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Income inequality

I don't deal with political topics here. But there were some thoughts I had on this fad going around on income inequality.

If you take a look at this report by the economist the claim is that while the income disparity between 99% of the people in the US hasn't changed much that between the 99% and the 1% has changed a lot.

I can see in my mind's eye some person or persons with a definite political agenda sitting at their software and moving a slider control. They first split the population 50/50 and grunt with dissatisfaction. They move it to 25/75. Still not so good. Then they get all excited and move it all the way to 1/99. Yay! Look at THAT income disparity.

I have a few concerns about this graph. Perhaps someone can enlighten me?
  1. If I took the top 1% of a distribution MOST measures I would make using that 1% would be biased in some extreme way. There is no way I could stop that, because I took an extreme part of the population to start with. I'm taking a few samples from a tail, taking that average and comparing it with the average of the rest. What ELSE could I expect from any distribution in the real world?
  2. What kind of outcome are we looking here? A truncation of the tail? Some way to get rid of the super rich? Sure we could, but WHAT WOULD THAT BUY US? What would we be happy with. One super rich individual per country? 10? 100?
I really don't understand this sentiment and frankly I am worried by it. I am worried by a sentiment that people should not be much more financially successful than the average.

If the anger is against the bank bailouts or bank policies, take your money and put it in a different bank or a credit union! If you hate outsourcing, buy local products. If you are unhappy because you are unemployed, start a business!

Life isn't easy, and never was and never will be. Anybody who promises otherwise is lying! There may be some temporary steps the government can take to increase short term demand, but getting rid of financially successful individuals can NEVER improve conditions. That's just jealousy pure and simple.

Progressive tax rates is fine, it's an economic decision on the part of the govt. but just remember, the top 1% are usually mobile, and have international interests, so they just might move to somewhere else more economically suitable for them - and we are left with, well 99% of the people who don't take the financial risk that a lot of the 1% are taking (which got them to 1%).

If you are angry with the bonuses that the wall street guys are getting MOVE YOUR MONEY ELSEWHERE! They didn't steal the money from us, we gave it do them in expectation of higher returns. MOVE THE MONEY ELSEWHERE! It was a bad decision.

If they broke laws, shout for their prosecution. If the laws were lax, shout for better ones.

But don't hate on the rich: it's the surest way to stay poor and miserable.

We are not serfs paying rent to rich landowners anymore. We have choices. But we need initiative and courage to take them. Sure we can take less risk, but then we get less reward. If we complain about that - well that's entitlement and that just keeps us poor.

Take control, and don't hate.

Comments

  1. It's class warfare/entitlement theology as espoused by the President:

    http://danieljmitchell.wordpress.com/2011/10/08/is-this-the-worst-thing-obama-has-ever-said/

    ReplyDelete
  2. Yeah, assuming different classic distributions, what ratio would you expect between the top 1% and the rest? I'm too lazy to do the math & research right now but I'm going to hold that thought.

    People could be arguing that a Gaussian is more fair than a Poisson distribution or a Zipf distribution, so that, even if the data fit what you would expect from a Zipf, that's the "wrong" distribution to have. By the way, distribution is an unfortunate word in this context since it matches the false picture that wealth is created by some independent process and then gets distributed arbitrarily.

    ReplyDelete

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