8 ms·

The top 1% own 40% of the wealth and have realized 95% of the increase in wealth over the past decade: https://en.wikipedia.org/wiki/Wealth_inequality_in_the_U

The top 1% own 40% of the wealth and have realized 95% of the increase in wealth over the past decade: https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... "More recently, in 2017, an Oxfam study found that eight rich people, six of them Americans, own as much combined wealth as half the human race."

ahupp 7y ago
Both of these things can be true: that the top 1% own a large fraction of wealth, and that an even larger fraction is owned by the pensions and retirement plans of the non-wealthy. Wealth comparisons are tricky, e.g they'll show that Americans are some of the poorest people in the world because there's a large fraction with debt (e.g homes, credit cards, student loans). While technically true, that doesn't really match our intuitions for what wealth means.
- UweSchmidt 7y ago
  Well then our intuition is wrong. If your finances throughout your life are not in order, if you have high debt, regardless if it's because of medical bills, student loans or too big a car and house, you are in a weak position. What good does a nice car do if you worry about bills and if you try to avoid to look at the balance in your banking app? You don't always know how rich some folks are, but for the most part it's easy to see if someone is living above their means, if you get a little anxienty on those people's behalf, then good!
  - bluGill 7y ago
    If you die deep in dept you managed to cheat at life: your cost of living was higher than input. If you die rich you got cheated: you put more effort into life than you got out of it.
    - zentiggr 7y ago
      And there is the failure of so much modern thinking, laid out in black and white: your financial picture is your measure of success. God I hate greed and the profit motive more than anything else in this whole wacky place. I would love to die in average suburban comfort if it meant the billions I'd made had all gone to deserving causes and not to any flagrant lifestyle of my own.
      - bubblewrap 7y ago
        I don't see how your desire is incompatible with the comment above it. You can give all your money to deserving causes. By the definition of the previous post, you have then succeeded in life, because you have no money left. If you don't give money to deserving causes and happen to have some left, you have been cheated by life. It's pretty similar to what you say (except it gives you more options on what you want to spend on).
      - roenxi 7y ago
        Greed and the profit motive are proxies for resources not being infinite and so we have to make hard choices about who gets what. What doesn't get managed (observe->think->act if needed) gets squandered; and if we squander resources at the societal level that would just be stupid. We don't have the abundance of the modern era because luck is on our side, we have it because our management practices have grown unbelievably efficient over the centuries. Economic forces are the most effective way of triggering the management cycle; and because of that are necessary. The need to focus on the material (which manifests as greed and profit seeking) is an ugly fact of life in the same way that needing to eat regularly is an ugly fact of life. It'd be better if we could get rid of both, but there are practical considerations to bow to.
        jononor 7y ago
        You forgot how we (as a society) have been consuming fossil fuel resources (in particular) way above a sustainable rate. Millions of years of accumulated resources gone in tens of years. Possibly 'efficient' in the short term, but most likely problematic in the longer term - even without accounting for climate change.
  - nickelcitymario 7y ago
    Well, thought experiment: John lives in extreme poverty. He's debt free, but is unable to adequately feed himself or his family. Several of his children have died from malnutrition. Marc lives in a nice suburban home, has 3 square meals a day, so does everyone in his family. However, his debts (including his mortgage, car payments, student loans) exceed his savings. If our intuition is wrong, then John is winning. He's ahead of Marc financially. But I can tell you which one of them I'd rather be. It's not John.
    - mwfunk 7y ago
      They’re both screwed. I’d rather have crippling debt than children dying from malnutrition, but obviously both Marc and John are completely screwed in different ways. They’re both losers in this scenario, there are no winners.
      - UweSchmidt 7y ago
        Well said.
      - pitaj 7y ago
        That doesn't seem even remotely true. Taking on large amounts of debt can be risky in many cases. But consider the following case: - newly purchased $150k home with down-payment of $30k - $80k savings / investments - $20k car - $80k/yr income This person is not at risk, but they have a net worth of $[30k + 80k +20k - 150k] = $-20k
        bdowling 7y ago
        Your math is off. The home is an asset worth $150k plus a liability of $120k for the mortgage, for a net positive $30k. That puts your hypothetical person with a net worth of positive $130k, not negative $20k as you calculated.
        ericd 7y ago
        When valuing a business, you typically look at the discounted future cash flows in addition to assets/debt. Basically, you factor in their profitability and calculate the current value of owning that stream of cash flow. People have cash flows as well. So even though people typically only count assets/debt, Marc effectively has a net worth substantially higher than -$20k if he’s saving more than he’s spending, which jives better with people’s intuition about Marc’s situation.
  - geofft 7y ago
    > What good does a nice car do if you worry about bills and if you try to avoid to look at the balance in your banking app? You have a nice car you can drive around? I mean, the purpose of money is to do things with it. The balance in your banking app is only relevant because you desire to put it to some purpose. If you stop desiring to put it to some purpose, you're equally equipped whether or not you have a positive balance, and if you already have put it to some purpose like a nice car, you've accomplished the actual goal you wanted and should stop getting distracted by the means. (You should, of course, continue to pay attention to the means if you have other, unfulfilled goals. And perhaps you should think about whether having a nice car is more of a priority than those goals. But the goals are not money in and of itself.) If you've got debts from student loans or mortgages that are set up such that you can pay those debts slowly and in a way you can afford to pay, and in the meantime you've got money to spend, you are actually fine. A balance sheet that only looks at how much is in the bank and how much you're in debt and not at how much you can afford to hold that debt is not telling the full story. (This is, incidentally, the same reason the national debt isn't a big concern: nobody is going to demand that we pay that debt right now. So going further into debt gives the ability to do more things with that money, i.e., it gives us the effect of having more money, even though on paper we now have less money.)
  - dredmorbius 7y ago
    Yonatan Zunger's notion of "financial shock wealth" is the most novel and satisfying framing of this question I've seen in years. ...If $5,000 is something you could afford, ask yourself the same question again with $100,000 (fire burn down your house?), with $250,000 (cancer treatment and your health insurance kicked you off?). For everyone, there’s some number which is the largest size of a financial shock they could weather. This number is probably the truest measure of a person’s real wealth: What is the largest unexpected financial shock you could sustain without the cost of that to you suddenly becoming ten times the original cost or more? That number isn’t something easy to calculate; it depends on whether you have a family that can help you out, on your income, on whether that shock involves losing your job (and thus your health insurance, if you live in the US), on whether you have access to any other sources of security (including public assistance).... https://shift.newco.co/2017/12/04/your-financial-shock-wealth/ https://shift.newco.co/2017/12/04/your-financial-shock-wealt...
- yeahitslikethat 7y ago
  We see wealth as living in a big house. Not the net value of that house on a balance sheet. Reality is unimportant. Is perception that matters to society.
anonthrowaway2 7y ago
That study is super flawed. Its conclusion is directionally correct, but aggregating negative wealth just doesn't make sense in this context, so the numbers "8" and "half" are meaningless except insofar as you interpret them only with the precision "few" and "lots".
onetimeusename 7y ago
The claim that the top 1% have realized 95% of the increase in wealth over the past decade is spurious. I think the original study[1] that claim came from only argued that was the case for percentages of income growth, which is not wealth, and only true from 2009 - 2012. I think it has been propagated since then as a different claim that the top 1% had 95% of the increase in all the wealth for the past decade. I don't think there is any evidence for this stronger claim. [1]: https://eml.berkeley.edu/~saez/saez-UStopincomes-2012.pdf https://eml.berkeley.edu/~saez/saez-UStopincomes-2012.pdf
- dractori 7y ago
  You're absolutely right, I misread that statistic.
  - simonebrunozzi 7y ago
    And you get an upvote because answers like yours are simply beautiful to read.

ahupp 7y ago

Both of these things can be true: that the top 1% own a large fraction of wealth, and that an even larger fraction is owned by the pensions and retirement plans of the non-wealthy. Wealth comparisons are tricky, e.g they'll show that Americans are some of the poorest people in the world because there's a large fraction with debt (e.g homes, credit cards, student loans). While technically true, that doesn't really match our intuitions for what wealth means.

UweSchmidt 7y ago
Well then our intuition is wrong. If your finances throughout your life are not in order, if you have high debt, regardless if it's because of medical bills, student loans or too big a car and house, you are in a weak position. What good does a nice car do if you worry about bills and if you try to avoid to look at the balance in your banking app? You don't always know how rich some folks are, but for the most part it's easy to see if someone is living above their means, if you get a little anxienty on those people's behalf, then good!
- bluGill 7y ago
  If you die deep in dept you managed to cheat at life: your cost of living was higher than input. If you die rich you got cheated: you put more effort into life than you got out of it.
  - zentiggr 7y ago
    And there is the failure of so much modern thinking, laid out in black and white: your financial picture is your measure of success. God I hate greed and the profit motive more than anything else in this whole wacky place. I would love to die in average suburban comfort if it meant the billions I'd made had all gone to deserving causes and not to any flagrant lifestyle of my own.
    - bubblewrap 7y ago
      I don't see how your desire is incompatible with the comment above it. You can give all your money to deserving causes. By the definition of the previous post, you have then succeeded in life, because you have no money left. If you don't give money to deserving causes and happen to have some left, you have been cheated by life. It's pretty similar to what you say (except it gives you more options on what you want to spend on).
    - roenxi 7y ago
      Greed and the profit motive are proxies for resources not being infinite and so we have to make hard choices about who gets what. What doesn't get managed (observe->think->act if needed) gets squandered; and if we squander resources at the societal level that would just be stupid. We don't have the abundance of the modern era because luck is on our side, we have it because our management practices have grown unbelievably efficient over the centuries. Economic forces are the most effective way of triggering the management cycle; and because of that are necessary. The need to focus on the material (which manifests as greed and profit seeking) is an ugly fact of life in the same way that needing to eat regularly is an ugly fact of life. It'd be better if we could get rid of both, but there are practical considerations to bow to.
      - jononor 7y ago
        You forgot how we (as a society) have been consuming fossil fuel resources (in particular) way above a sustainable rate. Millions of years of accumulated resources gone in tens of years. Possibly 'efficient' in the short term, but most likely problematic in the longer term - even without accounting for climate change.
- nickelcitymario 7y ago
  Well, thought experiment: John lives in extreme poverty. He's debt free, but is unable to adequately feed himself or his family. Several of his children have died from malnutrition. Marc lives in a nice suburban home, has 3 square meals a day, so does everyone in his family. However, his debts (including his mortgage, car payments, student loans) exceed his savings. If our intuition is wrong, then John is winning. He's ahead of Marc financially. But I can tell you which one of them I'd rather be. It's not John.
  - mwfunk 7y ago
    They’re both screwed. I’d rather have crippling debt than children dying from malnutrition, but obviously both Marc and John are completely screwed in different ways. They’re both losers in this scenario, there are no winners.
    - UweSchmidt 7y ago
      Well said.
    - pitaj 7y ago
      That doesn't seem even remotely true. Taking on large amounts of debt can be risky in many cases. But consider the following case: - newly purchased $150k home with down-payment of $30k - $80k savings / investments - $20k car - $80k/yr income This person is not at risk, but they have a net worth of $[30k + 80k +20k - 150k] = $-20k
      - bdowling 7y ago
        Your math is off. The home is an asset worth $150k plus a liability of $120k for the mortgage, for a net positive $30k. That puts your hypothetical person with a net worth of positive $130k, not negative $20k as you calculated.
      - ericd 7y ago
        When valuing a business, you typically look at the discounted future cash flows in addition to assets/debt. Basically, you factor in their profitability and calculate the current value of owning that stream of cash flow. People have cash flows as well. So even though people typically only count assets/debt, Marc effectively has a net worth substantially higher than -$20k if he’s saving more than he’s spending, which jives better with people’s intuition about Marc’s situation.
- geofft 7y ago
  > What good does a nice car do if you worry about bills and if you try to avoid to look at the balance in your banking app? You have a nice car you can drive around? I mean, the purpose of money is to do things with it. The balance in your banking app is only relevant because you desire to put it to some purpose. If you stop desiring to put it to some purpose, you're equally equipped whether or not you have a positive balance, and if you already have put it to some purpose like a nice car, you've accomplished the actual goal you wanted and should stop getting distracted by the means. (You should, of course, continue to pay attention to the means if you have other, unfulfilled goals. And perhaps you should think about whether having a nice car is more of a priority than those goals. But the goals are not money in and of itself.) If you've got debts from student loans or mortgages that are set up such that you can pay those debts slowly and in a way you can afford to pay, and in the meantime you've got money to spend, you are actually fine. A balance sheet that only looks at how much is in the bank and how much you're in debt and not at how much you can afford to hold that debt is not telling the full story. (This is, incidentally, the same reason the national debt isn't a big concern: nobody is going to demand that we pay that debt right now. So going further into debt gives the ability to do more things with that money, i.e., it gives us the effect of having more money, even though on paper we now have less money.)
- dredmorbius 7y ago
  Yonatan Zunger's notion of "financial shock wealth" is the most novel and satisfying framing of this question I've seen in years. ...If $5,000 is something you could afford, ask yourself the same question again with $100,000 (fire burn down your house?), with $250,000 (cancer treatment and your health insurance kicked you off?). For everyone, there’s some number which is the largest size of a financial shock they could weather. This number is probably the truest measure of a person’s real wealth: What is the largest unexpected financial shock you could sustain without the cost of that to you suddenly becoming ten times the original cost or more? That number isn’t something easy to calculate; it depends on whether you have a family that can help you out, on your income, on whether that shock involves losing your job (and thus your health insurance, if you live in the US), on whether you have access to any other sources of security (including public assistance).... https://shift.newco.co/2017/12/04/your-financial-shock-wealth/ https://shift.newco.co/2017/12/04/your-financial-shock-wealt...
yeahitslikethat 7y ago
We see wealth as living in a big house. Not the net value of that house on a balance sheet. Reality is unimportant. Is perception that matters to society.

anonthrowaway2 7y ago

That study is super flawed. Its conclusion is directionally correct, but aggregating negative wealth just doesn't make sense in this context, so the numbers "8" and "half" are meaningless except insofar as you interpret them only with the precision "few" and "lots".

onetimeusename 7y ago

The claim that the top 1% have realized 95% of the increase in wealth over the past decade is spurious. I think the original study[1] that claim came from only argued that was the case for percentages of income growth, which is not wealth, and only true from 2009 - 2012. I think it has been propagated since then as a different claim that the top 1% had 95% of the increase in all the wealth for the past decade. I don't think there is any evidence for this stronger claim. [1]: https://eml.berkeley.edu/~saez/saez-UStopincomes-2012.pdf https://eml.berkeley.edu/~saez/saez-UStopincomes-2012.pdf

dractori 7y ago
You're absolutely right, I misread that statistic.
- simonebrunozzi 7y ago
  And you get an upvote because answers like yours are simply beautiful to read.