Wealth distribution in America. Frightening.

DollarsThe great capitalists of their day — like Henry Ford — clearly saw the need for a strong and growing middle class to buy their products. We would do well to remember that a strong and prosperous middle class acts as a shock-absorber for society. Through several decades of poor design choices, neglect, and excessive greed, our current shock absorbers are becoming frighteningly worn through….Here is a fascinating video that is absolutely breathtaking in its’ ramifications….

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2 thoughts on “Wealth distribution in America. Frightening.

  1. Here is an audio interview with Dan Ariely, the researcher behind this data: http://www.radioopensource.org/dan-ariely-on-the-irrationality-of-american-inequality/

    More detailed, much more interesting, follow up studies are discussed at roughly 15:30 of the interview. The interview takes place before the US election – he makes an interesting point about how your ideology colors your perception of public policy in the same way that your opinion of a wine’s taste is colored by knowing the brand and the price.

    But how and why do you really “fix” this wealth distribution problem? The small handful of wealthy people that I know didn’t take much of anything from those further down the ladder – they created wealth by leveraging opportunities and actually created a lot of jobs for the rest of us (me, for example) in the process. The graphic in the video suggests that there is a pie of fixed size that gets carved up unfairly, but the total size of the pie is probably highly variable – it would depend on background incentives, opportunities, education, etc, etc. that may be affected in perverse ways by trying to engineer relative wealth outcomes.

  2. Hi Dave, great to hear from you! Thanks for pointing out the audio interview, I have read and listened to a number of Ariely’s pieces and find them all quite interesting. I agree with your point about some of the people making the pie bigger for all and being able to thus enjoy a dis-proportionate share of it as their gains, such as successful entrepreneurs like Gates, Jobs, Dell, etc. who create huge wealth for society. However I also see a lot of inequity in terms of “hired managers” who are stacking the deck in their favor and extracting huge rents for their services regardless of whether real wealth is created — no better example of this than many Wall Street institutions…

    I don’t know how you can “fix” this — my focus would be on policies and structural fixes to rebuild back the middle class as the continually hollowing out of that is “the canary in the coal mine” to societal upheaval… easier said than done….

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