Those poor folks in the 99% who only have 8 million to their name.


After some time looking I finally found the number I’ve been after, which is the cutoff point in terms of the wealth of those elusive and mysterious  “1% people” everybody is talking about.  Here’s the excellent research document:

http://www.levyinstitute.org/pubs/wp_589.pdf

We learn that the cutoff for moving from the impoverished 99% to those nasty ONE PERCENTERS is …. wait for it …. a  Net worth of $8,232,000 or more..

WoW.

So here’s the problem if you are an anti occupation person – those one percenters SURE have a LOT of money!    In fact as you go into the category of the super duper rich – the top tenth of a percent, you get wealth so great it’s hard for most of us to even imagine – hundreds of millions of dollars.

HOWEVER if you are a “pro occupation” person I think you have even a bigger problem, and that’s the thing most  would not even call a “problem” at all, it’s the fact that we are SO prosperous here in America that millions and millions of people who are well below the “one percent” mark are incredibly well off .   Somebody with 7 million in the bank won’t make the 1% cut, but clearly they are very rich.

How moved should we be by a movement that considers millionaires to be among the disadvantaged in America?  

Of course the 99% folks don’t mean it literally, rather they are concerned that a small number of elite rich folks control the whole show.   It’s an important topic, yet it seems to me the concept of exploitation of the poor by the rich weakens as you examine closely the actual data as well as the procedures and power structures as well as how things work in the country’s business and political circles.  Lots of redistribution is already taking place, though tax critics will reasonably note that taxes go mostly to entitlements for the middle class and the defense department.   Higher taxes are not necessarily a path to “greater fairness”.

Certainly we want more even distribution of America’s massive wealth, but it’s also important to keep the production levels high so we have something to redistribute.  This balance is not easy.  Not easy at all.

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About JoeDuck

Internet Travel Guy, Father of 2, small town Oregon life. BS Botany from UW Madison Wisconsin, MS Social Sciences from Southern Oregon. Top interests outside of my family's well being are: Internet Technology, Online Travel, Globalization, China, Table Tennis, Real Estate, The Singularity.
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10 Responses to Those poor folks in the 99% who only have 8 million to their name.

  1. Why should there be a more even distribution of America’s massive wealth?

    In the first place, wealth can not be distributed. Wealth is earned by peoples’ hard work, energy, capabilities, and virtues. (True, wealth can also be stolen, but that is another topic.) Secondly, the only way that wealth can be “distributed”, is if one assumes, beforehand, that there is a finite amount of wealth. But wealth is not finite. What we count as “wealth” is a ex poste estimate which we total and from which we calculate percentages.

    Because people in the top percentiles have more wealth does not prohibit persons in the lowest percentiles from earning more wealth for themselves. The percentages might not change but the resources they might own would increase. For example, as a commercial driver, I increased my income from $30,000 to $50,000 per year by changing companies and working longer hours, a 66% increase in my income, but probably much less a percentage increase in my percentile ranking. My additional $20,000 was not transferred to me from anyone else. I earned it.

    We used to have elite rich folks who controlled the whole show. They were called Kings, who owned everything and distributed it to whomever they pleased. One way to understand history is to see that the power and control and wealth of kings has been removed from kings and spread among the people. Those who want to redistribute income or share the wealth want to become the king – the government – who gives to whom he (or she) pleases. They say “equal” but I do not believe them.

  2. BTW, your comment about the richness of the 99% is right on. I did not mean to take away from that. Today, even the poorer ones in the United States are wealthy by any objective, non-relative, standard.

  3. horatiox says:

    Tax cuts and supply side policies have led to the great increase in the 1%’s wealth, JD. The divide between very wealthy and ..the 99% (even the successful, upper middle class, etc) has grown exponentially since RR’s days.

    Distribution does seem to relate to normativity in a sense (not just economic efficiency). Humans object to the Bill Gates/Buffett type wealth. They don’t approve of success via mere capitalist fortune (ie stock market, software boom, inheritance,etc). We object to a system which rewards people of similar skills (say Gates’ education, or wall street brokers vs Miss Garcia the HS math teacher) in a greatly disproportionate fashion–BG’s a..billionaire, and Ms Garcia struggling to keep her schoolteacher job.

    Ergo, the Occupy movement. Hardly perfect but somewhat reasonable (tho with many street people–which the Media focuses on)

    “orthovoxwritings”: “Christian, freelance columnist, conservative with libertarian leanings, retired, elderly, opinionated, and, most especially, abundantly blessed. ” Well Mr Duck, Pahraise de Lawd, with Rev. Ortho here

    • JoeDuck says:

      The fact we do not LIKE to see massively disproportionate distribution is an excellent point Horatiox, in fact I think it’s the key driver of the 99% movement. The *gains* we’ve seen over the past decades (as well as most wealth in general) have fallen mostly to the wealthy, where it does seem that a healthier system would distribute the gains more evenly.

      But what is the right / optimal / fair / best / possible balance? Only the naive think that you can create an entire economy that distributes “to each according to their need” and takes “from each according to their ability”. That was a recipe for the stagnation highly centralized, mostly communist economies saw for decades until they realized that free market principles would incentify the behaviors pretty much any system needs to generate enough production to keep things humming along.

      So, given that we don’t have that optimal balance yet, we still need to recognize that it’s not a broad sweeping leveling of everything of value.

      I also note that if we DO make the systems more fair on a *global* basis there aren’t many here in USA who will be better off, because even the poorest 10% here are better off than billions and billions of folks in Asia and Africa. I’m for more economic equality but unlike many I recognize that’ll come at a significant expense to many here in the USA who are not even remotely related to the wealth of the 1%ers.

      • JD: You write,
        ” I’m for more economic equality but unlike many I recognize that’ll come at a significant expense to many here in the USA who are not even remotely related to the wealth of the 1%ers”

        What will it cost me, who is in the bottom 2%ile of the wealth distribution? What will be my significant expense?

      • Orthovox that’s a good question and I’d guess that the bottom 2% in USA is probably below the global average, though I’d guess not by that much. There are billions of poor people living on dollars per day. Did you reasearch that – I’m kind of skeptical you are in the bottom 2%, which means you are really pretty far underwater. If you can pretty much rub 2 coins together (ie if you have a positive net worth), I think you’d be well above the 20th percentile or so…. need a bit more research to be confident of that one tho…

      • horatiox says:

        American leftist often are naive. Actually most Americans are–including the tea baggers who assume that if the Govt. just cuts taxes, slashes programs and let the wealthy do their thing, everything will be fine. That may do for the 1% (or even top 5%). Not for the rest of us.

        The problem might be called Statist-phobia. Efficient govt. programs–even entitlements–are not impossible, nor is responsible govt. intervention. But the Teabag types just assume any statist policies are wrong,corrupt or worse totalitarian (though most will use ..public institutions when needed). They’ ve been indoctrinated with libertarian ideas or quasi-libertarian ala Ayn Rand.

  4. Nice contrasting comments OrthoVox and Horatiox! Ortho I certainly agree that good system reward people for productivity, but I don’t follow your “wealth cannot be redistributed”. This happens often via many mechanisms such as taxes, inheritances, and even outright confiscation / nationalization. I think you could make a case that there should be NO redistribution of wealth – that all social services, roads, military, etc costs should somehow be itemized and paid in some “non-redistributive” measure, but it’s not a strong case and is not practical. How would you care for those who cannot produce much/anything? Not to mention the road you drive on which was funded by redistributed wealth in the form of the higher taxes we charge the rich in our system. ALL societies without exception practice some redistribution of wealth.

    But I think maybe your point is that without disproportionate wealth we lose incentive and I agree with that. The issue though is how to optimize that disproportion so you get incentive but also make sure everybody eats well, and I’m surprised you think we can’t make any progress in the direction of having more of the wealth flow to the bottom half here in USA, or if you view thing globally have more wealth flow to the bottom….95 percent, a group that controls surprisingly little of the total global wealth.

    • Mr. Hunkins,

      Thank you for your comment and you are correct in that wealth is distributed and redistributed all the time. I intended to make a point about the use of inappropriate statistics of income distribution to determine government policy.

      What I needed to try to express more clearly is that neither wealth nor income can be dealt out like a deck of cards. Walter Williams did this much better than I on November 23rd here, http://www.gopusa.com/commentary/2011/11/23/williams-should-the-rich-be-condemned/?subscriber=1 .

      Every economic transaction is a transfer of wealth; see one of my columns here, https://sites.google.com/site/orthovoxwritings/home/columns-2011/110826-redistribution .

      I do indeed believe unequal distributions of both wealth and income lead to a a healthy economy and a healthy society. I believe the the natural flow of wealth is from the wealthy to the less wealthy. Like energy and water, wealth does not naturally flow uphill from the poor to the rich. Most rich people get rich because they fulfill a customer’s need and desire for which the customer is willing to pay. Some, a relative few today, get rich from preventing the poor from receiving the natural flow of wealth or by confiscating too much of the products of the work of the poor. What these few fail to understand is that they could have been much richer by being more generous and more compassionate.

      I observe that plenty of wealth has already flowed to the lowest percentiles of both income earners and wealth holders. Using percentages to describe the status of percentiles without looking at the absolute values leads us to foolish and impossible policy decisions. I cashiered at Wal Mart for years and observed the buying habits of many people in the lower percentiles of income and wealth. Few ate poorly.

      You point out correctly that all governments redistribute wealth by taxation to provide those things the society needs in common. Indeed, without such government power, chaos and anarchy reign. So I would not try to make a case that there ought be no forced, mandatory, redistribution of wealth.

      God himself tells me to care for the poor, the disabled, the unabled, and those in prison. I am called personally to that task. I am not called to force you to feed the poor. Of course, many don’t hear or obey Him, therefore, the government ought to care for some of the least able.

      Thank you again for your comment which has led me to try for more clarity. I hope I have responded adequately.

  5. Mr. Hunkins, you are quite correct about the 2%, I really need to avoid hyperbole. Our joint SS income put us near thr the 14-15% percentile family according to http://taxpolicycenter.org/numbers/displayatab.cfm?DocID=2970. Of course those are incomes which are “taxed” while we do not pay tax on our SS. The 2%ile is under $9000. Ironically, that is about the sum we might pay for Medicare Part B, Medigaps for both of us, and Part D RX insurances. Probably explains why. I felt as if I were at the 2%Ile.

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