Physicist, Startup Founder, Blogger, Dad

Tuesday, September 13, 2011

US oligarchy net worth

Is this true? Let's say the top 400 families average a few billion each. Then the average net worth for the bottom 50 million families would have to be about $20-30k. Seems possible.

Guardian: ... In fact, so staggeringly unbalanced has America become that the richest 400 American families have the same net worth as the bottom 50% of the nation.

If this outrages or saddens you, I recommend Who rules America?

If you believe this is a just, pareto optimal outcome, I suggest graduate school in economics, perhaps in Chicago ;-)


Raymond Cunningham said...

From your link:
However, compared to most countries, upward wealth mobility in the U.S. remains quite high. For instance, the U.S. Income Mobility Study conducted by the Treasury Department found the following -The Treasury study examined a huge sample of 96,700 income tax returns from 1996 and 2005 for Americans over the age of 25. The study tracks what happened to these tax filers over this 10-year period. One of the notable, and reassuring, findings is that nearly 58% of filers who were in the poorest income group in 1996 had moved into a higher income category by 2005. Nearly 25% jumped into the middle or upper-middle income groups, and 5.3% made it all the way to the highest quintile.Of those in the second lowest income quintile, nearly 50% moved into the middle quintile or higher, and only 17% moved down. This is a stunning show of upward mobility, meaning that more than half of all lower-income Americans in 1996 had moved up the income scale in only 10 years.The income of those in the top 1% fell by 25.8%, on average, and the top 10% by 2.8%. [8]

galton said...

A big part of the rise in income inequality is due to mass immigration. When the bottom 20% of your population can't read, they aren't going to be middle class -- let alone millionaires. I wonder whether the inequality of income within whites is anywhere near as high.

ziel said...

It's really easy to buy advocacy against wealth re-distribution. Tea Partiers, for example, who are mostly small-business and non-union working class people, identify with the incredibly rich more than the minority leeches they despise. But of course the super wealthy view the Tea Partiers with just as much disdain as those minority leeches, except insofar as they are useful to promote their causes. 

ziel said...

For example, a typical Tea Partier has probably been saving in a retirement fund his whole life and at the age of 45/50, probably has ~100k in a 401k, as opposed to the typical minority who has about $500 dollars saved. But to someone with $100m in net worth, there's no difference between 100k and 500 - they're both pathetically puny sums hardly worth stressing over. But to the Tea Partier, that measly 100k might be the difference between living out a few years of retirement in a fairly safe if not exciting locale and being condemned to an absolute hell-hole. (But yet again, to the super-wealthy, the Tea-Partier's serene retirement locale is not distinguishable from the minority's urban hellhole).

paulyoungUK said...

So short a time ago the left was so focussd on "one world".  Now that global income inequality is drastically reduced, Kruggy and co. like to complain that they aren't keeping up in Princeton, NJ ...   Who rules the world?

MtMoru said...

"quite high" yet lower than almost every other rich country. http://en.wikipedia.org/wiki/Economic_mobility#Worldwide
But mobiltiy can probably be mesured in many ways.

I recommend you watch a very unpleasant documentary, Harlan Conuty USA.

The poor miners are all thin, clean shaven, no tattoos, no legible cothing.

It used to be much harder to tell people apart. Has the distribution of genes changed so much? The culture has, and it's been worst for the proles, who very often now appear sub-human.

MtMoru said...

That there are more rich in the developing world does not mean that "global income inequality is drastically reduced". In fact, the oppoiste is the truth. Or perhaps now not only corporations but also states are people? It's hard to keep up with the latest developments in The Party's ideology.

David Stern said...

Yes, it sounds about right. A big group have zero or negative net worth.

Eric P Johnson said...

‎"The standard of living of the common man is higher in those countries which have the greatest number of wealthy entrepreneurs." -- Ludwig von Mises

Jean Huiskamps said...

http://blogs.reuters.com/great-debate/2011/08/19/of-the-tea-party-by-the-tea-party-for-the-tea-party/... while the campaign that brought them to power channeled the frustrations of some economically distressed voters, the Tea Party freshmen class comprises mostly millionaires ...... Here is a movement united around an unfailing support of tax cuts for people like them, at a time in which poll after poll (23 polls, by one count) reveals the American electorate to be united by unprecedentedly broad-based support for doing the opposite. But there also more specific interests at play: the wealthier freshmen generally made their livelihoods in one of three economic sectors—health care/insurance, real estate and energy—whose profit margins not too long ago appeared particularly vulnerable to Obama’s policy goals ...

5371 said...

Ever heard of eastern Kentucky?

paulyoungUK said...

The global gini coefficient is falling not because of chinese or russian oligarchs (you are right that this wouldn't help) but because more average people in the developing world are emerging from relative poverty.  Five percent of people in china now have an automobile.  

esmith said...

Here's a slightly different perspective. 

This alleged "unbalancing" occurs because the American economy provides almost unprecedented opportunities for accumulation of wealth during one's lifetime.

It is not uncommon for a small number of wealthiest families in a society to possess a significant percentage of all wealth. But, in the past, it used to be inherited wealth.

Starting in 1930's, we've been seeing a drastic crackdown on inherited wealth, because large estates are routinely broken down and subjected to 50%+ estate tax. By now, most of those 400 richest families are headed by individuals who were born into the middle / upper middle class. Top 3 in the aforementioned list of 400 are Bill Gates, Warren Buffett, and Larry Ellison. None of these three were rich by birth.

If you still think that we have an imbalance here, where did it come from? Did we fail to tax Bill Gates and Warren Buffet enough to prevent said "unbalancing"? I doubt it. Did we fail to spread enough cash over the bottom 50%? Since most of them have zero to negative values of net worth, is there any reason to think that they wouldn't spend rather than save any additional money we could've given them?

Kevin Agnew said...

Bill Gates was from a rich family. His father was a high end lawyer, his mother a teacher and was on many boards and committees. She was on a committee with the Chairman of IBM, and convinced him to hire her son's company (Microsoft).

Warren Buffett's family was also wealthy. His grandparent's owned a chain of grocery stores, his dad was a politician and had an investment firm (which is where Warren Buffet began his career).

Larry Ellison was adopted by his aunt and uncle, who had amassed a fortune in the real estate market, until the great depression, when their fortune was lost. He was raised in a middle-class, Jewish neighborhood. 

I don't know about Larry, but both Bill Gates and Warren Buffett support the estate tax. And unless you have more than 5,000,000$ you plan to leave to one person, or plan to inherit more than 5,000,000$, the estate tax wont affect you (federal estate tax rate is only 35% on amounts exceeding 5,000,000$, meaning the effective rate is always under 35%).

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