Understanding American wealth distribution
I’ve written some of this information elsewhere before, though this is certainly updated.
I’ll start with a question:
If we were to divide the American population into fifths (called quintiles, 20% chunks) by wealth, what do you think the distribution of wealth by quintile should look like? If you’re a communist, you say the percentage of America’s wealth by quintile should be the same as the percentage of population. But capitalism doesn’t work like that. Come up with an ideal distribution you think makes sense. This question applies to everyone, including Republicans.
If you ask this question, even Republican answers aren’t as skewed as reality. I’m going by figures that are about eight years old; by now, the figures should if anything be more skewed. Here’s about how the numbers looked:
Richest quintile ca. 84%
2nd richest quintile 11%
Middle quintile 4%
2nd poorest quintile 0.2%
Poorest quintile 0.1%
That’s right, the poorest 40% of America’s population has less than 1/3 of 1% of America’s wealth. Right now for the poorest quintile I was generous because they’re actually in debt for more than they’re worth. Their percentage is negative. We keep on looking at the One Percenters. We should start on the other end of the scale, at the 0.3 Percenters (of wealth, not population).
What does this really mean? What does it look like? To answer that question, I’m going to use a form of measuring wealth I used in a post years ago. The problem with looking at wealth is that we don’t have a sense of scale: one …illion just seems like the next …illion. But they’re not. To give you a sense of scale, I want to compare money to something you understand vast differences of scales in. I’ll use time because we all understand a minute and we all understand a decade. So, the equation is one second = one dollar. A reasonably expensive meal is about a minute a person, 60 seconds. A day has 86,400 seconds. The median price of a house in the US is just under three and a half days, mortgaged of course. A million seconds is at just over 11 1/2 days.
And then it gets interesting. If a million seconds is 11.57 days, a billion seconds is roughly 11,570 days. Let’s express that in years: about 31 2/3 years.
The average American lives in mortgaged house worth about 3 1/2 days (median US house value). What’s the richest American, Jeff Bezos, worth? If we measure his time into the past, it takes us past the beginning of recorded history. If we measure it into the future, it takes us roughly to the year 8100 CE. He’s worth about 6,100 years. (If you don’t trust me, he’s worth about $195 billion. You can do the arithmetic yourself.) Bill Gates’ number would only take us back as far as Abraham. For Elon Musk, add about eight centuries to that.
When you understand that they pay lower tax rates than we do, you begin to understand one significant reason we run huge federal deficits. Not only do they pay lower tax percentages, the Republicans would like to do away with inheritance taxes altogether. This would be a great way to create American royalty or at least American nobility, understanding that I’m talking about class, not nobility in a personal sense. Think about the prospect of Don jr. and Eric being worth maybe 50 years apiece. What exactly have they accomplished? Not only would it be a great way to stratify and ossify class, it would be a great way to make the United States Government poor.
We’re not talking about their objecting to a particular size of inheritance tax, we’re talking about their objecting to its existence at all. How necessary is this for the preservation of wealth among the very wealthy? For that I’ll use the late David Koch as an example. He had a wife and three children.I don’t know that this is true, though it probably is, but let’s assume that the estate was divided into four equal parts. Now, just for the Hell of it, let’s get extreme and pretend that the inheritance tax was effectively 99%. This is a ridiculously high number that I do not advocate anything like and that we‘ll never get close to, particularly given strategems to get around paying a lot of it, but let’s say for this example that the rate was a real enforceable 99%. How destitute would Mr. Koch’s heirs be left?
They’d inherit roughly $125,000,000. One hundred twenty-five million dollars. Does that sound like their lifestyle would be excessively limited?
That hundred twenty-five million figure might be a bit ambiguous, so I’ll clear up the ambiguity:
That’s one hundred twenty-five million dollars each. That’s the leftovers after taking 99% of it. And Republicans want us to take Zero.
That pretty much says they don’t want America to be for Americans but for a few of their donors.
And, by the way, this would be terrible for business. The more money is concentrated, the less it gets spent at American businesses, the fewer people they hire, the less they order, the less taxable profits they generate. That’s a longer post and one I’ve already written, possibly multiple times.
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