
Myths of the 1 Percent: What’s Putting People at the Top - tangled
https://www.nytimes.com/2017/11/17/upshot/income-inequality-united-states.html
======
balance_factor
It's interesting what words are not in the article. Words like heir,
inheritance, profit, interest, rentier. The word rent is there, but assumed as
a tenant, not landlord.

I assume the Forbes 400 richest are in the 1%. How did the Koch brothers get
their $100 billion? Where did the Waltons get their $140 billion? Where did
the Mars family get their $75 billion? The article makes it sound like these
people became rich when they decided whether or not to go to law school.

It's important to note how in the US how FIRE (Finance, Insurance, Real
Estate) and health care affect the economy. But a lot of what puts people at
the top is at which hospital they took their first breath.

~~~
ameister14
There are millions of people in the 1%. The 400 people at the very top aren't
going to come into it much.

~~~
hn_throwaway_99
But even within the 1%, the income distribution is highly skewed, i.e. those
400 people are responsible for a very sizable total of the overall wealth
within the 1%.

~~~
MuffinFlavored
i'd be curious to know around what portion the 400 people are responsible for

~~~
llamataboot
"With a combined worth of $2.34 trillion, the Forbes 400 own more wealth than
the bottom 61 percent of the country combined, a staggering 194 million
people. The median American family has a net worth of $81,000. The Forbes 400
own more wealth than 36 million of these typical American families."

[http://www.ips-dc.org/billionaire-bonanza/](http://www.ips-
dc.org/billionaire-bonanza/)

~~~
jjeaff
That is the favorite to parrot around. It's not that impressive considering
the large percentage of the world's population has a negative net worth.

[http://blogs.reuters.com/felix-salmon/2014/04/04/stop-
adding...](http://blogs.reuters.com/felix-salmon/2014/04/04/stop-adding-up-
the-wealth-of-the-poor/)

~~~
hn_throwaway_99
That quote also included the comparison to the _median_ family net worth.

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200x0
Funny to see you people discussing petty caviar-allowance inequality so
fervently within your own arbitrary Western borders yet never giving much
mindshare to the rampant "developing" country exploitation that is the very
source of your general prosperity.

I'm a citizen of third-world country that is being sucked dry by the West for
its resources and getting its people shackled to the ground by direct support
for the ruling dictatorial regime.

I don't even know why I'm writing this..

~~~
lovich
I see what you mean and it is bad. Until we have nations merge however,
there's nothing we can do even when the system is working at it's theoretical
perfection. Our people live in demarcated areas with separate rule sets.

When it comes to the rich vs poor in Western society we are ostensibly equal
and many people are upset because reality doesn't reflect that. When it comes
to the US vs say Burkino Faso, what would the correct course of action be?
There's exploitative actions being taken by individuals and companies against
developing nations that could stop, but then what happens? I don't think
sweatshops are good but no western company is going to source goods from them
if they aren't cheap as the quality isn't the same. We could try to help other
nations get to the same quality of life, but many have made it explicitly
clear that they don't want interference from foreign powers.

Do we act paternalistic and do what we think is right for other people which
removes their autonomy? Do we avoid that and avoid exploiting them, but leave
them in the dust because they have nothing we want or need if they are using
regulation and price arbitrage to gain business? Do we continue as we
currently do which sends money into these countries which should help them
develop, but tends to be spread unevenly and causes a lot of human despair?

I can't tell what the right answer is, I can't tell if there even is a right
answer

~~~
200x0
1\. Exploitative actions taken by individuals and companies are nothing
compared to the ones taken by your governments. Europe is running cheap
education improvement programs here as we speak, and other such show-tell
crap, but they also sign exploitative deals and house corrupt blood money of
my dictator in your banking systems - giving him free-pass to do as he likes,
as long as the deals are signed and people are silenced. It's realpolitik all
the way down.

2\. We do want interference, interference against your current interference.

3\. Just let us establish our own instutitions, stop helping and making deals
with criminals, stop putting on the mask of being humanitarian and then
exploiting the living shit out of us.

4\. Work visas - please make them available for the skilled and offer us some
channel for escape. We are majorly landlocked because our passports don't even
grant us a tourist visas to anywhere other than bumhole Somalia or
Afghanistan.

I could go on for ages but you people have so vastly different view on these
issues I don't even feel like it would be worth my time.

~~~
thatguy0900
Regarding 4, I'm curious why it's in this list with the others. It certainly
makes life better for the individual, but doesn't losing all its top talent to
foreign countries hurt developing countries?

~~~
200x0
As I said, vastly different views, to the point of being annoying.

We, as a country, are not in the business of "country-building" but rather
survival and that of avoiding pain. Our government doesn't need talented
individuals - they just need brainwashed populace and stability for their
power. Thinkers are direct infraction to the system and usually are not
tolareted.

Also, what do you expect disarray of talented individuals with no power to
concentrate power to do alone in a society that doesn't recognize nor like
them?

~~~
fnovd
So you solution (highlighted in point 4) is to move to a Western country and
become part of the problem?

~~~
cardiffspaceman
I think the "casual game theory" of (4) is, if you want to improve those
places, let them have work visas. There are people in certain countries who
can be empowered through work visas to pursue their calling (pastors in
churches, teaching mathematics in universities, sizing contact lenses of the
rich and idle or whatever). Those who choose not to apply for the visas will
maybe try something at home, knowing they can get that work visa if what they
try doesn't work. And maybe in the trying they will find a different calling
than they thought. In succeeding at the things they try at home they might
lower the need for work visas.

------
Mitchhhs
Is inequality a feature or a bug of capitalism? Seems like the general
thinking is that its a feature in-so-much as it encourages innovation,
entrepreneurship, etc. It seems like it becomes a bug when it reaches a level
in which it creates a positive feedback loop of more inequality.

As with anything, i've noticed the discussion is really about how much, not
should it exist at all. Almost every debate in American politics is painted as
black and white, whereas the actual debate is where we fall on a spectrum. It
seems like everyone disagrees so much, but really I think we are haggling over
a slight deviation to the right or to the left and because we have to talk
about everything in such black and white terms, the real discussion gets lost.
We all agree on much more than we disagree on.

~~~
aantix
"Human beings are born with different capacities. If they are free, they are
not equal. And if they are equal, they are not free." \-- Aleksandr
Solzhenitsyn

~~~
fallingfrog
“Alike and equal are not the same thing at all.”

― Madeleine L'Engle, A Wrinkle in Time

~~~
fallingfrog
It's crazy to me how _both_ capitalist authoritarians and state communist
authoritarians will argue that "equal" means "the same". Communists argue this
in order to convince you that in order to be equal you have to be equally
subservient to the state. Capitalists will argue this to convince you that you
can never expect equality since that would mean state communism.

~~~
aantix
Most are drawing a distinction for equality - it's about equal opportunity,
not equal outcome.

~~~
Terr_
Except all (positive) outcomes are opportunities in another context. It's a
continuous process.

The most obvious place to see this is looking at parents' economic outcomes
versus their kids' development opportunities, but it doesn't even have to be
generational.

If you have a sack of money (outcome), you automatically have many more
options (opportunity) for creating a larger stack of money. Imagine a fair and
random gambling game: Insolvent players are removed from the game, so the
player with the deepest pockets at the beginning has the best opportunity of
winning everything.

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cperciva
_In the United States, the richest 1 percent have seen their share of national
income roughly double since 1980, to 20 percent in 2014 from 11 percent._

Not true. The _highest income_ 1% have seen their share of national income
roughly double. But the _highest income_ 1% is not the _richest_ 1%.

~~~
WalterBright
It's normal for articles like this to conflate income and wealth whenever it's
convenient to whatever point they're trying to make.

For example, one might see an article complaining that some percentage of
wealthy people didn't pay income tax last year. But an income tax is a tax on
income, not wealth, and it's commonplace for wealthy people to have a bad year
and lose money.

------
vtange
I'm surprised the words "capital gains" are not mentioned at all in the
article. It's already well known that the richest of the 1% did not get there
purely through a high wage/salary.

Some might blame loose monetary policy for providing easy money for the 1% in
the USA (if you can borrow money and speculate for free, why not, after all),
but if that's the case Japan really stands out; they've been QE'ing since
their '80s bubble popped and they've managed to keep a relatively good Gini
coefficient relative to the rest of the developed world (they're more
egalitarian than their East Asian peers). You'd think that having two lost
decades with your economy stuck in neutral, the Japanese 1% would just leave
their country in the dust.

~~~
jopsen
> It's already well known that the richest of the 1% did not get there purely
> through a high wage/salary.

This talks about the 1%, not the few super rich, which is less than 1 out of
100.

It's confusing because often when people say "the 1%" they actually mean
multi-millionaires; which is less than 1%.

Most 1%'ers are elite professionals. And this articles argues they make more
money because of regulation that creates barriers to competition.

The super rich multi-millionaires and billionaires is a different story.

~~~
mcguire
The threshold of the top 1% by wealth is $8.4 million in the US.

[https://mobile.nytimes.com/blogs/economix/2012/01/17/measuri...](https://mobile.nytimes.com/blogs/economix/2012/01/17/measuring-
the-top-1-by-wealth-not-income/)

------
sigi45
Whatever the reason was, that a family or people where able to accumulate that
much wealth: I believe, there should be an upper limit.

It is not okay for people like Bill Gates (i do think he is a good person) or
Mark Zuckerberg to have that much power on such a small planet.

It is awesome that someone like Bill Gates spends tons of money for research
etc. but he should not be able to make such huge decisions in a modern
democratic society.

There is a good reason to allow people to accumulate wealth. Why shouldn't
someone be allowed to not spend all his/her money for alcohol, party and cars
or whatever and instead put the money into real estate for there children. But
something like 5-10 Million per Child is still super reasonable.

Perhaps that leads the way to a more fair feature where it is not necessary
for anyone anymore to horde money for the familiy heritage.

~~~
vlehto
Is that a real problem?

Seems like 5 richest US citizens own less than 0,5% of all US assets.

I'd be lot more worried about organizations. JP Morgan chase and General
Electric are not exactly democratic either. Both are way richer than Gates.
And while church of latter day saints is not quite in the same league, it's
incredibly wealthy and not at all democratic.

If you assume that Gates foundation gets 5% profits and distributes that, then
it can share about 2,1 billion/year. American Red Cross gets to distribute 2,7
billion/year. Who does their homework better, Bill gates or the average guy
who donates to Red Cross? And yet Red Cross is still not exactly democratic.

It doesn't seem very straight forward how you should count assets or income
and deduct the monetary power from there.

~~~
odonnellryan
I think at the end of the day it approaches dystopian levels of "what can we
do?" against these people if they were to behave in ways that the majority of
society deems irresponsible.

If Gate's wanted to he could cause immense harm in the country.

It can be argued that some like the Koch's and Mercer's are doing that harm:
depending on your political views.

What could be done? These people are literally untouchable. I think the
Mercer's would be untouchable even by the US government, if they played their
hands in a smart way.

...Unless we'd want to send the army after them, they could just hide on their
yachts :)

Anyway, there's no realistic revolution you can have against these people, is
my point. If that fear doesn't exist, well, they can do what they want, yes?

I know that what keeps my worst urges "in check" is because it is not healthy
for me to act on those actions.

I'm talking about stuff like "pissing off my prior employer" and "saying fuck
you to my boss."

I do not know what kind of impulses the .01% have ... I am afraid what I may
say or do to that old employer's company if I didn't have to worry about
repercussions!

What should I fear from them?

~~~
vlehto
Yeah, but what should you fear from organizations? It's easy to scrutinize an
individual. It's lot more difficult to scrutinize an organization. It's
actually difficult to even stay interested in them.

I'd claim that if Gates would have wanted to cause maximum harm, he would not
have earned millions of dollars first. Just found an organization and go evil.
It's more straight forward, less suspicious and more effective. Just look at
Scientology.

------
tveita
"Workers at the 90th percentile of the income distribution for professionals
make 3.5 times the earnings of the typical (median) worker in all occupations
in the United States. Only Mexico and Israel, which have very high inequality,
compensate professionals so disproportionately. In Switzerland, the
Netherlands, Finland and Denmark, the ratio is about 2 to 1."

It's hard to find comparable numbers, but aren't the median wages higher in
all those countries?

The article vaguely makes it sound like it's just a matter of paying highly-
paid professionals less, but would that lift the bottom or just concentrate
the money to an even thinner slice of the population?

~~~
jopsen
> It's hard to find comparable numbers, but aren't the median wages higher in
> all those countries?

Last I looked no; the bottom 30% is where Denmark does better than the US. The
median wages are similar, maybe slightly higher in the US.

> The article vaguely makes it sound like it's just a matter of paying highly-
> paid professionals less, but would that lift the bottom or just concentrate
> the money to an even thinner slice of the population?

Good question. Probably you have to hit the super rich 0.001% with massive
taxes, or an aggressive estate tax (preventing wealth from accumulating across
generations).

But even with that, good regulation that facilitates competition is probably
necessary. I wouldn't be surprised if that makes a bigger splash than the top
0.001%.

Note: there is good and bad regulation. Denmark is heavily regulated, but a
lot of it is efficient and fosters competition.

------
hkmurakami
>Almost all of the growth in top American earners has come from just three
economic sectors: professional services, finance and insurance, and health
care, groups that tend to benefit from regulatory barriers that shelter them
from competition.

>The groups that have contributed the most people to the 1 percent since 1980
are: physicians; executives, managers, sales supervisors, and analysts working
in the financial sectors; and professional and legal service industry
executives, managers, lawyers, consultants and sales representatives.

Not a surprising result at all when you consider that the bottom of the top 1%
has an income of high 6 figures to somewhat above $1M. That number is
something very achievable for the most successful "professionals" \-- doctors,
lawyers, bankers (not HF managers), traders, and there are _a lot_ of these
people out there!

It's a natural consequence that if you look for a large number of people
earning $1M, you'll end up with highly successful "professionals" rather than
outlier level wealth from business ownership, which is much more rare.

~~~
danharaj
Im very confident the author knew this and thought this little shell game
would make his calls for deregulation look convincing.

------
squozzer
>the political causes of the 1 percent’s rise are directly under the control
of citizens.

Patently false. The political causes are directly under the control of the US
state and federal legislatures, which are populated by whom?

------
alexasmyths
What I find interesting is that it is in the 'professions'.

I would have thought it was massively wealthy equity owners/holders, hedge
fund managers etc..

But yes - if we are paying doctors $1M/year then this will happen.

At a nearby hospital in Canada, technology improvements have allowed doctors
to diagnose using x-rays a lot faster ... but the Unions have kept pay scale
the same. The doctor at the Orangevill hospital earns over a million dollars a
year, and he works from home. Swipe, swipe, swipe, swipe - done.

Faster tech = more money for the doctor. Savings not passed on to taxpayers.

Innovators thought they were improving healthcare, but they really were
throwing more surpluses onto the value chain, to be captured by those with the
most power: doctors, possibly drug companies.

One would think a private system would be more efficient ... but it's probably
just as bad in the US.

~~~
pdonis
_> One would think a private system would be more efficient ... but it's
probably just as bad in the US._

The US health care system is not a "private system". It's a mishmash of
private and public which combines the worst features of both. The reason we
have it in the US is that during WW II, the government controlled wages, so
businesses trying to compete for employees had to offer something else as an
incentive, and they mainly picked health care benefits. Then, when the war was
over and the government stopped controlling wages, instead of going back to
competing on wages and dropping employer-provided health benefits, the system
of employer-provided health benefits kept on growing. Which now meant it had
to be regulated by the government, and so on, and so on...

~~~
groby_b
Let's not forget that health care is a great point of leverage for employers,
too. Because often, your spouse is also insured on that same plan, and leaving
a job is not palatable if either one is dealing with significant illness.

If you wanted to create a legal equivalent of indentured servitude, company
healthcare plus high healthcare cost would be a great solution. I don't think
that was the _plan_ , but it sure works out that way.

------
candiodari
TLDR: the public secret is that if you take away the top 0.01% who started
businesses like Amazon, Microsoft, Google, etc, the big driver of inequality
is not capitalism/economy/...

The big driver of inequality ( 0.01% to 1% ) is ... government regulation.
Directly, as in the government hires tens of thousands of highly paid people.
And, more offensive at least to me, government regulation giving massive
advantages to specific businesses (most recent "wtf" example I think would be
equifax, with the government rallying behind them _and_ (worst of all)
effectively forcing large banks to buy from them). Businesses pushed like this
by governments include Boeing, Oil companies, Tesla, SpaceX, ... But this is
only the very upper layer. There is a huge "second" layer that includes large
parts of the legal space, the health care space, the education space, where
hundreds of thousands of people make $400k+ per year because ... well because
the government says so.

Which of course very much opposes most of the viewpoints taken on this site.
Given that this is what gives over half of the 1% owes their wealth directly
or indirectly to taxes (or in the case of things like equifax "hidden taxes".
Taxes, as in government forces you to pay, but you pay in your mortgage bill,
you pay in charges on your bank account, etc ...) ... there is a strong case
to be made that more taxes ... will increase inequality. At least as long as
the government doesn't slim down a LOT.

------
whatyoucantsay
Few things are sadder than seeing Britain and China post equal "gains" for the
1 percent.

------
neil_s
This is such an interesting article, attempting to answer one of the biggest
questions of the 21st century in one fell swoop. However, I'm not sure all of
the reasoning and analysis holds up. For example, software engineers with
salaries over 390K are far from rare in the US, and Switzerland has both large
numbers of bankers per capita and private doctors with incredibly high
incomes.

~~~
mcguire
In terms of income, anyone with an income greater than $390,000 per year is
pretty rare. Roughly 99% of the population make less, in fact.

