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The top 1 percent of American income-earners account for ~25% of the nation’s total income every year. The top 1 percent of American wealth-holders account for

by rudiger 16y ago

The top 1 percent of American income-earners account for ~25% of the nation’s total income every year. The top 1 percent of American wealth-holders account for ~40% of the total wealth. I hear statistics like this all the time but I never understand... What is the "correct" amount? The top 1 percent of anything by definition are going to hold some larger share. There are compelling theoretical reasons for wealth and income distribution to follow a power law (ie. Pareto distribution). Why should these numbers be as they were 25 years ago, or as they are in other countries now?

dot 16y ago
Because the bottom X% are starving.
henrikschroder 16y ago
The main criticism isn't that "the rich" have a lot of the income and assets, or that their share is increasing, it's that the rest of the people are getting less. The american society as a whole is getting richer, but the majority of the members of that society are getting poorer. Is that really the way things should be? On the other hand, this piece only talks about inflation-adjusted net income. If you compare the quality of life or purchasing power I think that everyone is still better off with each year. Even though a typical middle-class family has less money now than 30 years ago, they can have mobile phones and a flat-screen TV and a computer and internet and one or two fuel-efficient comfortable cars, and none of those things existed 30 years ago.
- lusis 16y ago
  Wealth isn't a fixed pool of stuff. Me having more wealth isn't taking away from someone else.
  - chairface 16y ago
    Nor is that what henrikschroder is claiming. I understand him to be saying that the majority of Americans have declining incomes, adjusted for inflation, over some recent period of time. Could be true, but I'd like to see numbers.
    - henrikschroder 16y ago
      Exactly, I've even seen some articles here on HN that were about this, but a quick googling seems to say that the jury is kinda out on that one. If you look at wikipedia the incomes for the lower percentiles are pretty flat, but not really declining. shrug
      - lusis 16y ago
        Yes, I apologize. There are a few things that raise my hackles when it comes to discussions of "income inequality" and "rich people". 1) The presumption that wealth is gained at the expense of someone else. 2) That wealth is always given and not earned. 3) That being "rich" is the result of some sort of criminal behavior. 4) Phrases like "doesn't need that much money" or "has too much money" and the like. 5) The idea that a job belongs to anyone other than the person providing it. You didn't claim any of those things per se.
  - mkramlich 16y ago
    Not strictly true. In real life, sometimes it does. Sometimes it doesn't. It depends on the particulars.
    - lusis 16y ago
      True. Obviously if we both work for the same company, there's a fixed set of money they pay for our two salaries (generally speaking). Should I perform better, My salary might go up at the expense of yours going down but alternately your salary could stay the same while mine goes up.
_delirium 16y ago
A recent survey found rather surprising consensus between people on different part of the political spectrum if you asked them what an ideal wealth distribution would be. Overall, people thought the top 20% should ideally own about 32% of the wealth; liberals preferred 30%, while conservatives preferred 35%. People making over $100k/year were slightly more pro-inequality, but still only gave 40% as their ideal target. No demographic group gave anything close to the current proportion, which is around 83%, as their ideal target. So it seems like "top 20% should own 35% of the wealth" is roughly the consensus of the vast majority of Americans, give or take 5%, across many demographic and political groups. Where they differ is what, if anything, we should do to make that happen. Source: http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20pre...
- Tycho 16y ago
  So what would that actually mean? If you put everyone on the X axis in order of their income, with the Y axis representing income, what would the curve look like in order for the top 20% to own 30% of the wealth? And if you left this running, what would the total wealth graph look like after say 50 years?
  - corysama 16y ago
    According to http://en.wikipedia.org/wiki/Wealth_in_the_United_States http://en.wikipedia.org/wiki/Wealth_in_the_United_States the total household wealth in the US is $55 trillion. https://www.cia.gov/library/publications/the-world-factbook/geos/us.html https://www.cia.gov/library/publications/the-world-factbook/... says the US population is 313 million. $55t/313m = $175k per person on average. The most conservative proposal from the survey splits the wealth at roughly 40:20:20:10:10. That means if we had an average representative of each of the 5 groups, they would each be worth 5* $175* (that group's percentage) = $350k : $175k : $175k : $87.5k : $87.5k Meanwhile, the most liberal proposal was roughly 30:20:20:15:15 giving $262K : $175k : $175k : $131k : $131k
    - Tycho 16y ago

by rudiger 16y ago

dot 16y ago

Because the bottom X% are starving.

henrikschroder 16y ago

The main criticism isn't that "the rich" have a lot of the income and assets, or that their share is increasing, it's that the rest of the people are getting less. The american society as a whole is getting richer, but the majority of the members of that society are getting poorer. Is that really the way things should be? On the other hand, this piece only talks about inflation-adjusted net income. If you compare the quality of life or purchasing power I think that everyone is still better off with each year. Even though a typical middle-class family has less money now than 30 years ago, they can have mobile phones and a flat-screen TV and a computer and internet and one or two fuel-efficient comfortable cars, and none of those things existed 30 years ago.

lusis 16y ago
Wealth isn't a fixed pool of stuff. Me having more wealth isn't taking away from someone else.
- chairface 16y ago
  Nor is that what henrikschroder is claiming. I understand him to be saying that the majority of Americans have declining incomes, adjusted for inflation, over some recent period of time. Could be true, but I'd like to see numbers.
  - henrikschroder 16y ago
    Exactly, I've even seen some articles here on HN that were about this, but a quick googling seems to say that the jury is kinda out on that one. If you look at wikipedia the incomes for the lower percentiles are pretty flat, but not really declining. shrug
    - lusis 16y ago
      Yes, I apologize. There are a few things that raise my hackles when it comes to discussions of "income inequality" and "rich people". 1) The presumption that wealth is gained at the expense of someone else. 2) That wealth is always given and not earned. 3) That being "rich" is the result of some sort of criminal behavior. 4) Phrases like "doesn't need that much money" or "has too much money" and the like. 5) The idea that a job belongs to anyone other than the person providing it. You didn't claim any of those things per se.
- mkramlich 16y ago
  Not strictly true. In real life, sometimes it does. Sometimes it doesn't. It depends on the particulars.
  - lusis 16y ago
    True. Obviously if we both work for the same company, there's a fixed set of money they pay for our two salaries (generally speaking). Should I perform better, My salary might go up at the expense of yours going down but alternately your salary could stay the same while mine goes up.

_delirium 16y ago

A recent survey found rather surprising consensus between people on different part of the political spectrum if you asked them what an ideal wealth distribution would be. Overall, people thought the top 20% should ideally own about 32% of the wealth; liberals preferred 30%, while conservatives preferred 35%. People making over $100k/year were slightly more pro-inequality, but still only gave 40% as their ideal target. No demographic group gave anything close to the current proportion, which is around 83%, as their ideal target. So it seems like "top 20% should own 35% of the wealth" is roughly the consensus of the vast majority of Americans, give or take 5%, across many demographic and political groups. Where they differ is what, if anything, we should do to make that happen. Source: http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20pre...

Tycho 16y ago
So what would that actually mean? If you put everyone on the X axis in order of their income, with the Y axis representing income, what would the curve look like in order for the top 20% to own 30% of the wealth? And if you left this running, what would the total wealth graph look like after say 50 years?
- corysama 16y ago
  According to http://en.wikipedia.org/wiki/Wealth_in_the_United_States http://en.wikipedia.org/wiki/Wealth_in_the_United_States the total household wealth in the US is $55 trillion. https://www.cia.gov/library/publications/the-world-factbook/geos/us.html https://www.cia.gov/library/publications/the-world-factbook/... says the US population is 313 million. $55t/313m = $175k per person on average. The most conservative proposal from the survey splits the wealth at roughly 40:20:20:10:10. That means if we had an average representative of each of the 5 groups, they would each be worth 5* $175* (that group's percentage) = $350k : $175k : $175k : $87.5k : $87.5k Meanwhile, the most liberal proposal was roughly 30:20:20:15:15 giving $262K : $175k : $175k : $131k : $131k
  - Tycho 16y ago