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The Cost Of An Ultrawealthy Uberclass: $1500 Per Worker
Submitted by mickeyman via The World Complex blog,
Interpretation of scaling laws for US income
It has been remarked that if one tells an economist that inequality has increased, the doctrinaire response is "So what?"
- Oxford Handbook of Inequality
h/t Bruce Krasting
Social Security online has published a full report on income distribution in America.
Two years ago we looked at the distribution of wealth in America. Today we are looking at income.
There were a total of about 153 million wage earners in the US in 2012, which is why the graph suddenly terminates there.
As we have discussed before, in self-organizing systems, we expect the observations, when plotted on logarithmic axes, to lie on a straight line. Casual observation of the above graph shows a slight curve, which gives us some room for interpretation.
I have drawn two possible "ideal states"--the yellow line and the green line.
Those who feel the yellow line best represents the "correct" wealth distribution in the US would argue that the discrepancy at the lower income (below about $100k per year) represents government redistribution of wealth from the pockets of the ultra-rich to those less deserving.
Followers of the green line would argue the opposite--that the ultra-wealthy are earning roughly double what they should be based on the earnings at the lower end.
Which is it? Looking at the graph you can't tell. But suppose we look at the numbers. Adherents of the yellow line would say that roughly 130 million people are getting more than they should. The largest amount is about 40%, so if we assume that on average these 130 million folks are drawing 20% more than they should (thanks to enslavement of the ultra-wealthy), we find that these excess drawings total in excess of $1 trillion. Thanks Pluto!
The trouble with this analysis is that the combined earnings of the ultra-wealthy--the top 100,000--earned a total of about $400 billion. They simply aren't rich enough to have provided the middle class with all that money.
Now let's consider the green line. Here we are suggesting that the ultra-wealthy are earning about twice as much as they should be, and let's hypothesize that this extra income is somehow transferred from the middle and lower classes.
As above, the total income of the ultra-rich is about $400 billion. If half of this has been skimmed from the aforementioned 130 million, they would each have to contribute about $1500.
I expect a heavier weight has fallen on those at the upper end of the middle-class spectrum; but even so, $1500 per wage earner does seem doable. Of the two interpretations, the green line looks to be at least plausible, and we are forced to conclude that those who believe the ultra-wealthy are drawing a good portion of their salaries from everyone else have a point.
But isn't $1500 per year a small price to pay to create a really wealthy super-class?
Paper on causes of income inequality full of economic axiomatic gibberish here (pdf).
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Man worships heirarchy.
Mankind wired for hierarchy.
Man recognizes hierarchy because it often (but certainly not always) arises from meritocracy.
He also worships facile explanations.
While a power law distribution is a pretty good fit for variables like income, there's no law of nature that says that incomes must follow a power law distribution. Treating curve-fitting as some sort of moral imperative is absurd.
Those sows. May the choke on their Thanksgiving stuffning and icening.
It's not that I hate the uber rich, it's just I hate the ones that stole the money from the economy through manipulated interest rates or fraud. They should hang on a 24 kt lace rope.
If someone was to hang(not advocating this at all BTW, I say take their shit and put them to work at min wage with a bus pass and FREE section 8 housing...maybe in Chicago, the Prez says it's a wonderful place, that'll teach alot quickly), for stealin' fiat from the economy, then get prisoners in the system to make Fed Reserve note rope,(ever seen the shit they can fold dollars into?) don't waste MONEY(24kt rope). JMO
GERMANY, the DISGRACE of Europe
...the barbarians, who forced beautiful Europe to get down Zeus’ “back” and made her a prostitute.
http://eamb-ydrohoos.blogspot.com/2012/02/germany-disgrace-of-europe.html
stop posting links to your CRAP SPAM SITE!
there's nothing good about this drivel
What are we going to do about it?
unfortunately, graphs can't express the whole story. There are many 'uber rich' that are not syphoning off the middle/working classes and can be considered part of the productive classes. So, you have to figure out exactly who, in that 100,000 pool of wealthy, are actually looting the wealth of the working classes.
Well, 50 fuckin' million EBT cards and a transaction fee on each for GS. Paid via US Govt(taxes). How many GS employees in this group? start the fuck here. And before you say "50% of americans pay no taxes" there're 44% of Americans gettin' fuckin' robbed in there somewhere before the (not even) top 5% this represents. That top 5% knows loopholes so they don't count either BTW.
By the Way, I've nothin' against anyone becoming wealthy, but add fuckin' somethin' to your country, your great grandkids may thank you one day, they'll likely live there(wherever your family hails from) too.
"There are many 'uber rich' that are not siphoning off the middle/working classes and can be considered part of the productive classes."
Name two.
If stolen money is spent in the market place, does that make it okay?
all wealth beyond a certain level should necessarily be returned to the system from which it was derived. also, there should be no legal way to circumvent this. not by family trusts (like the Rockefellers), offshore shuffling nor by declaring the corporation the entity to which the wealth belongs.
of course, this would only work if the entire world agreed to it, and we all know no nation would. but it's nice to dream, if for only a minute.
Which is why I've proposed (last year) that taxes be set on a semi-log scale: taxes are on a linear scale, and Income (regardless of source) is on a Log scale.
You set the bottom end at, say, 5% for Income at $10k/yr, and 45% at (say) $5M/yr. No taxes below 10k, and at 45% for all above 5M.
On top of that, I'd issue a 20% surtax for all earning above $5M, but with a philanthropic twist: the taxpayer (not the Gov) would have a say in what fraction of that portion would go to the Federal, State and Local governments, and philanthropic causes. None of these may get more than, say, 50% to incentivize each level of Gov to 'compete' on the basis of merit, rather than entitlement.
No loopholes, no exemptions, deviations or special rules, which corrupt the election process.
calling henry george ....
log scale, bitchez!
What exactly is being self-organized here?
I never heard that any self-organizing systems were expected to draw straight lines on any kind of scales.
An ideal self-organizing system (free of fraud and manipulation) would probably be like a pure Meritocracy.
In such a system, I'd expect the frequency distribution of Incomes to be close to a Normal (Gaussian) distribution.
To the extent that it isn't, and is 'wickedly' skewed, is an indicator of the extent to which it IS being manipulated and fraud exists.
The closest we get to an ideal system is in one in which the Checks & Balances are in places and enforced. The more these are absent or compromised, is the extent to which the System is/has shifted to some form of a Totalitarian system -- be it Feudal, Fascist or Communist.
For a while at least, during America's Golden Age, we had a chance of being close to the ideal, and perhaps we were. But now, with each year we drift further from the light of that shiny city in the hill.
"In such a system, I'd expect the frequency distribution of Incomes to be close to a Normal (Gaussian) distribution."
Why?
I think that it comes from the pareto principle. Another name for it is the 80-20 rule, saying that 80% of the wealth belongs to 20% of the people. Since each division can be split into another 80-20, this makes it log scale.
http://en.wikipedia.org/wiki/Pareto_principle
Wow what absolute gibberish. A new low for ZH.
It's 2013, almost 2014. I'm pretty sure you have to go out of your way to make chart pr0n look that shitty.
There are those who get rich though honest labor and acceptance of risk, and voluntary tranactions for thier labor. Then there are those who use Govt Power to either augment or make thier wealth in total. I suspect it is the latter who are upsetting your curves, since your striaght line would only be expected if the system was not tampered with and force were not bineg used to change the result. And for any idiot lefties who think the answer is MORE GOVERNMENT , you obviously don't understand that the Force in question is Government force. Increasing the power of government only increases the opportuniites for Graft and Corruption. The Govt is who issues the threats and takes in the money. Yes, "influence can be bought' just as you can go to the head of a crime syndicate and ask a favor, but you know that you will have to do them a favor in return (don't worry, it will be something you like doing!) . The govt has the power to destroy every company, organization and individual in this country- because leftists argue that the govt ISN'T limited and the Constitution is a relic. He has the power to destory a thing, controls a thing. NExt time you want to wail about XYZ Corporation being so evill, ask yourself what favors they are paying back and who requested them.
Yes, I should have clarified that there is a difference between those who earned their wealth legitimately and those who have tapped into the endless stream of govt coercion for their benefit.