American Pie

I started thinking about this after hearing PJ O’Rourke on Marketplace. This was an essay answering the question about “If the 1% had less, would the 99% be better off?

We have a pie that represents the wealth of America. The “1%” controls about 38% of that wealth (2011). The “20%” (that includes the 1%) controls 88% of the nation’s wealth.

If we use a net worth of $56T (2011) then 38% = $21.3T  and 88% = $49.3T.

Wealth is not zero-sum. In 2007 American wealth was over $65T and the control percentages were 1-2 percentage points lower. So while the overall net worth dropped  16% the top “20%” lost only  -3% of their share of the pie (going from 85% to 88%). I wonder where the rest of the loss came from?

Wealth is not zero-sum. But the pie is. It sums up to 100% whether the net worth is worth $65T or $56T. If the top “1%” keeps a lock on $20T and the net worth figures keep falling, their percentage of the pie keeps going up. and the “99%” keeps getting squeezed as their percentage goes down.

It isn’t a matter of declaring wealth is evil or that reward for success is bad. It is a matter of saying that using wealth to promote a playing field that favors your increasing your wealth is bad. Buying the influence to set the field in your favor is bad. Gaming the system with a disregard for intent is bad. (Fraud is fraud, unless you can do enough semantic acrobatics to rob everyone blind, legally.

I don’t disparage the 20% their wealth. No matter how you cut the pie, there will always be a 20%. But 88% of the wealth seems a bit much for 20% of the population.