Richest 2% Own Half the World's Wealth 1330
kop writes "The richest 2% of adults in the world own more than half of all household wealth, according to a new study by a United Nations research institute. Most previous studies of economic disparity have looked at income, whereas this one looks at wealth — assets minus debts. The survey is based on data for the year 2000. Many figures, especially for developing countries, have had to be estimated. Nonetheless, the authors say it is the most comprehensive study of personal wealth ever undertaken." The study itself is available from the World Institute for Development Economics Research.
Not just true for humans (Score:5, Funny)
Re:Not just true for humans (Score:4, Insightful)
Re: (Score:3, Informative)
Re: (Score:3, Insightful)
Re: (Score:3, Informative)
Re: (Score:3, Interesting)
Re:Not just true for humans (Score:5, Interesting)
This 2% b.s. is a pretty meaningless statistic, all things considered. You only need to be making 44k a year to hit that.
Re:Not just true for humans (Score:5, Interesting)
0.001 euro's and you get: You're in the TOP 68.98% richest people in the world!
Now try 0 euro and the result is: You're in the TOP 68.98% richest people in the world!
Amazing 31.02% procent of the world population has an income of less than nothing!
It's the same for negative numbers.
Re:Not just true for humans (Score:5, Informative)
You don't even need to read the article, but please at least RTFSummary:
". Most previous studies of economic disparity have looked at income, whereas this one looks at wealth -- assets minus debts. "
It's not income, it's wealth.
So apparently 31.02% of the population owe more than they have.
I don't know about any other countries, but I know that's fairly common in the US, even among middle-class people with good standards of living.
Re:Not just true for humans (Score:5, Insightful)
I have a job that puts me in the top percentile of people in the world, but to have that job I have to pay the top percentile of living expenses
Re:Not just true for humans (Score:4, Informative)
He told about how he went on a radio show, gave this advice, and was ridiculed by the talk show host, who admitted he was shoe stringing it on $100k/year in New York. The talk show host finally gave in and did this. He found he was spending $16,000/year eating out. Some people spend a couple thousand a year on coffee-like substances, when inexpensive or home-brewed varieties can be had for a couple hundred or less. Any regular expense that you incur that doesn't relate directly to running your house or car should be viewed in a similar manner, and decide which is a bigger priority, having that item today or setting the money aside to invest and turn into 5 or 10 times as much money later.
I can imagine paying 3 or 4 thousand a year to cook (excellent meals) for myself and my wife (and soon our children), and finding a much better use of the other 12k dollars. And, actually we do similarly, instead of paying rent and eating out, we eat at home and bought a house three years ago when interest rates were really low. In less than 10 years, we'll own our house debt free, and what we were paying on house payments (or would otherwise be spending on rent), about $7100, will be money we can use to do things we consider fun or invest for retirement, or buy our next house. We'll probably do more of the last two, but some of the former too. Keep in mind that when we executed our house purchase, my average expected income for the next 8 years was around $35,000 in the mid-USA, and we bought a house for $110,000, with my wife quiting her job (planned) to stay at home with our children. I got an unexpected promotion and nearly 40% raise this year, which is making things much easier. I expect that in 30 years, we'll have $5 million in assets divided between 401k, real estate, RothIRA (we pay little in taxes currently, and I'd rather avoid the taxes I can't predict in 30-40 years) and other stock market investments.
In the end, people make their own decisions about their priorities, and choose not to spend a couple dozen hours figuring out how to do more with less, thus making themselves wealthy in the end. The book I was looking at was The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich, available for about $10 on Amazon, but it really comes down to a few simple steps.
1: Eliminate unnecessary expenses, set aside that money, and put it to work for you.
2: Buy a place to live, paying rent makes others rich at your expense, owning your place will be your foundation to future wealth.
3: Have a certain portion of your paycheck directly diverted to your retirement/investment program, and plan the rest of your budget like that money doesn't exist. (This can be done manually, if you have discipline, but it must happen)
4: Profit!!! (sorry, couldn't resist)
As for the grandparent post, houses in New York for very modest places rent for thousands depending on the area/building, I could get a similar place for 1/4 the cost or less in less urban areas. And when you rent, that becomes nothing as far as your balance sheet is concerned, when you are paying on the mortgage, that expense you pay on the principle becomes an asset.
Re:Not just true for humans (Score:5, Insightful)
I imagine if they had the money to afford those things then 3rd World taxes would be comparable to 1st World taxes but they don't because for a variety reasons they are much poorer.
There's nothing really stopping you going to live in the Congo or somewhere similar where you can spend your money on what you like. I bet you'd still spend a fair proportion of it on drainage, sewage treatment, security etc.
Re:Not just true for humans (Score:4, Insightful)
Not that I necessarily, 100% agree, but this is how the world sees the US, and this view is somewhat justifiable, albeit simplistic.
Re:Not just true for humans (Score:4, Insightful)
Not having clean water, safe housing, basic nutritional needs and basic medical care are what is really the issue. Not their income in relation to ours in the U.S. Most of these places that don't have as high an income are the places that have issues in these basic needs. Big issues in these basic needs that make them NOT "just fine". It is not a matter of feeling one way or the other, the hardships these people go through in these situations are facts.
Now, if they are in a community that provides for their own food and shelter (I.e. living off the land) then that is fine for them. However if they have abandoned a society like that or are born into a society that has abanded that for one of say factory work to provide U.S. markets with cheap goods then like it or not we should be concerned about their well being because we are a part of the situation.
Being part of that situation and not having any concern and assuming no responsibility is why half of the worlds population now lives under goverments ruling in Marx's name. Because it is Marx who addressed this exact problem and said that the elite who don't know they are a part of the problem, is the problem. This obviously made a lot of sense to people being exploited this way who looked towards communism for some protection against such injustice.
So as an elite western consumer, work towards economic justice so people won't have to look for systems to protect themselves from you, like communism (which IMHO does even more harm to them).
Re:Not just true for humans (Score:5, Insightful)
Re:Not just true for humans (Score:5, Informative)
The top 1% pay about 30% of all taxes
The top 5% pay about 50% of all taxes
and the top 50% pay about 98% of all taxes
Tax breaks for the rich?! DUH only the rich can get 'em cause the botom 50% is getting the money.
Re: (Score:3, Insightful)
Or (Score:3, Insightful)
If you put it that way taxing them to a larger degree sounds almost fair, doesn't it?
Re:Not just true for humans (Score:5, Interesting)
Another interpretation of the statistics would be that the bottom 50% aren't paying much taxes because.... they don't have any money to pay taxes with. But I like your logic better. Allow me therefore to paraphrase:
Statistics show that the top 50% all die eventually.
Consequently, the bottom 50% obviously live forever!
This is A Conspiracy Against Rich People ®. THE GOVERNMENT MUST CUT TAXES FOR POOR, UNDERPRIVILEGED RICH PEOPLE!
Re:Not just true for humans (Score:4, Insightful)
Does that mean that 1% of the richest are not quite the same as 1% of the top tax payers? What happened to the progressive tax system?
Re:Not just true for humans (Score:5, Informative)
Does that mean that 1% of the richest are not quite the same as 1% of the top tax payers? What happened to the progressive tax system?
It means exactly that. We tax based on INCOME, not WEALTH. If I have one TRILLION dollars in assets, but an income of only fifteen thousand a year, I pay no taxes. And that trillion is pretty much meaningless.
So Bill Gates doesn't pay taxes based on what his Microsoft stock is worth, but rather on what Microsoft pays him (plus what he gets for selling any stock over and above what Microsoft pays him). In his case, wealth and income are totally disjoint.
Once upon a time, the last time but a few (dozen) that we had a discussion that got around to taxes, I went to the IRS website to get their tax statistics. The "rich" (in terms of income, NOT wealth) pay a higher percentage of their income as taxes than the rest of us do. Not an astoundingly higher percentage, but higher. Which is as it should be - a flat tax is an inherently bad idea, just as an extremely progressive tax is a bad idea.
Re: (Score:3, Informative)
Income tax systems taxes income, not wealth. The top 1% of earners presumably make A LOT less than 30% of the world's income. That said, a progressive tax system is immoral. Ever
Re:Not just true for humans (Score:5, Interesting)
The problem is that President Bush signed an across the board tax cut. Each bracket's taxes were lowered by the same percentage. Since 50% of the people were generally not paying any taxes at all anyway, they complained the tax cuts were for the "rich" and that lower income people (lower 50%) received no benefit at all.
Well, yes, the argument is true - people paying no taxes don't generally benefit from tax cuts, but I fail to see a valid complaint. In fact, after the tax cuts, because now even fewer people are paying any taxes at all, the "rich" are actually paying a higher percentage of the income tax burden than they were before.
An interesting analogy [polipundit.com] that I've always liked.
There's also the myth that the disparity of income is increasing between the rich and the poor. Well, if person "a" earns $1,000,000 and person "b" earns $50,000, then person "a" makes $950,000 more than "b". If they both increase their income by 10%, then "a" makes $1,100,000 and "b" makes $55,000. A difference of $1,045,000. OMG! The income disparity is increasing! But their relative buying power remains exactly the same!
People are not putting things in perspective when they complain about the disparity between the rich and poor. They don't even take into account that someone making $100,000 in San Fransisco has very little buying power compared to someone making $50k in Atlanta - and the guy in S.F. is paying disproportionately higher taxes because cost of living is not a factor in calculating taxes owed.
Bunk (Score:4, Insightful)
Here [economist.com] is a chart that says it all - the rich are getting richer as a percent of total wealth and that's bad for America.
Last time it was this bad we had a great depression.
If you don't like your 100k income in SF try making 15k there cleaning up after the 100k club. The so-called middle class has a very poor picture of how normal people actually live. You can live very very well on 100k in SF if you don't buy a lot of over priced crap.
Promote efficiency in the upper income brackets; tax 'em.
Re:Not just true for humans (Score:4, Interesting)
If I can give another analogy of two people making $75k a year.
One guy rents a nice apartment in the uptown area of the city he works and leases a new car every two years and doesn't save enough to invest an significant amount.
The other guy scrimps and saves and invests all he can manage. He lives in a moderate house near the city, but not in it, and drives a financed automobile until it becomes economically wiser to trade it in then to keep repairing it.
The second guy has paid income tax on all the money he's earned; the money he's invested is taxed money. So the money he makes in capital gains is a lot less than it would be... this is the benefit of 401ks, you get to invest the money pre-taxes, but then you have to pay taxes on it when withdrawn. A Roth IRA isn't taxed because it's built with already taxed money.
Taxing capital gains is a form of double taxation. This is why you need to start off your argument with "if I was sitting on a huge pile of money" as opposed to "if I earned a huge pile of money that was already taxed."
So you look at the caricatures of wealthy people; the Paris Hilton's and Nicole Richies of the world, the poster children for excess, and complain they aren't paying taxes because it was "given" to them by their parents. But these people represent only a tiny fraction of the wealthy people in this country. The whole system of taxation we currently have simply punishes people for achievement. It's one of the reasons I support the Fair Tax. Poor people (below poverty levels) not only wouldn't pay a damn penny in taxes, but they'd get more money and have more spending power then they do now even if prices didn't go down. It's a system where you're punished for spending on non-necessities. Who spends the most on non-necessities? People like Paris Hilton and Nicole Richie - these are the people you think of when wealth envy rears it's ugly head, aren't they the people you want to "punish" for being born rich?
Re:Not just true for humans (Score:4, Insightful)
After all, that's why Roths and 401ks exist, because it was understood that the system was "unfair."
Moreover, that seed money is at the top of your income - the highest taxed portion. That's as much as 35%. It'd take years just to get your seed money back to it's pre-taxed value.
And keep in mind that while people may invest for their own personal gain, investing does create new jobs and new opportunities. The intentions might not have been benevolent, but the results generally are.
Agreed; the two extremes are both unfair. (Score:3, Insightful)
A percentage-based tax (which is often
sales tax (Score:3, Interesting)
Re: (Score:3, Insightful)
My point was merely that they benefit disproportionately from living in a stable and civilized society, and ought not to whine when they are asked to pay their fair share of the cost of maintaining it.
Wealth-based taxation sucks. (Score:5, Insightful)
Now I agree that it's rather bizarre that we don't just tax capital gains as income; actually it's bizarre that we don't just tax all income as income, and do away with all the little niggling special categories -- if it was someone else's money and now it's yours, that's income, tax it at the same rate.
People shouldn't be taxed on money that's sitting around and not doing anything, or on the principal value of property. If an investment makes money, then they should get taxed on it -- immediately in the case of dividends, or when they cash-out in the case of capital gains. But taxing "wealth" in the form of unrealized capital gains would result in people's retirement/college/savings funds just magically shrinking, year after year. It would basically be telling people: "use it or lose it."
That's not a smart road to go down, because when you discourage people from saving, you're just going to end up having to bail them out later, when they're 65 and broke because they didn't bother to save money for retirement. (I suppose you could pull a Logan's Run and kill them, but I'm going to make some assumptions here.) Rather than letting individuals run their own lives, you're heading down the road to a centrally planned economy, where because nobody can afford it on their own anymore, they have no choice but to depend on the government for everything.
Furthermore, you'd also discourage property ownership (which is one of the keys to social stability), and instead favor people who maintain a low "wealth" by constantly matching their stream of income to their stream of expenses, even when it's obviously not sustainable. Anyone who wants to could probably zero out their 'wealth' by just spending more on services and other items with little residual value. As long as they stay employed, they can maintain a high quality of life -- but the second that they have a gap in their income stream, because they don't have any savings, they fall flat. And then it's back to the government for a bailout.
Wealth-based tax schemes lead directly to heavy government dependency by the entire populace, and encourage personal finance schemes that aren't sustainable or productive in the long term. You might think that it's eliminating one form of classism, but instead you'd just replace it with the classism of a Politburo: a small number of bureaucrats managing all of society's savings and wealth. No thanks.
Re: (Score:3, Informative)
Re: (Score:3, Informative)
If he ever sells his stock, he'd have to pay taxes on it. It's not a free ride by any means.
Re: (Score:3, Insightful)
Think about this when looking at politicians. Most politicians, including the President of the U.S., don't make that much money in straight salary. George Bush makes FAR less than almost any CEO of any major corporation. Yet the power and resources the President controls make it one of the most desirable positions in the country. Why else would people be willing to spend millions of $ to get a position that only pays $400,000 a year?
Income
Taxing unrealized cap gains = badness. (Score:5, Insightful)
So let's say I buy 100 shares of a stock at $1 a share; during the year, it increases in value to $100 a share. So my $100 investment is now worth $100,000. Aside from the dividends, I don't owe any taxes on the stock -- however, if I 'cash out,' and sell any of the shares, I'm immediately liable for capital gains taxes. It's not a free ride.
The IRS doesn't try to tax investments as they go up and down, because to do so would be ridiculously complicated (and, as other people have pointed out, would probably lead to people claiming negative tax liability on losses). Instead they look only at the value when you bought in to the investment, and when you cash out, and then tax the difference between the two.
E.g., if my 100 shares ran up to $100 a share but then sunk back to $50 before I could sell them, the capital gain I get taxed on is $49 a share, not $99. Taxing me on $99 wouldn't make any sense, because I never really had that much money, except theoretically.
So while Bill Gates has a lot of money in MSFT, it's only wealth insofar as Microsoft's stock is considered rather stable. If Microsoft were to tank tomorrow, much of that apparent wealth would evaporate. Any time he actually sells stock in order to use any of that wealth, he gets hit with taxes. So really, he has a constant 'potential tax liability' on his 'potential wealth' of about 28% -- because if he wanted to cash out tomorrow, that's what the IRS would be coming after him for. (Well, probably slightly less than 28%, I think the first few thousand bucks get taxed at a lower rate and it goes up from there to 28% which is the cap.)
Actually taxing people on unrealized capital gains would be effectively a tax on savings. It would be a giant mess and have vast consequences -- basically it would mean that just having money sitting around in an investment would make it "shrink." It would lead to lack of savings and probably not hurt the very rich nearly as much as it would hurt the middle class. Not to mention that taxing unrealized capital gains would also involve taxing real property -- it would basically be a federal property tax. That's going to hurt homeowners everywhere; it's a total non-starter.
There are a lot of problems with the current tax code, but the fact that it doesn't go after unrealized capital gains is not one of them.
Pareto Distribution (Score:5, Insightful)
Re: (Score:3, Interesting)
Re:Pareto Distribution (Score:4, Insightful)
As the man himself, Chris Rock put it, Michael Jordan is rich, the man who signs his pay cheque is wealthy.
All that will happen is more and more economic bubbles will burst, the rich will join the poor and the wealthy will be further separated.
The only real balancing acts comes at the end of a sword during a revolution. Well I guess in modern times we'll use guns, but the idea is the same. Wealthy people keep taking and taking, hording cash and assets, till the point where the rest of society will just plunder and steal. The real trick is how far can society be pushed until this actually happens (again).
Frankly, hording cash and assets is the worst thing wealthy people can do. Money only has value when it's being traded for something. Which is also a form of wealth distribution. Keeps the rest of us fed and warm at night.
If you look at an average income of say $25,000/yr for a low income person, then realize that the wealth accumulated by people like Gates could pay the yearly salary of ~1.7 million people, it kinda makes you think what exactly are they doing with this money anyways? (Yes, I know Gates has his charity, but there is only so much money a person needs...)
Tom
Re:Pareto Distribution (Score:5, Informative)
But surely it's not hidden in a mattress anywhere. It's out in the economy, making the economy work. The money *is* changing hands. Sure, it's making Rich Bastard wealthier, but it's making us wealthier, too. Maybe it's in a treasury bill, giving our government a loan and working capital to buy things and pay salaries. Or in a stock, which gives a company working capital to buy things and pay salaries.
What would happen to to the US government if all of its bonds and bills were suddenly called in and no one else bought? For that matter, what happens to a company? That money *has* to be there for our economy to work.
"Own" might not be the best word in the summary (Score:4, Insightful)
This is a great point, one that is essential for understanding the relative advantages of capitalism over communism or socialism. It's not so much that the richest 1% own the majority of capital, it is that they control it. It's not ownership the way we normally think of it with respect to personal property, because there are practical limitations on how they can use it. Bill Gates can't just liquidate his stock and take the cash; partway through the process the resulting market crash would wipe out his wealth. What he can do, though, is choose where it will work in the economy.
As the capital he controls is worked through the economy, it creates growth. His appreciation and return is a small tax on that growth, however like taxes it is quickly reinvested as new capital. The rich capitalists compete with the government in directing the economy. This creates the competitive tension between elitist business and populist government that drives the improvement of both.
Re:Pareto Distribution (Score:4, Insightful)
You don't just give people money to be generous or to be nice or because you think everyone should have the same amount of money. Thats socialist and it doesn't work. If you give 10 people $1 Million Dollars and check back on them in 10 years you'll find some still rich, others poor and the rest somewhere in the middle. Spread the wealth? What are you, high on something? Like seriously?
The problem you have is you seem to have a problem with people benefiting from the power their wealth brings them. Well thats kinda the reason people want to be rich in the first place. Its not just about buying things or having the necessities. Some folks confuse our goal of having an eagalatarian society with having a society where everyone is the same. Thats not what it means at all. The purpose is to provide everyone with a chance at success, not garuntee that EVERYONE will be equally mediocre. Implicit in that is also allowing people to fail, miserably so in some cases.
Re:Pareto Distribution (Score:5, Insightful)
Re: (Score:3, Interesting)
Re:Pareto Distribution (Score:4, Insightful)
Re:Pareto Distribution (Score:5, Insightful)
A rising tide lifts all boats.
Re:Pareto Distribution (Score:5, Funny)
Unless you are poor, black and live in New Orleans.
Re:Pareto Distribution (Score:4, Insightful)
Re:Pareto Distribution (Score:4, Insightful)
As regards healthcare, I already addressed that. Many (if not most) poor in the West have access to government-paid or government-subsizided healthcare, and the quality of that care is dramatically better than it was years ago. Here is my proof: the life expectancy is much higher today than it was 100 years ago. Now if only the "rich" are benefiting from better healthcare, that would not be enough people to materially increase the average lifespan (unless the "rich" were living hundreds of years).
I agree that trinkets don't define a standard of living. They were just examples of how once-expensive technology, which was basically subsidized by the wealthy, is now available and affordable for the masses. The same argument applies to things like climate control (public housing is now air conditioned) and healthcare.
Ahh, but having a computer and access to the internet does
Re: (Score:3, Informative)
Re:Pareto Distribution (Score:5, Insightful)
It isn't quite that simple. It depends on whether you measure wealth in some sort of absolute or relative terms.
The gap between rich and poor may indeed be widening, but the poor are becoming wealthier as well. In absolute terms, therefore, the rich are getting richer, but the poor are getting richer as well. This can be measured in lots of ways. Life expectancy and infant mortality are usually pretty good indicators. India and China alone account for roughly 2 billion people who were barely scraping out an existence two generations ago, but who now have a much higher degree of food security, have access to a much higher level of health care, access to technology (i.e. the cell phone is rapidly becoming ubiquitous, even in rural areas).
For the system to be clearly unsustainable, one would need to believe that people would undermine a system that is delivering them a rising standard of living. It would seem unlikely that they would do so in any sort of broad, universal way.
Re: (Score:3, Interesting)
Do people remember the Unabomber? If we can believe that his true motivation was to create a ruse and call attention to his manifesto, as he claimed, and discounting the possibility for a second that he is batshit crazy, then I believe what the core of his manifesto is saying is that technological progress is enslaving humans.
While he might be^W^Wmost certainly is crazy, the effect of technology on society warrants at least a detailed discussion.
I do believe that tech
Re:Pareto Distribution (Score:5, Interesting)
Re: (Score:3, Insightful)
Re: (Score:3, Insightful)
Sure, the people who are getting the work are happy, because things are better for them. Working in really bad conditions, being physically and sexually abused is still better than dying.
Now the people who are employing them, and employing those employers (the Western countries) are making huge amounts of money. Is this moral? No. They could be enforcing better conditions, but they choose t
Re: (Score:3, Insightful)
I think you're right, and you have every right to stop me from kicking a homeless man in exchange for giving him food.
Just don't expect the homeless man to thank you.
Re:Pareto Distribution (Score:4, Insightful)
But isn't that true
It is a sad reality, but this is the way it must be. Maybe not dying of hunger, but poverty is inevitable. If everyone had plenty of money, then the money is simply worth less. The world will always have poverty stricken people. Sure, take 99% of the money from the rich, spread it out to the poor. What happens now? Goods and services will all of a sudden cost more, and now the formerly poor are poor again. The only difference is, now the rich are not quite as rich.
Even so, I agree, 2% holding 80% does seem like it could be balanced out. There must be a happy medium between this, and the reality that some groups will always be in poverty.
How Is My Comment Idiotic? (Score:3, Interesting)
If you're calling my comments 'idiotic,' I would appreciate it if you told me why I'm idiotic. I pointed out Pareto's Law & speculated that it isn't a bad thing if there isn't corruption & there is the ability for the poor to work themselves out of their situation. Currently, the world is rife with corruption and, as you pointed out, there are massive regions of the world where people can't even find work for money. You'll also
Re: (Score:3, Insightful)
I disagree that everyone eats in socialism. Of course that's the ideal, but in practice it doesn't work. It's human nature to do as little as possible to get by. The problem with socialism is
Rich People Have all the Money! (Score:5, Funny)
But... (Score:5, Insightful)
...just because an asset is owned by some over-rich guy, doesn't mean that it is unproductive. Tomorrow we could send Bill Gates the title deed to all farmland in the Midwest, and that land would still continue to grow wheat for everyone's Raisin Bran.
And even if we then sent Bill Gates the profits from all those boxes of Raisin Bran, Bill would only have a pile of cash. Cash is not an asset; it represents assets, which usually remain in production somewhere.
No matter how rich Bill Gates gets, he still consumes very little, perhaps a half-million dollars a year in food, real estate, clothing, maids, butlers, and the like. Everything else that he owns is (if he is an even half-wise investor) still producing something elsewhere.
Re:But... (Score:4, Interesting)
Housing has been rather screwy lately after the mad rush we had in '05. Like all things, the market eventually starts to correct itself. Gotta love supply and demand.
What I'd like to see is a comparison (Score:5, Interesting)
It is possibly very hard to create such comparison given that probably the definition of wealth changed, the definition of feudal times is loose, the overall human population was much less and the world used to be much more fragmented back then. I think that 500 years is a nice round number, so a comparison between 1500 and 2000 could be made with some difficulty. Hard, but I don't think it's impossible.
Currently my gut feeling tells me that the "wealth" used to be even more centralized in those times, but we probably made some progress in social equality since then. I'd be interested to see in the amount of progress though.
Re:What I'd like to see is a comparison (Score:4, Insightful)
Re:What I'd like to see is a comparison (Score:5, Insightful)
Really? By what measure? More people own their own homes. Unemployment is lower. Even lower income families have things that would have been considered utter luxuries 50 years ago (multiple televisions, cell phones, cable, cheap antibiotics, cheap fresh food of every imaginable kind, etc). What does "social equity" mean to you - that someone who is successful should not have a flatscreen TV until everyone does? Or that incredibly wealthy pro basketball players shouldn't be allowed to spend their cash until everyone can spend the same amount of cash?
Re:What I'd like to see is a comparison (Score:4, Interesting)
And, to top it all off, he has the right -- nay, the sacred duty -- to report you to the Holy Inquisition for heresy or just not being a good Christian, and woe to you if you actually criticize him. Situations were pretty much identical in, say, China under the Mandarins and during most of the history of the Moslem countries.
Needless to say, the Middle Ages were not exactly equalitarian: thank the enlightnment for making things change, a little. So comparing, say, feudal Europe with modern-day Canada really is comparing Apples and Oranges.
Re:What I'd like to see is a comparison (Score:4, Interesting)
Another poster made the critique that the wealth distribution doesn't take into account the scientific and social progress since then. Now that's talking about apples and oranges! Yes, I'm aware that those things have changed but they have no relevance here. (Unless you consider scientific knowledge wealth, which I do, but they are usually treated separately from traditional wealth because it is much harder to put into numbers, etc.) What I would be interested in is the change of wealth distribution over a long period of human history. I by no means am saying that the number produced would be indicative of progress as the other poster seems to think. It would be just interesting to see, so you know, you can have another datapoint to put current numbers and trends into context.
Re: (Score:3, Informative)
But that's where such conversations always go wrong. The pie isn't always the same size - it grows through production. We aren't just changing the way the economic pie is distributed, we're producing more pie. And, as you alluded to, we're also putting things like Penicillan into the mouths of dying babies for less than a hamburger costs - and someone from 500 years ago would have considered themselves
You're wrong about China (Score:5, Informative)
Another thing in China helped redistribute wealth. While in most places the eldest son inherited everything, in China, the property was divided equally amongst all the sons. This meant that "rich" families often became "ordinary" over a few generations unless they can produce one or two men of great ability every generation or so. In fact, this custom was deliberated introduced by the Chinese emperors to reduce the chance of feudalism.
What's worse (Score:4, Insightful)
More tax cuts for the rich!!!
Re:What's worse (Score:5, Interesting)
What's better for a group of a million people?
Each of them get +$5, or one of them gets $5 million?
If the "one" is an entrepreneur or small businessman, he can likely parlay that $5 million into a significant investment to grow his business, and probably result in at least 5-6 PERMANENT jobs with an annual salary/value of $30k-$40k per year. That additional workforce could allow him to grow his business further, possibly snowballing into more jobs, more business, etc. This ALSO means more tax revenue for the local government, more $ for schools, playgrounds, streets, fire depts, etc.
This is called growth, and it's a good thing for a community.
Does it help everyone equally? NO, and that's why it's so offensive to the leftish
Is it possible that the $5 mill goes to some indolent rich person who wastes it? Sure (and this is pretty much what the
Re: (Score:3, Interesting)
Also, $61k in assets does sound fairly affluent, when you remember to subtract liabilities such as student loans, mortgage, credit card debt, and car loans from your assets.
The farmers are in the top 10% because they're sitting on increasingly valuable land that can only make so much when used for food production. It's totally nonliquid unless they sell out to ADM o
Right idea, wrong math. (Score:3, Informative)
Where'd you go wrong? You forgot to consider that a home isn't like a car -- it holds its value. This means that every dollar you pay toward equity in your home is
If it's legal (Score:4, Insightful)
Still, as long as the issue is `do I cough up for a PS3 or is the Wii good enough` and not `why do millions of people die from easily and cheaply preventable/treatable diseases/issues such as malnutrition, malaria and sleeping sickness` I don't see things changing.
You still think the `war on terror` is important? Perhaps if the number of deaths on 9/11 we repeated in every country, every day, otherwise no - statistically, not really. And yet, look at the ratio of money spent on that futile little endeavor to money spent on issues that affect millions daily.
How's it feel to be rich (on a global scale)? (Score:5, Insightful)
So what? (Score:3, Informative)
Mind the Gap [paulgraham.com]
How unfair! (Score:5, Interesting)
Seriously, the wealthy of the world can be divided into kleptocrats, heirs, and entrepreneurs. As far as I'm concerned, you can shoot the former. Certainly not the second, though you may debate the merits of inheritance tax (which I'm personally against). Mess with the third at the peril of your nations well being.
Like (Score:5, Funny)
Prof. Farnsworth: "I can. But that's because I'm not a penniless hippy!"
We just need to change the way we see things (Score:5, Insightful)
In my own life, I have learned to divest myself of debt financing and to save and survive with more focus on needs and less on wants. I definitely pay a lot less attention to pop culture marketting. Having grown up very poor as a child does make the adjustment easier and somewhat more natural for me, but I am definitely not an unhappy person.
Among the things that no longer hold any direct personal value for me are things like diamonds, gold or other things that do not directly enrich my life in any meaningful way. In short, I value the practical and all but ignore the impractical, useless shiny things in life. I doubt I'll see the world's culture shift in this direction within my lifetime, but if we were to simply stop valuing many of the things we currently value, much of the world's wealth would simply lose value.
You act as if this is some sort of problem (Score:5, Insightful)
The real reason that it seems to be getting more and more exaggerated is because the overall wealth/economy of the nation has continued to grow. This means that more people are able to afford to survive, to get health care, to be in a place where they can fill out these census instead of working their arses off or just trying to stay warm. Think back to the 1900s, or even late 1800s. People that were just scraping by would often not even survive. But really that's all besides the point.
Who cares if we have ridiculously rich people? What does it matter? It doesn't stop you from achieving your goals, you have to work to get there and earn your way the same. Just because there are enormously wealthy people doesn't mean you're prevented from acquiring wealth yourself. in fact, it makes you all the more likely to be able to get rich. These people if they want to stay wealthy, or grow their funds, must use it in some way. Maybe just earning interest in a bank, maybe investing in startup companies. Either way that money becomes a tool banks/companies can use to generate more wealth, and you can get in on that.
Quit being so classist. Just because others have done well doesn't mean you can't, but you surely can't if all you do is gripe about how you deserve more money without doing anything to earn it.
Re: (Score:3, Insightful)
The richest 2% of adults in the world own more than half of all household wealth,
Parent:
because the overall wealth/economy of the nation has continued to grow
Trailer-park libertarian, huh?
Just because there are enormously wealthy people doesn't mean you're prevented from acquiring wealth yourself.
Yeah, thought so. In the real world, one of the major uses of wealth is to concentrate and control further wealth. To put it bluntly, that means preventing YOU from getting it.
Quit being so classist.
It's
Re: (Score:3, Insightful)
Coming up from next to nothing and achieving so much, I really fail to see what all this garbage about wealth distribution and "ruling class" is.
Re: (Score:3, Informative)
Barbara Ehrenreich called bullshit [nickelanddimed.net]on this attitude. [henryholt.com]
Re:You act as if this is some sort of problem (Score:4, Interesting)
This is to be expected. People work disproportionately as well. High intelligence is distributed in a very similar curve.
So, you are assuming that wealth is distributed along some merit based system based on hard work and brains? So, how do explain the railroad moguls who built their fortunes by exploiting immigrant Chinese labor, and forcing small farmers off their land with hired guns and goon squads? How about the textile families who forced women, immigrants, and children to work 10 - 15 hours a day, six days a week for most of the late 19th and early 20th century? How about the British colonial officials who were carried around on litters to supervise the production of Indian tea?
Looking at the other side of the coin, how do explain Paris Hilton? Are trying to tell me that she sits where she is because she is brilliant and hard-working?
All this boils down to a fundamentally flawed assumption on your part about great wealth is accumulated. It doesn't happen through hard work. It happens when capital is amassed and then reinvested in the generation of yet more capital. In other words, a cycle of accumulation that can work even if the owner of the wealth doesn't do anything but raise himself up off the couch long enough to say "I pay you to make money, so you better go get more, or I will not pay you again." Since the distribution of wealth has been uneven since before the renaissance, hard work need have little to do with it.
Think back to the 1900s, or even late 1800s. People that were just scraping by would often not even survive.
Ok, it is true that in the 18th and 19th century it was even harder to get wealthy (or just get by) then it is today. However, in the 1940s through 1970s, there was a general reduction in the disparity between rich and poor. It was at this time that many fortunes were made in manufacturing, oil exploration, housing, and other war time and post-war activities. But taxes were much higher and the distribution of wealth today is more like it was in the 1900s, when it was very difficult to get rich when, then it is like the mid-20th century, when there was more socio-economic mobility. Uneven wealth distribution and social mobility are inversely proportional, my friend.
Just because there are enormously wealthy people doesn't mean you're prevented from acquiring wealth yourself. in fact, it makes you all the more likely to be able to get rich.
Here you make the assumption that everyone aspires to be a multi-billionaire. That seems flawed, as well. Many judeo-christian and non-western moral teachings warn of the dangers associated with accumulating great fortunes. There are many wealthy people who are perfectly decent folks, but, to paraphrase comedian Chris Rock, in many cases, it is true that "behind every great fortune lies a great crime."
Quit being so classist. Just because others have done well doesn't mean you can't, but you surely can't if all you do is gripe about how you deserve more money without doing anything to earn it.
Tell me again who's being classist here? Your argument basically affirms socio-economic distinctions - the differences between the rich and poor (also known as classes) - as part of the natural social and moral order. If any argument is "classist," it would be yours.
And by the way, speaking of people who gripe about deserving more money without doing anything to earn it, may I refer you again to Paris Hilton?
I've never been 100% certain whether tremendous wealth has positive or negative social consequences, but at least I have some kind of notion of reality.
At least now we know... (Score:4, Funny)
Missing econ theory? (Score:3, Interesting)
I might be exposing my ignorance on the subject (I have had hardly any economics education), but it seems to me that there should be something we can do as a pre-emptive release valve for wealth maldistribution. We start out with a relative imbalance, but not too much, say 70/30. This imbalance is not due to unfair advantage. It's just because some people are a more [industrious|clever|capable] than others [1].
The "problem" starts when the accumulation of assets among the more-capable accelerates, a phenomenon that I believe is due to the selfish exploitation of systems. (This is quite probably an evolutionary strategy, so it may not go away soon.) This, of course, is precisely what Marx was on about, and his prediction is that the imbalance will grow to the point that the have-nots will rise up in arms and simply take back what was taken from them (i.e., the release valve is opened). I think history has shown this to be fairly accurate, the French, American, and Russian revolutions being three recent examples.
So accepting that this is the inevitable result of accelerating imbalance, an intelligent course of action would be the invention of an economic mechanism that effectively bleeds wealth back to the proletariat, thereby providing release and staving off revolution. This should make sense to the wealthy as well! A stable system in which they are assured their wealth ought to be better than a short-term system that will lead to their heads being cut off.
Even though there are some mechanisms like this already (e.g., progressive taxation), they are apparently not effective. What's the blockage here? Why can't this be figured out? I am enough of a cynic to think that the main blockage is the arrogant belief of the wealthy that they can suppress revolution indefinitely. However, has there been any good mechanism proposed to address this issue?
[1] cf. Beggars in Spain [amazon.com] for a good treatment of the economic responsibility of the more-capable viz. the less-capable.
Integrating the DC Component of Wealth (Score:5, Informative)
"The rich get richer" is basically a result of something sometimes called the "risk free asset" by modern portfolio theory [wikipedia.org] aka "risk free rate of return" -- generally the interest rate the government pays to borrow money. In classical economics its called "economic rent" or "Ricardian rent" (after the classical economist Ricardo). It results from systemic growth in the economy -- growth that increases the value of assets that do not increase with increasing demand, such as land. If you shove more people onto the Earth, you get higher land prices but you don't get more land. (BTW: This is the real reason guys like Gates, Bush and Kennedy are for immigration liberalization.) In a natural setting, this corrects itself through die-offs and/or fighting over the land -- or whatever the monopoly at issue happens to be (it could be a monopoly on, say, the right to make copies of an operating system that everyone happens to have standardized on, which is what made the present day's richest man). Governments protect wealth holders from this natural redistribution by taxing things to pay for police, courts, military, and other things that protect nonsubsistence property rights. When this service is paid for by taxing things other than those property rights, you have a subsidy of nonsubsistence property rights.
If you don't tax away all monopoly profits and redistribute it evenly to everyone, then you end up with a class of people who have an incentive to load up the economy with more people, whether through immigration or birth rates, in order to increase the demand for their property. This class can be the private owners of the monopolized rental properties or it can be public officials that reserve to themselves and their special interests the economic rent derived from taxation.
Think of it as signal processing where you don't subtract out the DC component of the signal before integrating. You end up overflowing your accumulators and losing the information you were trying to extract.
The only exception you might make is for intellectual property representing genuine invention of technological utility, and subsistence property rights since people will generally fight to the death to retain their subsistence.
That's why "the money quote" from my white paper says:
Not a Zero-Sum Game (Score:3, Insightful)
Consider the graduating class of a typical suburban high school as a closed system (ie ignore everybody not in that class). When they graduate, their individual wealths are usually pretty similar since they have very little in their own name. Now, fast forward 20 years -- some of those people will have been extremely successful, some moderately successful, and some will just be getting by. The relative wealth among the graduates has become skewed, yet each is generally better off than they were upon graduation.
If the pie keeps growing, we don't need to be as concerned with getting a smaller portion of it. In fact, there's a good argument that concentrations of wealth actually help the pie to grow -- when finding a cure for a disease may cost a billion dollars, you need people who have that sort of money and who are willing to put it at risk.
Re:Communism or Socialism (Score:5, Insightful)
Re: (Score:3, Interesting)
Re:They deserve it (Score:4, Insightful)
Are they poor because they don't understand how money works, or do they not understand how money works because they are poor, and so have little access to MBA degrees and financial newspapers, and are forced to spend the majority of their income on living expenses (hence having little to save for long term schemes), and take lotteries because their 'nothing to lose' situation creates a risk-taker utility function, and have jobs that are unreliable and so will likely not give them a predictable future income - hence also forcing them to take loans?
The economic statistics we have suggest the latter - while income inequality is rising, social mobility is falling. Quite simply, a large number of people are poor because they are stuck in the low income trap inherited over several generations.
Re:They deserve it (Score:5, Insightful)
It was worth the karma loss.
Re:They deserve it (Score:5, Insightful)
A very rich man is asked by a journalist how he made his first million dollar. The rich man answered that he started off with just a few pennies, put them in a phone box and made a phone call: "Dad, can you lend me a million dollar, please?".
Re: (Score:3, Insightful)
Re:The rich are disproportionately heavily taxed (Score:5, Insightful)
The richest 2% pay considerably more than 2% of taxes, however. They are disproportionately heavily taxed. I believe in the US, for example, the richest 1% bear 18% of the total tax burden.
Do they have more than 18% of the income (including capital gains, interest etc) and/or own more than 18% of the assets?
Re:The rich are disproportionately heavily taxed (Score:5, Insightful)
If not, on what ethical basis do we justify taking from them what they or their parents have earned and spending it on ourselves?
Re:The rich are disproportionately heavily taxed (Score:5, Insightful)
Re:The rich are disproportionately heavily taxed (Score:5, Informative)
Do they use more than 18% of the expenditure of State?
If not, on what ethical basis do we justify taking from them what they or their parents have earned and spending it on ourselves?
Because the rich have more stake in the state keeping the status quo intact (i.e. enforcing property rights, repelling foreigh takeover) than the poor. Not to mention many often receive indirect benefits in the form of subisidies, etc. from the government.
Re:The rich are disproportionately heavily taxed (Score:5, Insightful)
Do they use more than 18% of the expenditure of State?
If not, on what ethical basis do we justify taking from them what they or their parents have earned and spending it on ourselves?
You're conflating an ethical issue with an economical issue. Just because a capitalist economy has happened to distribute wealth in such and such a manner does not imply that those who received the wealth that they did are somehow ethically justified in spending that wealth. For example, it may well be the case that the economy dictates that your average celebrity or pro-athlete earns 1000 times as much as they need to survive. This is a far cry from saying that these people are somehow morally entitled to spend all of this money in any way they so please, when people are dying every day because the economy gave them a smaller piece of the pie (in a typical Ottawa winter one homeless person dies of the cold per day, for example.) To sum up, just because money is distributed in a particular way does not mean you are ethically entitled to spending it. Ethical questions are an entirely different matter from the particular circumstances that arise from our economy.
Let me note that I can't really fault you for believing this, because it is incredibly commonplace to hear that kind of sentiment. But I am interested in knowing why it is that so many people believe that economic circumstances should dictate what is morally correct. In any other domain it is absurdly obvious that what is ethical is determined by considering the pain and pleasure of the people involved, or by considering other aspects of the human condition, or by adhering to certain ethical maxims. And yet, when the domain of discourse is money, people suddenly forget this -they implicitly introduce the premise that what is ethical is entirely governed by the economy. This sort of assertion would be laughable if made out loud, and yet it is the implicit foundation the very sentiment you expressed in your post.
Re:The rich are disproportionately heavily taxed (Score:5, Insightful)
I'd like to believe that, sir, I really would. Except I know that free markets are not really as free as we'd like to believe. By and large, the extremely rich maintain and increase their wealth through a number of mechanisms. They have connections. They know politicians, and other heads of industry. They enact protectionist laws. The reason lawyers and doctors make so much money is that they have erected barriers to entry to their professions. To practice law, one must attend an expensive law school before being allowed to take the bar. Along with the needless complexity of the court system dictates that leagal endeavors will be very expensive. The medical profession is very similar. While I don't dispute that quality surgery is likely to be expensive, day to day medical care should not be. Doctors, however, stand as the gateway between the people and most medications. I suffer from excema. About once a year, I need a new tube of cream to treat the occasional outbreak. The tube costs $4.15, but I have to pay for a $200 doctor visit before I can get one.
And of course, the rich generally begin life with a great deal of wealth. They have access to better nutrition and schools. They inherit the business connections of their fathers. They attain positions of power not through merit, but as an accident of birth. Which also implies that my own child is just that much more unlikely to attain those positions of power. There are a lot of policy changes that can be made to rectifiy this sort of situation. Eliminate protectionist laws. Reinstate the estate tax. Actually, just treat it as any other taxable gift, because that's what an inheritance is: A gift you make when you die. Eliminate incentives for the poor to remain poor. There are far too many of them to list here. Just a few ideas anyway. I don't mind the rich getting rich on their own merit. But for every James Sinegal (Costco founder) out there, there are 100 asshats riding on daddy's (or grandpa's) coattails.
Wealth != Darwinism Sucess (Score:5, Insightful)
The definition of "fitness" is your ability to reproduce. Welfare mothers, NBA stars with 14 kids, are more fit than CEOs worth millions/billions with one,two, or especially no children, regardless of income.
Earning a degree from college does not make you more "fit". Having children makes you more fit.
Having an IQ of 150+ does not make you more "fit". Being "smart" enough to take birthcontrol to prevent unwanted pregnancies probably makes you more "unfit".
Impoverished Americans are in the top 12% globally (Score:3, Interesting)