
The richest 10% of households now represent 70% of all U.S. wealth - smacktoward
https://www.marketwatch.com/story/the-richest-10-of-households-now-represent-70-of-all-us-wealth-2019-05-24?link=sfmw_tw
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6gvONxR4sf7o
How do you take into account negative wealth? If 20% of americans have zero or
negative wealth, and you need the positive wealth from the 20th-40th
percentiles to make up for the negative, do you say the bottom 40% account for
zero percent of U.S. wealth? Or do you just call negative wealth zero for
these purposes? How's the calculation work?

I'm asking because I'm wondering whether it's "the rich are too rich" vs "debt
is getting crazy" or somewhere in between.

~~~
founderling
Money is debt.

Imagine an island with two residents. Alice and Bob. There is no difference
between these two scenarios:

1: Alice has 1 seashell. Bob has 0 seashells.

2: Alice has 0 seashells. Bob has 0 seashells. Bob owes Alice a seashell.

Either way, Alice can go to bob and exchange her wealth for an apple. In
scenario 1, she gives him a seashell. In scenario 2, she pays by voiding his
debt.

Either way, Alice owns 100% of all wealth.

~~~
6gvONxR4sf7o
Isn't scenario 1 equivalent to

3: Alice has 0 seashells. Bob has 1 seashell. Bob owes Alice a seashell.

Once all the accounts are settled by Bob paying Alice the seashell he owes
her, it becomes scenario 1, so this seems a better match for scenario 1 than
scenario 2 does.

~~~
founderling
Maybe.

What I wanted to emphasize is that a dollar "In the bank" means nothing else
then "The bank owes you a dollar".

And banks do not lend money they don't have. And where do they have it from?
From other customers.

Ergo: Your $1 in wealth is someone elses $1 in debt.

~~~
6gvONxR4sf7o
I agree with that, but it doesn't answer the question of how to account for
negative wealth in a X% of americans own Y% of wealth calculation. In scenario
2, Bob has negative net wealth. In scenario 3, Bob has zero net wealth (which
is why 1 and 3 are equivalent, not 2).

Supposing we had a scenario where once all accounts are settled, Alice has 2
seashells, and Bob had -1 seashells, does alice have 100% of all wealth? 200%?
(Equivalently, Alice has 1, Bob has 0, and Bob owes Alice 1)

(edit for everyone else: this thread is confusing because I changed my comment
to respond to founderling's edit, but founderling responded to my original
comment before I changed it... ¯\\_(ツ)_/¯)

~~~
founderling

        Alice has 2 seashells, and Bob had -1 seashells
        does alice have 100% of all wealth
    

Yes. Bob has no buying power at all.

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deogeo
In other terms, top 1% owns 32%, leaving 38% for the 9% below that.

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gok
> The national homeownership rate for the first quarter of 2019 was 64.2%,
> according to the U.S. Census Bureau. That is below the historic average of
> 65.2%, which dates back to the 1960s.

Ugh I really wish we stopped caring so much about homeownership. Misguided
pro-homeownership policies got rates unusually high in the mid 2000s, reaching
almost 70% by 2005. It had no impact on wealth equality and almost certainly
made the Great Recession worse, if not causing it entirely.

~~~
drivingmenuts
The people who care about home ownership are either trying to justify/maintain
the value of the home they own, or they’re trying to sell you a home.

Since there’s such a large number of renters, what happens if we just convince
them to ignore the non-renters?

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jedberg
So we know that this distribution is bad for the economy, and these trends
generally precede a recession or depression.

We also know that the policies that fix this, namely a wealth tax and or
extremely high taxes on the wealthy generally don't produce the results you
want (the ultra-rich tend to find ways to avoid said taxes so only the minor-
rich end up paying).

So what do we do?

~~~
throwawaysea
Why do you think such distributions generally precede a recession or
depression? I don’t see the causality here as clearly as say a yield curve
inversion. And follow-up, why is that bad instead of just expected?

People have more purchasing power and access to goods/services than ever
before. Perhaps the relative ubiquity of smartphones is the most emblematic
sign of this. Put another way, things are better than they’ve ever been and
even in the last ten years, quality of life has improved in many ways. So is
there really a problem?

~~~
kjar
This argument is laughable. We all have smartphones so serious wealth
inequality is OK? These days having a phone is a near requirement.

~~~
throwawaymath
I don't have a comment on inequality generally, but what's your point
specifically about a phone being a requirement?

Toilets are also a "near requirement" in any meaningful sense that phones are
a near requirement. But toilets (and sewage more generally) are obviously
quality of life improvements over what humans had in previous epochs of
history.

Stated more succinctly: hasn't it always been common for major improvements in
quality of life to eventually become the default, rather than the exception?
Or am I misunderstanding your point?

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tzs
What is pretty much missing from almost all articles about the top N% having
M% of some resource where N < M is a discussion of what percent the top N%
_should_ have.

Note that unless everyone should have exactly the same amount of whatever
resource is under discussion, then the answer to that question is not N should
equal M, because that is mathematically impossible.

~~~
throw0101a
> What is pretty much missing from almost all articles about the top N% having
> M% of some resource where N < M is a discussion of what percent the top N%
> should have.

This involves a value judgement that goes beyond reporting the facts that the
article does. You'd have to go to the op-ed section for that.

Piketty has some ideas in his book:

* [https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...](https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century)

And even given the topic, and the book's length, I found it quite readable.
Highly recommended.

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TAForObvReasons
Is this really a surprise? The 2008 bailouts were specifically targeted in a
way that benefited the richest 10% of households disproportionately. Monies in
the tax cuts and bailouts of companies were used for buying back stock [1],
creating gains for those who owned stock but not for the other households that
don't own sizable stock portfolios.

[https://www.cnbc.com/2019/05/25/the-stock-market-would-be-
mu...](https://www.cnbc.com/2019/05/25/the-stock-market-would-be-much-lower-
if-it-werent-for-companies-buying-back-their-own-shares.html?yptr=yahoo)

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jrh206
Honestly thought it would be worse than that?

~~~
FabHK
According to this, the top 1% control 32% of the wealth (and the bottom 90%
about 33%, a bit hard to see on the graph).

According to the previously discussed Bloomberg piece (about Zucman and Saez),
the top 0.1% of taxpayers own 20% of US wealth, the top 1% control 39% (and
the bottom 90% have 26%).

So, it might be worse.

EDIT to add: Bloomberg piece discussed here:
[https://news.ycombinator.com/item?id=19991496](https://news.ycombinator.com/item?id=19991496)

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carbocation
It's wild that neither this article nor the research paper it's based off of
seems to define the absolute dollar value of those quantile cutpoints.

[https://www.federalreserve.gov/econres/feds/files/2019017pap...](https://www.federalreserve.gov/econres/feds/files/2019017pap.pdf)

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crimsonalucard
Well if 10 percent of the population contributed to 70 percent of the world's
wealth then this is fair. Without the 10 percents leadership the world would
not be what is is today.

Think about it, you're just an engineer. Anybody can build something trivial
like a rocket ship, a super computer or a large hadron collider. However, not
everyone has the leadership skills to actually inspire you build that rocket
ship. That's why CEOs are so rare. If we weren't giving the majority of
Americas wealth to these CEOs there wouldn't be any technology in the world
today because nobody is around inspiring the engineers build this stuff. So
this wealth inbalance makes perfect sense. The amount of skill involved with
inspiring people vs building a light speed drive is incomparable, only the CEO
can inspire engineers to build such a thing. If you hire 10 CEOs instead of 10
engineers and pay them 90 percent of Americas wealth you'd be accumulating so
much leadership skills and potential into a single company that you won't even
need the engineers anymore... The technology will just materialize from excess
inspiration.

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chrisco255
The Pareto principle strikes again!

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willart4food
Pareto's Distribution

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lovedva
Is the Pareto distribution the way it is because on every time step the tail
ends have exponentially more ability to pull away? Is there some sort of
statistics concept that models time variation of distributions (first
derivative?) or their acceleration (second derivative ?)

~~~
hammock
No. There is quite a bit of income mobility in the US, and these types of
reports never really explore it. Instead, they leave you with the idea that
the top 10% today are the same people that were there 10 years ago. Which is
false.

~~~
FabHK
Social mobility in the US is, by now, smaller than in many other developed
countries, IIRC.

EDIT to add some sources:

> The key observation, based on a growing body of research, is that when it
> comes to upward social mobility, the U.S. is truly exceptional — that is, it
> performs exceptionally badly.

[https://www.nytimes.com/2019/02/28/opinion/ivanka-trump-
soci...](https://www.nytimes.com/2019/02/28/opinion/ivanka-trump-social-
mobility.html)

> Although the discovery of America’s low mobility, compared to similar
> countries, is relatively new, it turns out that mobility’s been low for some
> time.

[http://www.msnbc.com/msnbc/us-social-mobility-
problem](http://www.msnbc.com/msnbc/us-social-mobility-problem)

> A new study indicates that from the 1980s to the 2000s, it became less
> likely that a worker could move up the income ladder.

[https://www.theatlantic.com/business/archive/2016/07/social-...](https://www.theatlantic.com/business/archive/2016/07/social-
mobility-america/491240/)

~~~
dantheman
It's hard to compare, you have perfect mobility when everyone is dirt poor. In
the USA it's possible for people to get really rich, so measuring how many
from the very bottom make it to the very top is not a good metric; especially
when composing to other countries whose top is in the middle. So if you
compare mobility between income ranges you will find the US to be more mobile.

~~~
monocasa
Every country has a rich upper class.

~~~
dantheman
You need 10 million to be in the top 1% in the US and 700k to be in the top 1%
in the UK. There's a big difference between going from 0 net worth to 700k
than to 10 million.

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esoterica
A little bit of googling seems to indicate that the total household wealth in
the US was $86 trillion as of 2015, and there are 127 million households in
the US, so the average household has $700k net worth. If you have more than
that (and many people in tech do), then you are a beneficiary of inequality,
not a victim of it, and you don’t have the right to whine about the
billionaires hoarding all the wealth at your expense.

A surprising number of upper middle class yuppies love to act like they are
downtrodden proles just because they have less money than Jeff Bezos.

~~~
PierceJoy
Now do it with the median.

~~~
esoterica
The point of using the average is to evaluate the hypothetical where all the
wealth in the country were distributed evenly (and many of the people who
claim to be victims of inequality would actually be worse off in a truly equal
society).

~~~
6gvONxR4sf7o
The average wealth is the 84th percentile wealth. If everyone became worth
$677k, 84% of people would be better off (inflation aside).

~~~
esoterica
That is true, but people in the 90th, and 95th and sometimes the 99th
percentiles still complain about how oppressed they are because billionaires
exist.

