The Growing Disparity in Wealth Distribution. Does this Disparity Bode Ill for the Future?

I’ve often wondered why working class people (and I include the working middle class) so often vote against their own interests.

My mother was one of these people.  She was the bright daughter of a US army french horn player, born in 1916, who was 15 at the beginning of the depression. Her parents and her four younger siblings suffered greatly in the 1930s.

In spite of this she never associated the great depression with the probable causes of  the depression.  Whether economic malfeasance, the failure of the free market, governmental failure to regulate the money supply, the causes are still being argued today.

In the thirties people saw a lot of discussion about the causes of the depression.  The causes are beyond my analytical ability, but certainly there were many socialists, communists, keynsians, monetarists, offering their opinions.  Regardless, my mother chose to blame the communists.

She always believed that she would eventually rise socially to be an “owner” and always voted against unions, and anything that would raise the level of the working classes.  She worked for the Works Progress Administration but hated Roosevelt.  Just as today, politics is a lot like religion, you cleave to what you perceive to be your “tribe.”

Today, as in the 1930s, people identify as conservative, centrist, or “progressive” with all the dogma that inheres.  Although, there seem to be fewer centrists than before.

The statistical likelihood that someone in the working class will eventually advance to the moneyed classes are slim.  Sure, there are entrepreneurs, musicians, lottery winners, and others who for various reasons “make it,”  but the US has about 315 million people.

The following article is an invitation to enter a debate on where the money really is in the US and why people think they have more than they do.  Money in America has been trickling up for many years while people have believed it was trickling down.

Most people think there should be a reasonable distribution of wealth in this country but the data show that this is not the case; wealth is becoming more concentrated leaving a growing proportion no longer in the middle classes and this is a dangerous thing.

While most of us make d0 on less than $500,000/year, those fortunate enough to receive bonuses in excess of  $1,000,000 to $25,000,000/yr live in a rarefied atmosphere that few of us can imagine.  Chime in!  – carlos

Rising Wealth Inequality: Should We Care?

Why do Americans seem unperturbed about the growing gap between the rich and the poor?

The actual United States wealth distribution plotted against the estimated and ideal distributions across all respondents. See more details.

Living Beyond Your Means

Updated March 22, 2011, 12:18 PM

Michael I. Norton is an associate professor at the Harvard Business School. He is currently co-writing a book on money and happiness.

In a recent survey of Americans, my colleague Dan Ariely and I found that Americans drastically underestimated the level of wealth inequality in the United States. While recent data indicates that the richest 20 percent of Americans own 84 percent of all wealth, people estimated that this group owned just 59 percent – believing that total wealth in this country is far more evenly divided among poorer Americans.

What’s more, when we asked them how they thought wealth should be distributed, they told us they wanted an even more equitable distribution, with the richest 20 percent owning just 32 percent of the wealth. This was true of Democrats and Republicans, rich and poor – all groups we surveyed approved of some inequality, but their ideal was far more equal than the current level.

Why then, given the consensus on this more equal America, are Americans not clamoring for redistribution?

First, the expansion of consumer credit in the United States has allowed middle class and poor Americans to live beyond their means, masking their lack of wealth by increasing their debt. We might think that people who have “zero net worth” have nothing. But in fact, having zero net worth increasingly means owning a lot (cars, televisions, even houses) – but also owinga lot. As a result people with zero net worth, and even negative net worth, can still feel that they are living the American dream, doing “better” than their parents did while keeping up with the Joneses.Second, poorer Americans’ belief in social mobility – despite strong evidence of its rarity – causes negative reactions to policies that would seem to benefit them, like raising taxes on those who earn and own a lot more. Why would the poor oppose taxes on the wealthy? Because many believe that they, or at least their children, will eventually be wealthy, voting for taxes on the rich may feel like voting for taxes on themselves. As a result, even the word “redistribution” has negative connotations.My colleagues and I are now exploring whether educating Americans about the current level of wealth inequality (by showing them charts and pictures) might increase their support for policies that reduce this inequality. In addition, we are assessing whether different forms of redistribution – for example, raising the minimum wage, or longer term interventions like reducing disparities in education – are less likely to evoke heated opposition, and perhaps increase advocacy for greater wealth equality.Join Room for Debate on Facebook »

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About carlos

I'm a curious person, of reasonable intellect, "on the beach" (retired) and enjoying my interest in anthropology, language, civil rights, and a few other areas. I've been a hippie/student/aerospace tech writer in the '60s, a witness to the Portuguese revolution in the ‘70s, a defense test engineer and witness to the Guatemalan genocide in the '80s, and a network engineer for an ISP in the '90s. Now I’m a student and commentator until my time is up. I've spent time under the spell of the Mesoamerican pyramids and the sweet sound of the Portuguese language. I've lived in Europe, traveled in Brazil, Central America, Iceland, New Zealand, and other places. My preferred mode of travel is with a backpack and I eat (almost) anything local. Somehow, many of the countries I have been to have had civil unrest (for which I was not responsible). I'm open to correspond with anyone who might share my liberal, humanist interests. I live in San Buenaventura, California.
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4 Responses to The Growing Disparity in Wealth Distribution. Does this Disparity Bode Ill for the Future?

  1. blackwatertown says:

    I’d add libraries to the mix. I think it’s a mark of a civilised society that there it a network of maintained libraries – even now in these digital times. They’re coming under attack in the UK, where I live.
    By the same token, they need to be used more.

    • carlos says:

      Did I forget libraries, the home away from home of my youth? Thank you for of the great library at Alexandria, the Arabs who preserved knowledge during the dark ages, and the Irish monks for their devotion to knowledge. Protect us from the barbarians who blow up Bamian statues, burn books because they cannot stand heresy to their beliefs. Although the Spanish Inquisition is no more its spirit is not dead. It is alive across the world.

  2. blackwatertown says:

    Is this about ignorance? Or the strength of the aspiration myth?

    • carlos says:

      As a nation we believe in many myths. The myth of equal opportunity persists even when you have all women take three steps back, all non-ivy leaguers take two steps back, minorities take a step back and then start the race. Some people have advantages that others don’t. We can’t easily disadvantage everyone but we can put music classes back in school, maintain our universities and keep funding grants and scholarships. Some of the advantaged believe they blessed with an innate superiority and some even have a Darwinian belief that only the fittest survive. In any event, history shows that a large middle class is a buffer against social unrest.

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