Subject: Re: Consumption Gap Widening Date: 16 Sep 1998 11:48:49 PDT From: wfhummel@concentric.net (William F. Hummel) Organization: Concentric Internet Services Newsgroups: talk.politics.libertarian, sci.econ, talk.environment, alt.politics.usa.republican, alt.fan.rush-limbaugh, alt.politics.economics, alt.neo-tech, alt.philosophy.objectivism, alt.politics.libertarian, alt.journalism, alt.news-media, alt.politics.media References: 1 , 2 jim blair wrote: What makes me mad is that even after all that money spent to fight poverty, one person out of 5 is STILL in the bottom quintile. We must DO SOMETHING about that!! William F. Hummel: >Does it make you happy that more than half of the wealth is >concentrated in the top decile? Hi, I have read some of these "X% of the people own Y% of the wealth" statements, and have dicided that X and Y can be just about anything you want, by how "wealth" is defined. In one extreme, 1% of the people own 90% of the wealth. It is common to hear that the top 1% own 39% (or 22%) of the wealth. And that is just in the USA. Worldwide, the distribution is even more unequal. These are all "true" depending on how "wealth" is defined. Often houses, cars, appliances, clothes (and just about everything that many people own) is EXCLUDED: only stocks and assets that only a few own are counted as "wealth". The claim to future Social Security is also omitted. Now a Martian flying over the country in his saucer would look down and consider that the houses and cars that he saw were part of the "wealth". But if you were to claim that 1% of the people owned 90% (or 39%) of the cars or houses, everyone would know you were fudging the figures to make some kind of anti-rich political point. But if you say "wealth" many will believe you, especially if you don't define what you mean. But, OK, let's accept your claim that 10% of the people own 50% of "The Wealth". (I don't doubt that wealth can be defined so as to make this true). And let's also assume that is BAD. (I don't think it is, but this is a value judgement thing). Now since the post was about a UN report and deals with wealth inequality in the world, and since the US is only about 5 or 6 percent of the world population and the entire industrialized nations have only about 20% of the world population, and since the median household income in the US is about $33 - 35,000 per year, and since the US has a higher median income than the average industrialized country, (following me here ;-) it is a good bet that you and me and anyone reading this thread in a household with an income of over about $25,000 or so a year is included in that top 10%. And the poor of the world are mostly in places like China and India and Mexico and other third world countries. So the problem becomes: what can WE (those of us in that top 10%) DO to equalize the wealth of the world? Or the consumption of resources and goods in the world? LET ME COUNT THE WAYS Current US policy is to promote world trade and a Global Economy. This results in capital and jobs "moving" to poor countries like Mexico and India and China etc. Which is raising wages there. But this also widens the wealth gap in those countries, as SOME people there improve their incomes faster than others. But in the "long run" the world will become wealthier and eventually more equal. If that is TOO slow for you, how about some way to fire all those high paid people and replace them in their jobs with poor people who never had a chance to learn the skills that make the rich people rich. We could exchange Bill Gates and a Mexican subsistance farmer who is just as smart but just never had an education. And an airline pilot with a New Deli street beggar, pro basketball players and surgeons etc, with the poor people of the world. You and I could change places with Amazon head hunters. But this would be only a temporary solution if the new people in the high pay jobs learned how to do them, then they would be the "rich", and the former rich would be poor. Which is one problem with "rich get richer" claim: often it is the poor who got rich. Like Andy Grove. Consider that most of the wealth that is responsible for the gap is in the form of stocks and coroprations. Much of the growth of the "gap" in the US has been the rapid rise of the stock market since about 1980. The wealth distribution would be much narrower both in the US (and world wide) if there were a really big stock market crash, right? Like in 1929 only more so. So the fastest and most effective way to increase equality world wide would be to find a way to bring back the Great Depression. Another way would be a nuclear war. Or everyone who earns more than the world average, or has more wealth than the world average could either quit when they reached the world average, or keep working but give the "extra" money to the poor. But back to your question: when I consider the likely alternatives, yes, I am happy that us 10% have half of the world's wealth. William F. Hummel wrote: > Ah yes, this is the best of all possible worlds. Especially if > us (or even we) 10% have half of the world's wealth. Can I > assume that greater inequality would be even better? > > William F. Hummel Hi, While I am not Pangloss, I can easily think of ways which would both improve the living conditions of EVERYONE on earth AND create greater inequality. If you can't, then consult the "Wealth Fairy"; esp "The Wealth Fairy on Steroids". at: http://www.geocities.com/capitolhill/4834/rat.txt I will even suggest that something along this line is the most likely (and perhaps even the only) way to improve living conditions for everyone. -- ,,,,,,, _______________ooo___(_O O_)___ooo_______________ (_) jim blair (jeblair@facstaff.wisc.edu) For a good time call http://www.geocities.com/capitolhill/4834 From: "Tweek" Organization: MindSpring Enterprises Newsgroups: sci.econ, alt.politics.economics References: 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 Mr. Coburn wrote: >.... The point, of course, is that the VAST majority of > ownership is still concentrated in only a few very large hands and those > hands have never and will never be "in the ditch". ... >..... It is clear to me that the > benefits of technology are going to the BIG owners (those that owned BEFORE > the great boom in asset prices) and not to the producers or the consumers. > > Tweek: I'm not sure just who the "BIG" owners are, but 65% of all net worth is in the hands those who have a net worth of $2.7 million or less. Of those who have more than $2.7 million, most of their net worth is in the form of an unincorporated business. In 1983, the most common(22%) unincorporated business was a "professional practice". Law, medicine, accounting and architecture, specifically. The second most common(20%) was "other wholesale/retail outlets". By 1992, the real estate and insurance were the most common unincorporated businesses. Few of the richest households were in these lines of business in 1983. Taken at face value, these data suggest that different households were in the top 1% in different years, according to the author. Source: Federal Reserve Bank of St. Louis, "Review" The Rich and the Poor, Demographics of the U.S. Wealth Distribution, John C. Weicher, July/August 1997 Asset Holdings of the Richest 1% of Households Unincorporated Business (43.2%) Stocks(10.9%) Investment Real Estate(19.4%) Home Equity(7%) Trusts(2.1%) Bonds(5%) Farms(1.5%) Misc Assets(2.8%) All Other(8.4%) ....it would appear that their wealth isn't nearly as high as perceived at least not as a percentage of the total. The referenced article stated that the top 1% had 35% of net worth. You have stated that we shouldn't count some of these people because of the nature of their wealth. What I found quite interesting was that it only required $2.7 million to join the top 1%. And the fact that stocks only represented 10.9% of their net worth.