Friday, November 5, 2010

Wealth Distribution For Dummies

Let’s use 100 people to represent one hundred percent of the U.S. population, and $100 to represent the country’s wealth. Now let’s distribute the $100 among the 100 people in proportion to how it is spread out within the population.
What got me going on this, was that as alarming as the statistics are about the disparity between the wealthiest and poorest in this country, the graphic representations tend to feel less urgent. And that, ironically, has to do with the magnitude of the inequality. Charts using equal size increments, say, each 1% of the wealth-holders plotted on a bar chart, or even quintiles, for that matter, simply don’t read. So we need to resort to more abstracted depictions, i.e. charts that compare different size groups.
Above left, is a classic wealth distribution chart that compares the shares of different size groups. Sometimes it will be top 1% vs. bottom 99%, sometimes 10% vs. 90%. This 1-4-15-80 chart is from the Economic Policy Institute. The gradated layers amble across an expanse of years with some gentle dips and rises along the way. The meaning of the chart can only be accessed when you read “Top 1%” in the biggest layer and “Bottom 80%” in the smallest layer, and then mentally process the fact that we are being shown a comparison between different size groups. It always frustrates me, because the image doesn’t provoke amazement and outrage. The visual message is one of even distribution.

Drake Bennett, in a Bloomberg Businessweek commentary, 'The Inequality Delusion', points to a study by Dan Ariely and Michael I. Norton about Americans’ perceptions of the country’s wealth distribution by quintile (right chart). Concerning ourselves here with only the top two bars, the top bar shows the actual breakdown, and the second shows the estimations by those interviewed. As the note at the bottom of the chart points out, quintiles four and five on the actual breakdown are not even visible. I wouldn’t be surprised if the pervasive use of different-size-group layer chart (on the left), has graphically reinforced the delusion of those interviewed (on the right).

So I’m throwing this idea of '100 dollars/100 people' out there as yet another way to visualize this information. Yes, it too compares different size groups, but I’m hoping that by using 100 people (an amount we can all fathom), breaking the groups into individuals, and using real money in a way that is familiar (as opposed to $34.60 in pennies or even a stack of dollar bills), we might get a bit closer to getting our heads around, how concentrated the wealth in the U.S. really is.

The really bad news, however, is how much worse off the ‘Nonwealthies' are than they used to be. Bob Herbert’s Election Day column in the New York Times, covers a new book called Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class. Briefly, the book’s authors, Jacob Hacker and Paul Pierson explain that the economic struggles of the middle and working classes in the U.S. since the late-1970s have been due to government policies that favor the rich.

Furthermore, the book “explores the vexing question of how this could have happened in a democracy in which — in theory, at least — the enormous number of voters who are not rich would serve as a check on policies that curtailed their own economic opportunities while at the same time supercharging the benefits of the runaway rich.”

In other words, why do so many Americans continually vote against their own best interests? Hint: the answer has to do with the interconnectedness of the superrich, the power of their focused ability to organize, and the amount of influence that extreme wealth can buy. After all, the total wealth of the bottom 80% combined doesn’t even begin to come close to what the top wealth-owners have socked away.

Bennett reminds us of what John McCain said during the Presidential campaign two years ago. "That is what change means for Barack the Redistributor: It means taking your money and giving it to someone else …"

Telling voters that their money was to be taken from them proved so catchy, that Tea/publicans repeated it endlessly throughout the most recent campaign season.

What McCain and the other “anti-distributors” always neglect to mention, is that they are only addressing between 1% and, at most, 10% of the population. The other 90% have been having their wealth “redistributed” for the last three decades.


  1. Have you seen United for A Fair Economy's 10 chairs exercise about wealth distribution in the US? Check it out:

  2. Lee Raconteur Said:

    The problem is that taking someone else's property to give it to you, or the other 80%, always results in YOU losing your property. There is no way to prevent the loss of your property against your will.

    Your property is your time and labor.

    Thus taking your property against your will is theft. Or slavery. Theft of your labor and/or property, money and possessions.

    The solution to the current crisis is not Socialism/Marxism/Communism/Redistribution.

    It is to learn that these events always happen in a capitalist system, to learn that, recognize it and save for that rainy day in 90 years when everyone gets Bubble Fever again and forgets the lessons they learn from this disaster.

    More Government is never the answer.

  3. So how much of what a person didn't earn themselves do they deserve? Please tell me.


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