them that what they add to living standards isn’t likely to be adequately measured.

I think there’s a good bit of truth to parts 1, 2, and 4 of this story. But I’m skeptical about part 3.

This brings me to Steve Jobs. Apple and its delightful, user-friendly, (eventually) affordable gadgets play a key role in this story. The question is: Would Jobs and his teams of engineers, designers, and others at Apple have worked as hard as they did to create these new products and bring them to market in the absence of massive winner-take-all financial incentives?

In the things-have-improved-more-than-the-income-data-make-it-seem story, the answer is no. The financial incentive is the critical spur to inventiveness and hard work.

But I don’t find anything in Isaacson’s account of Jobs that supports this view. Jobs himself seems to have been driven mainly by a passion for the products, for winning the competitive battle, and perhaps for status among peers. The satisfaction of achieving excellence and of beating one’s opponents appears to have been far more important than monetary compensation. Excellence and victory were their own reward, rather than a means to the end of financial riches. In this respect Jobs was little different from scores of inventors and entrepreneurs over the ages, or for that matter from Bill Russell, Larry Bird, and Michael Jordan.

The rise of winner-take-all compensation occurred simultaneously with surges in innovation and productivity in certain fields, but that doesn’t mean it was the cause of those surges.

The report was released today in conjunction with this event in London.

What should we make of this? On the one hand, it’s good that there was little reduction in progressivity. The progressivity of federal taxes helps to offset the regressivity of state and local sales taxes.

On the other hand, there was a compelling case in the early 2000s (and still today) for increasing the progressivity of federal taxes. One of the chief rationales for progressive taxation is that those with high income can afford to contribute a larger share of that income. In the 1980s and 1990s, the top 1% of Americans enjoyed whopping income gains. Between 1979 and 2000,  the average (inflation-adjusted) income of households in the top 1% jumped from $350,000 to $1 million. For households in the bottom 20%, average income barely budged; it was $15,300 in 1979 and $16,500 in 2000. Given these developments, it would have been sensible to increase the effective tax rate a bit for those at the top and perhaps reduce it a little for those at the bottom. President Bush and the Congress instead chose to reduce rates for everyone.

The chief harm inflicted by the Bush tax cuts wasn’t to progressivity. It was to government revenues. The average effective federal tax rate for all households dropped from 23% in 2000 to 20.4% in 2007. Judging from the CBO’s data on income, that two-and-a-half percentage point decline subtracted roughly $300 billion from federal tax revenues in 2007. Proponents of the tax cuts hoped the economy would grow faster, mitigating the revenue loss caused by the lower rates, but that didn’t happen.

$300 billion a year wouldn’t address all of our revenue needs, but it could do a lot of good.

How much does economic growth benefit the poor? When and why does growth fail to trickle down?

How can social policy help? Is more social spending better for the poor?

Can a country have a sizeable low-wage sector yet few poor households?

Are universal programs better than targeted ones?

What role can public services play in antipoverty efforts?

What is the best tax mix?

Does improvement in the living standards of the least well-off require a sacrifice of other desirable outcomes?

Richard Freeman and William Rodgers were among the first to draw attention to the shift. In 2005, well into the recovery following the 2001 recession, they noted the anemic job growth relative to prior recoveries and wondered if the labor market had changed fundamentally.

Here are some revealing indicators.

During the growth phase of the business cycle, from 2002 to 2007, the number of people employed increased less rapidly than in previous upturns.

The employment-to-population ratio gained no ground over the 2002-07 upturn. It was 63% when the economy emerged from recession at the beginning of 2002 and 63% just before it plunged back into recession at the end of 2007.

Rising employment is particularly important for those at the low end of the labor market. Here too the 2000s upturn was a disappointment. In working-age households in the bottom quartile of the income distribution, average employment hours failed to rise at all.

What caused this collapse of the American jobs machine? I think the most convincing explanation is a shift in management’s incentives and in its leverage relative to employees. According to Robert Gordon, this has its origins in the 1980s and 1990s but emerged in full force in the early 2000s:

Business firms began to increase their emphasis on maximizing shareholder value, in part because of a shift in executive compensation toward stock options. The overall shift in structural responses in the labor market after 1986 were caused by … the role of the stock market in boosting compensation at the top, … the declining minimum wage, the decline of unionization, the increase of imported goods, and the increased immigration of unskilled labor. Taken together these factors have boosted incomes at the top and have increased managerial power, while undermining the power of the increasingly disposable workers in the bottom 90 percent of the income distribution.

Executives’ compensation is heavily influenced by their firm’s stock price. Financial advisers believe “lean and mean” delivers better long-term corporate gains. Employees have limited capacity to resist employment cutbacks during hard times and to press for more jobs during good times.

During the 2000s upturn this made for sluggish employment growth despite conditions that were, in historical and comparative terms, quite favorable for hiring: buoyant consumer demand, low interest rates, limited labor market regulations, modest wages and payroll taxes.

Is there direct evidence that employers were reluctant to hire? The pattern in the following chart, from Scott Winship, is telling. In the 2001 recession, posted job openings as a share of the labor force (the blue line in the graph) fell to their lowest level in more than half a century. Then, as the economy picked up steam, posted openings didn’t budge. The lack of increase was a sharp departure from previous upturns.

Many hope that when the economy finally gets moving again, we’ll return to the glory days of rapid employment growth. But developments in the 2000s, prior to the crisis, paint a discouraging picture.

The importance of this slowdown in employment growth is hard to overstate. In recent decades the American labor market has suffered from twin maladies: it’s been producing fewer middle-paying jobs and wages in the bottom half of the earnings distribution have been stagnant. For much of this period its chief virtue was that it created a large number of jobs. That looks to have gone by the wayside.

The idea behind a poverty rate is that we set an income line below which people’s resources are deemed insufficient for a minimally decent standard of living. The poverty rate is the share of people in households with income below that line.

Because it’s a binary measure, it’s a crude one. Suppose a lot of the poor at time 1 have incomes just below the poverty line. The economy then improves, or the benefit amount for a government transfer program is increased, so at time 2 a number of those people have moved above the line. It will appear that poverty has been sharply reduced, even though the amount of genuine progress is small. Similarly, suppose a number of people who formerly had very low incomes move into the work force and experience an income rise, but that rise doesn’t quite get them above the poverty line. This is a significant improvement, but it won’t show up at all in the poverty rate.

This problem is well known among social scientists. Some therefore also calculate the “poverty gap” — the distance between the poverty line and the average income of those below the line. To that we can add inequality among the poor. Measures exist to incorporate either or both of these. But they are complicated and thus difficult to communicate to a nontechnical audience. One common measure, for instance, is the poverty rate multiplied by the poverty gap. This is better than the poverty rate by itself, but the numbers yielded by the measure don’t have an intuitive feel.

Another problem with poverty rates is that much hinges on where the line is drawn, so we end up mired in interminable debates about exactly where that should be (here, here).

Is there a useful alternative? I think so.

Instead of a relative poverty rate, such as the official measure used by the European Union, I recommend the p50/p10 income ratio. Relative poverty is essentially a measure of inequality within the lower half of the distribution, so why not use a measure that more clearly conveys that? The 50/10 ratio is an inequality measure already familiar to social scientists, and it’s fairly simple to explain and understand. And as the first of the following two charts shows, the 50/10 ratio is very similar to the poverty rate multiplied by the poverty gap (the correlation is .96). The second chart shows that the poverty rate is a less effective proxy for the rate x gap.

Instead of an absolute poverty rate, such as the official poverty measure in the United States, we can use absolute household income at the tenth percentile (p10) of the distribution. Across countries and over time, this measure is very similar to the absolute poverty rate multiplied by the absolute poverty gap. But it’s much simpler and easier to comprehend. Also, it’s a low-end analogue to median (p50) household income, a common indicator of the living standards of the middle class.

Why the tenth percentile rather than the fifth or the fifteenth? Actually, I’d prefer the fifth, but there sometimes is reason to worry about data quality as we get close to the very bottom of the distribution. The tenth is reasonably close but not too close to the bottom, it’s a nice round number, and it already is commonly used in inequality measures such as the 50/10 ratio and the 90/10 ratio. But in truth, the choice of the tenth is arbitrary; it’s no more representative than the seventh or the twelfth or any other point at the low end of the distribution.

So we have good alternatives to the two most common poverty rate measures. But what about political impact? Isn’t the poverty rate a helpful tool in pressing policy makers to keep their eye on the least well-off? Maybe. Yet hardly any of Europe’s rich nations had an official poverty rate measure prior to the EU’s introduction of one a decade ago, while here in the U.S. we’ve had an official poverty rate for nearly half a century. The absence of an official poverty rate doesn’t seem to have impeded government commitment to the poor in Europe. And I’m not sure the presence of one has helped a whole lot here.

I don’t expect policy makers or social scientists to stop using poverty rates any time soon. And it won’t be disastrous if they don’t. But we could do better.

James Plunkett, Growth without gain? The faltering living standards of people on low-to-middle incomes

Matthew Whittaker and Lee Savage, Missing out: why ordinary workers are experiencing growth without gain

Wenchao Jin, Robert Joyce, David Phillips, and Luke Sibieta, Poverty and inequality in the UK: 2011

To keep up with U.K. developments, I typically look to:

Centre for Analysis of Social Exclusion

Centre for Economic Performance

Institute for Fiscal Studies

Institute for Public Policy Research

Joseph Rowntree Foundation

Policy Network

Resolution Foundation

Here’s what we know from the experiences of the world’s rich democracies: Relative to other nations, those in which labor is highly organized are more likely to have an influential social democratic and/or Catholic center-right (emphasis on center) political party, a proportional representation electoral system, well-organized employers, formal or informal-but-institutionalized participation by labor and business associations in the policy-making process, generous social insurance programs and complementary programs to help households that fall between the social insurance cracks, expansive public services, similar long-run economic growth, a fairly egalitarian distribution of individual wages and household incomes, reliable economic security, extensive economic mobility, and generous holiday and vacation time.

Sorting out the causality is a bit tricky, but it seems probable that labor organization has contributed to most, if not all, of these outcomes. If you want progressive policies, the comparative historical evidence suggests it’s very helpful to have a strong labor movement. Indeed, after democracy, it might well be the single most valuable thing to have.

But what if you live in a country with labor unions that are weak, and getting weaker? What if your country is the United States?

You might choose to focus on strengthening the union movement. Or you might seek an alternative view (“theory of politics”) about conditions for feasible and sustainable progressive policy change. Is there any such view? I think so.

Forge whatever electoral coalition you can, including but not necessarily centered on unions. Organize sympathetic interest groups into single- or multi-issue movements and coalitions. Build up a network of think tanks, journalists, bloggers, and other organizations and individuals to identify and expose the strategies and plans of opposing forces. Offer worthy, workable policy ideas and try to get them (or some acceptable version of them) passed when possible. Aim for big policy advances in rare favorable moments and small ones the rest of the time. (Examples of big ones in American social policy: universal public K-12 schooling, Social Security, unemployment insurance, AFDC, minimum wage, Medicare, Medicaid, Food Stamps, Affordable Care Act. Examples of smaller ones: Head Start, indexing of Social Security benefits to inflation, EITC (it later got big), expansion of EITC and indexing it to inflation, child tax credit, S-CHIP, periodic minimum wage increases.) If your favored programs work well, people will like them. They’ll therefore be difficult — not impossible, but difficult — for the other side to weaken or remove when it’s in power. This last element of the strategy, avoiding policy reversals, is critical, and it’s aided by the array of veto points in the American policy-making process (though there’s also this).

This is a second-best strategy, to be sure. But in the American context it may be the only practicable one.

Nor is its relevance confined to the United States. Workers are relatively unorganized in some other affluent nations, such as Japan and New Zealand. Even in western Europe, the bastion of encompassing labor movements, its relevance is likely to grow. One reason is the American problem: unionization is declining in much of Europe too, though from a higher level and at a slower pace than here. A second reason is the “postmaterialism” problem: union members may grow less and less wedded to left parties and progressive policies.

Henry Farrell suggests that we “not only need to think about the abstract desirability of a policy, but whether it supports or undermines the coalition that makes this and other desirable policies possible.” I agree. But I’d discourage any sort of rigidity on this. Sometimes good policy might usefully be subordinated to long-run politics, and sometimes not.

The following chart is sometimes viewed as evidence in favor of this hypothesis. The chart plots life expectancy at birth by per capita health expenditures as of 2007. Twenty affluent nations are included. Among these countries the U.S. spends by far the most money on health care and yet has the lowest life expectancy.

The inference is problematic, however, because America differs from the other countries in a number of ways that may affect health outcomes. It has a higher murder rate. It has more obesity. The U.S. population is more spatially dispersed than those of most other countries, so rural residents may live farther away from medical providers. Given these and other differences, how confident can we be that health spending is less effective in the U.S. than elsewhere?

Here’s a better way to compare. This chart shows trends in life expectancy by trends in health spending from 1970 to 2008.

The United States still stands out, and in a big way. Our gain in life expectancy per additional health spending is much smaller than in other countries, particularly after the early 1980s when we reached expenditures of about $2,500 per person (in 2005 dollars) and life expectancy of around 74-75 years.

The advantage of analyzing country differences in change is that it takes constant nation-specific factors out of play. It’s not a foolproof analytical strategy, but it reduces the likelihood of mistakenly inferring causation from correlation.

What we need to be wary of is life expectancy depressors that may have increased more or decreased less in the U.S. than in the other countries. Are there any? Not smoking: our rate of decline is in the middle of the pack. Not homicide: it’s decreased more here than elsewhere. Probably not spatial dispersion: Americans began moving back into cities in recent decades. One possibility, though, is obesity. Not only is it more prevalent here; it’s also increased more.

This kind of analysis is by no means conclusive. Life expectancy and total spending are highly aggregated indicators; it’s important to also examine more fine-grained measures of health-care effort and outcomes (see here, here, here).  But to the extent we treat the aggregate patterns as informative, a comparison of changes over time, rather than of levels, is likely to be our most valuable guide.

Update: Second chart now corrected, thanks to commenter Roger Chittum.

I’m referring to the Barcelona team of the past three seasons, 2009-11. Despite a few nontrivial player changes — Samuel Eto’o replaced by Zlatan Ibrahimovic in 2010 and then by David Villa in 2011, Thierry Henry replaced by Pedro Rodriguez, Yaya Toure replaced by Sergio Busquets — the squad remained largely intact over this period.

Who are their chief rivals? And on what grounds can we consider Barça superior?

National teams

Nearly everyone who isn’t a diehard partisan views Brazil’s 1970 squad the best national team ever. A recent poll of experts yielded this conclusion, with Brazil 1970 followed by the mid-1950s Hungarian national team and the Netherlands’ 1974 World Cup team. The 1970 Brazilian team featured Pelé, the widely-acknowledged best player of all time, along with several other entertaining attacking talents like Jairzinho, Tostão, and Roberto Rivelino. It played with a seldom-replicated panache and soundly defeated most of its opponents.

In a head-to-head match, the contemporary Barça team would demolish the 1970 Brazilians; fitness, strength, skill, and tactics have advanced a good bit in the past four decades. The only fair way to compare across such a long stretch of time is by assessing the teams relative to others in their own era.

I give the edge to Barça for three reasons.

First, Brazil were pretty equally matched by England in the 1970 World Cup. The two teams met in the first round. Brazil ended up winning 1-0, but it easily could have gone the other way. England played Brazil straight up and gave as much as they got.

To my knowledge, in the past three years no competitor has played Barcelona straight up and succeeded in giving them a genuine challenge. Manchester United tried in the 2009 and 2011 Champions League finals. In both matches they did well for the first ten minutes, but after that Barcelona thoroughly dominated. Real Madrid, perhaps the second best team in the world this year, tried to play Barça straight up in a league match this past fall. Barcelona won 5-0.

Barcelona are so good — so capable of keeping the ball for long stretches, creating scoring opportunities, and getting the ball back quickly when they lose it — that even the most talented attacking teams tend to feel no choice but to retreat into a defensive shell against them. The strategy is to “park the bus,” pulling most players back into the defensive third of the field, and hope for a counterattack goal or two. Three of the best attacking teams in recent memory — Chelsea in the 2009 Champions League semifinals, Arsenal in 2010 and 2011 Champions League ties, and Real Madrid in this year’s Champions League semifinals — were reduced to this approach.

Is this because these next-best teams simply aren’t very strong? On the contrary. In today’s soccer the top club teams are better than the top national teams. Globalization and the absence of a salary cap have allowed the world’s richest clubs to concentrate talent from around the world in a way that national teams can’t. This year’s Real Madrid team is one of the best we’ve seen in years. It features some of the top attacking players on the planet. Against Barcelona in the Champions League, however, Real’s coach Jose Mourinho kept several of them on the bench and played with, in effect, seven defenders. In the end it didn’t work, but it probably was their best hope of winning.

My second reason for preferring Barcelona 2009-11 over Brazil 1970 is the Brazilian team’s dodgy goalkeeper. It was a major liability. Barça has no comparable weakness.

Third, Spain won last year’s World Cup in what I think was the most dominant performance since Brazil’s in 1970. They took the game to every team they faced and won the tournament convincingly, even though a number of their victories were by small margins. Barcelona’s club team is essentially that Spanish national team plus Lionel Messi, the world’s best player and one of the ten best of all time. It’s a bit like taking Brazil’s 1970 team and adding Johan Cruyff or Franz Beckenbauer (or perhaps Gordon Banks in goal).

Club teams

Are there club teams that might rival Barcelona 2009-11 for the title of greatest team ever? One obvious candidate is Real Madrid 1956-60. Their record of five consecutive European Cup (the predecessor of the Champions League) titles likely will never be equaled. The team featured two of the premier players of the 1950s in Ferenc Puskas and Alfredo di Stefano. But that was an utterly different soccer era, before teams knew how to defend. And I’m skeptical about the quality of the competition they faced. Rightly or wrongly, I exclude them from consideration.

Here are four others.

Ajax 1971-73. This team won three consecutive European Cup titles and dominated the Dutch league until Johan Cruyff left to play for Barcelona. It also included the nucleus of the great 1974 Dutch World Cup team. But herein lies a problem. Most would consider the 1974 Netherlands team better than the Ajax team, and most also rank Netherlands 1974 below Brazil 1970.

Bayern Munich 1972-76. Bayern dominated the German Bundesliga in the early 1970s and won three successive European Cup titles following Ajax’ run. It then dropped off when Franz Beckenbauer left for the New York Cosmos in 1976. Here too, though, we have a club team-national team difficulty. The Bayern team contained the nucleus of the World Cup-winning German national team in 1974. But that World Cup squad probably was better than Bayern, and the World Cup squad is generally rated below the team they beat, the Netherlands, which in turn is ranked below Brazil 1970.

Liverpool 1977-84. Liverpool won four European Cup titles in eight years, including three in five years. They also won six English league titles during those eight years.  There was a good bit of turnover during this span — the key forward, for instance, shifted from Kevin Keegan in 1977 to Kenny Dalglish for the bulk of the period to Ian Rush by the end — so it’s a stretch to think of this as a single team. I suspect that’s why relatively few seem to include them on the list of top contenders for all-time greatest status.

AC Milan 1989-91. This was a mesmerizing squad, with Paolo Maldini and several other Italian stalwarts alongside the brilliant Dutch trio of Marco van Basten, Ruud Gullit, and Frank Rijkaard. The team won the European Cup in 1989 and 1990 and went through the entire 1992 Italian league (Serie A) season undefeated.

Great teams dominate their competition. There’s a qualitative aspect to dominance, but we can also look at the numbers. I think the two key indicators are titles and goal difference.

Begin with titles. Barcelona has now won the Champions League two of the past three years. (It’s won three of the past six, but the squad that won in 2006 was sufficiently different that I’m not including it here.) This isn’t the best title run ever. But it’s no less impressive than the earlier runs by Ajax, Bayern, Liverpool, and AC Milan. Virtually all of the world’s best players now play in Europe, with many of them concentrated in just ten clubs. Barcelona therefore faces stronger competition than its predecessors.

Barça has won its domestic league (La Liga) each of the past three years. The Spanish league is less competitive than the English Premier League, but it’s quite good. And in the past two years Barça’s main domestic rival, Real Madrid, has been one of the world’s top two or three teams.

Including titles in the assessment diminishes the luster of the AC Milan team of 1989-93 somewhat. Though it won the European Cup twice in a row, Milan won the Italian league title only twice during that five-year span.

Along with titles, goal difference (goals scored minus goals allowed) is probably the best quantitative indicator of dominance. The following chart shows per-game goal difference for each of these five club teams in domestic league matches and in Champions League matches. Performance in Champions League matches is the better measure for comparison, since domestic league quality varies a good bit. Ajax stands above the other four in goal difference in domestic matches, but the Dutch league competition was likely the weakest of the five.

Barcelona looks good relative to the others in both Champions League and domestic league goal difference. Is its impressive Champions League goal difference a product of some early-round 10-0 thrashings of weak opponents? No; Barça’s largest margin in any Champions League match during its three-year run was five goals.

Lucky rather than great?

One possible knock on Barcelona is that they got a bit lucky in their Champions League seminal tie in both 2009 and 2011. In 2009 they faced Chelsea. In the first leg, in Barcelona, Chelsea parked the bus and got a 0-0 draw. In the second leg Chelsea again played counterattack, and it worked well. They generated several good scoring chances, including a couple of possible penalty kicks that the referee didn’t award. Barcelona got a very late goal to tie the match 1-1 and go through to the finals on away goals. In this year’s semifinal Barça beat Real Madrid 2-0 in the first match and drew 1-1 in the second. In the first match, several Barça players reacted theatrically to some Madrid fouls, which may have contributed to Madrid’s Pepe getting red carded early in the second half. That probably helped Barcelona, though I’m not sure Real would have stopped Messi’s second goal even with eleven (or twelve or thirteen) men.

The thing is, every successful team needs a bit of luck to get by. Brazil’s 1970 World Cup team were lucky not to have to face England in the final. In the quarterfinal match between England and West Germany, England went up 2-0. England’s coach substituted for two of the team’s best players, to rest them and safeguard against injury. The Germans pulled off a remarkable comeback to win 3-2 and England were out of the tournament. In AC Milan’s first victorious European Cup run, in 1989, they faced Red Star Belgrade in a second-round home-and-away contest. They tied in the home match in Milan and were behind 1-0 in the 65th minute of the away match when a fog rolled in, forcing cancellation of the match. The full game was replayed the next day. It ended in a draw, with Milan then winning in penalty kicks.

Over time we forget the luck and remember the brilliance. A decade from now hardly anyone will remember these details of Barcelona’s Champions League triumphs. What people will recall, rightly, is Barça’s exquisite play.

A thing to behold

Are Barça the best team of all time? There’s no way to settle the question objectively, and in the end it doesn’t much matter. What matters is the joy of watching them play. I was too young to appreciate Brazil’s 1970 squad and Cruyff’s Ajax team, and television coverage then was too limited in any case. What good fortune to live at a moment when it’s been possible to see a team as glorious as this Barcelona side work its magic on a regular basis.