Facts of Life: Wealth in the USA

Let's take a brief timeout from current events to pursue a little basic education. After all, one reason the Republican Party is so strong in present-day America is that most people don't know what the $@&% is going on around them. One example is economic inequality in this country, which cannot even be discussed without drawing howls of protest from the political "Right" about "class warfare". Well, let them howl.

Fact is, the distributions of wealth and income in the USA are rather lopsided right now, and have been getting more so for the past few decades. We can and should have an open dialog about whether this is good or bad, and what to do about it if we decide it's bad, but first we should all understand the basic facts. Even if the consensus is that the present degree of inequality isn't bad, economic realities such as this should be kept in mind when discussing other policy issues. I've prepared the graph below to try to give a clear understanding of where we stand, using the best data available to me.

In this graph, area represents wealth, with the large outline of the continental US representing the total, and smaller outlines within representing portions. Each stick figure represents 1% of households, and their placement shows who owns what. Thus the lone figure occupying the green area in the middle commands the 36% owned by the top 1%, while the 4 figures scattered through the blue area mark the 36% owned by the next 4%, 15 stick men in the purple stake out the 24% owned by the next 15%, and those 80 figures crowded into the white space at the edges occupy the 4% shared by the bottom 80% of households.

OK, does everybody here grasp that? Good. Now practically speaking, voters can be divided into distinct groups, i.e. those who (A) don't know, (B) know but don't care, (C) know but think this distribution is good, or (D) think this degree of imbalance is a problem. I doubt you will be surprised to hear that I am in group D, and I will argue rhetorically with C and B eventually, but it is group A that concerns me the most, which prompted me to spend precious time and energy to produce this little essay and the nifty graph above. In fact, I suspect that if group A were better informed they would end up largely in my camp.

Unfortunately, group A seems to include some people in influential government positions, people who really ought to know better and whose ignorance is a public problem rather than a private one. People such as Elaine Chao, our present Secretary of Labor, who bristled at concerns raised about economic inequality during an NPR interview in April of 2001. "America is about the most equal country in the world," she said, which was, and is, pure bunk. For instance, a quick fact check at the time revealed this contrary tidbit:

I charitably assume Ms. Chao's remarks are based on ignorance, rather than dishonesty. Bear in mind, the bar graph shows income inequality, which is related to, but not the same as, the wealth inequality discussed above. Generally speaking, wealth data is harder to find than income data, and wealth disparity is more pronounced.

As stated earlier, these disparities have been increasing for a few decades now. This graph made from our latest Census data shows the Gini coefficient, a function used by economists and social scientists to measure many kinds of inequality, applied to household income. The range works basically like this: a coefficient of 0 means everyone is equal, while a value of 1 means one guy gets everything and everyone else comes up empty-handed. Most modern economies fall between 0.3 and 0.5, and the USA is headed toward the high end. Democrats and Republicans can have a grand old time pointing fingers over results like these, when they acknowledge them at all, while Progressives can only watch from the sidelines in despair.

If you look at the details behind these graphs, it turns out they actually represent soaring prosperity for a small minority of Americans, coupled with a slight decline in the economic fortunes of the masses. Some folks think this is just fine, and ridicule any thought of correcting this imbalance - I mean, Omigod, wealth redistribution? What are you, some kinda communist?? This is pretty funny once you realize that our capitalist economy, which I happen to be rather fond of, is like a machine whose PRIMARY PURPOSE is the redistribution of wealth - and a glance at the data should make it crystal clear what direction the machine is running in lately!

Personally, I don't wish to live in a society that fails to reward the effort, initiative, and talent of exceptional individuals. Neither do I desire one where vast wealth is concentrated in the hands of a few, out of all possible proportion to skill and effort; one where money and power are accumulated without limit from generation to generation, where the accident of birth virtually guarantees success for some and dooms others to failure and servility, where polarization and envy eventually trap us on opposite sides of security fences and police barricades - and make no mistake, ladies and gentlemen, that is where we are headed.

facts_of_life_wealth.html ... released 12 February 2006 ... expires 6 November 2012