Here's my response to your Wealth, Income, and Power Distorted link by G. William Dumbkopf
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However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (Wolff, 2004, p. 4, for a full discussion of these issues).
Besides, if we counted cars and household assets (even though we've counting household debt), it would kinda go against our purpose here. Ya know.
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Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person's net worth.
In addition, economists use the concept of financial wealth, which is defined as net worth minus net equity in owner-occupied housing.
Ignoring equity in people's houses allows us to cook the statistics even more to our liking.
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As of 2001, the top 1% of households (the upper class) owned 33.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 51%, which means that just 20% of the people owned a remarkable 84%, leaving only 16% of the wealth for the bottom 80% (wage and salary workers).
84% is pretty small. Why, in a sample composed of our immediate family and all dependents - five households:
The top 20% (my wife and I - and I am one of those managerial-professional types) own essentially 100% of the wealth. That's right - 100%!
Our kids and their spouses and dependents (the bottom 80% of households) own near zero wealth (!) (a few piddling little accounts that will need decades of work and saving to amount to something - oh, they have cars and household stuff but that doesn't count).
All of which goes to show that the biggest single source of inequality in America (that Obama people think needs fixin' apparently) is simply the fact that older people have had more time to acquire more stuff than young people. How horribly unfair! Save our kids and our grandkids, Obama, why should they have to work and save and invest for decades to acquire stuff like their parents and grandparents did?
Just think about it. Use your brain. Don't let socialist-minded liberals bamboozle ya.
A new household is usually formed as each person reaches around age 18. And our average life expectancy is about 71. So households consist of individuals and families headed by people between the ages of about 18 up to about 71 - a span of 53 years. Households are weighted toward the bottom cause at age 18 and for some years thereafter most people are unmarried. Till marriage, each individual = one household. As people age, they tend to marry - effectively households merge and combine assets.
Is it a surprise to anyone that households headed by people in the 60.4 - 71 year age group have got a disproportionate portion of society's assets? Should we be surprised the households headed by people in the 18 - 28.6 year age group have hardly any assets (especially since we're not counting cars and household stuff)? IOW, these supposedly alarming statistics are pretty much what we ought to expect to see. If we think anyway.
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Figures on inheritance tell much the same story. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). Thus, the attempt by ultra-conservatives to eliminate inheritance taxes -- which they always call "death taxes" for P.R. reasons -- would take a huge bite out of government revenues for the benefit of less than 1% of the population. (It is noteworthy that some of the richest people in the country oppose this ultra-conservative initiative, suggesting that this effort is driven by anti-government ideology. In other words, few of the ultra-conservatives behind the effort will benefit from it in any material way.)
Call it ideology or whatever you want. The opposition to death taxes is based on the belief people should be allowed to own property and dispose of it as they want. Just because someone dies, the government shouldn't come in and confiscate the wealth they've worked to accumulate during their lifetime. People should be able to transfer that to their heirs if they choose to as a basic matter of equity. Property belongs to its owners, not to the government.
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The only industrialized democracy with a higher concentration of wealth in the top 10% than the United States is Switzerland at 71.3%. For the figures for several other Northern European countries and Canada, all of which are based on high-quality data, see Table 4.
The other states are countries with high taxes and welfare state policies which encourage people not to save for themselves but to depend on the government for their support.
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Those who control a government can use their position to feather their own nests, whether that means a favorable land deal for relatives at the local level or a huge federal government contract for a new corporation run by friends who will hire you when you leave government.
Like when the wife of a longtime contributor buys part of the lot the house you want to buy sits on?
There's a powerful argument against increasing government power here. But don't expect an advocate of socialism to make it.
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If the top 1% of households have 30-35% of the wealth, that's 30 to 35 times what we would expect by chance, and so we infer they must be powerful.
No, its not what we'd expect by chance! Because "households" includes all people ranging in age from about age 18 on up to retirees, we shouldn't expect households to all be roughly equal in wealth. Wealth is acquired over time for most people and therefore households headed by older people ought to have vastly more wealth ... as they do. The writers hope people are too unthinking to realize this. For liberal readers, they're probably right.
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The income distribution also can be used as a power indicator.
Of course, income is affected by age as well. Households composed of young people typically have low incomes. Households headed by older people include a lot of people who've been working at a career and/or business for decades and who therefore have much greater incomes.
Again, I'll refer to the sample of households consisting of myself and my wife and our kids and their dependents. The top 20% of these households (my wife and I, both of whom work and are in our 50's) have roughly 2/3 of the income of these households. The bottom 80% of the households have only about 1/3 of the income of these households. A problem for society? Hah. |
