Worthlessness
When I think about my financial well-being, I tend to think of income. My two-income, two-person household falls well above the American median of about $50,000. So I can’t complain (though I often do). But Harvard Professor Michael Norton, talking this morning to Steve Innskeep on Morning Edition, paints a different picture of wealth–looking at the distribution of financial assets–net worth. Looked at in this light, 20% of Americans have 85% of the wealth, the next 40% share 15% of the wealth, and the bottom 40% net out out at zip–nada–owning nothing on the plus side of the ledger but their lives.
Given my mortgage and other indebtedness, I may have a small piece of the 15%, or I may own nothing free and clear except my skin–hard to tell without doing more accounting than I am accustomed to doing. Most people don’t know, and most don’t want to know.
According to Norton, when asked how much they think the top 20% owns, people guess way too low. When asked what they think the top 20% should own, they say around 35 percent. This answer is very similar, whether the respondent is rich or poor, and regardless of political affiliation. The country that is closest to this wealth distribution is Sweden, but even in Sweden wealth is much more unequally distributed than Americans say they would prefer.
You would think that this level of cross-class, bipartisan consensus would have some impact on the economic debate raging in these election-year politics. However, that opinion appears to have a net worth of zero.
Tags: economy
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I have a hypothesis to explain this wealth distribution. It is my observation that the vast majority of people believe (rightly or wrongly) that their contribution to whatever organization they work for is worth more than they are paid. Those who are in the top 20% are the same people who are either in a position to influence or outright decide who gets what share of the proceeds from the organization so they take what they believe they are worth first and the rest of us get what’s left.
Hellen,
I figured that the rich got richer and the poor got poorer because most of us pay our monthly bills. As a stone mason, I worked for the rich. It was not a way to become wealthy. However if every slob everywhere owed me $20/month, then we’re talking about a lot of money. As the financial pyramid becomes flatter and flatter, money, that abstract medium of exchange could cause some real (not abstract) trouble like the fibrilations we called the “savings and loan crisis” and our present “economic downturn”. Not as big a deal for us up here where weve got the barter system already in place and know how to use the land to support ourselves. People ask me about the local situation and I tell them that we’re still in the recesion of the seventies.
Just one thought on owning. You never really own anything. You don’t even own your life. Everything you think you have is borrowed until you die.
Just wanted to cheer everyone up.
Yeah, James, I think you’re on to something. There was a program on NPR the other day where they were talking to stock brokers about the Wall St. bailout. None of them could understand that us taxpayers had saved their jobs by funding the bailout, and all of them were convinced that their exorbitant salaries were fully justified by the fact that they were so much smarter and harder working than folks who made normal salaries. Then there was the story about the execs of a company facing a decline sitting around faced with a choice between foregoing their fat bonuses for the year or laying off 15% of their workforce. They asked for a show of hands. One guy was for killing the bonuses, all the rest were for the layoffs.
And Pete, it’s a cute thought that you don’t really own anything, but just take a look at all the obscene amount of stuff that the wealthy in this country are “borrowing until they die.”