The Los Angeles Times put out an article this morning in which it said that income inequality had reached the point where just 85 people controlled half the wealth in the world. Amazingly, the reporter and the various editors at the LA Times actually let that nonsense get published. Do they ever bother to read what they write and think about it at all?
Not long ago, the Times made a correction and made clear that the 85 richest people in the world control just over half of one percent of the wealth. That makes a lot more sense. Even with this correction, however, the Times laments the income inequality worldwide. According to the Times, the inequality is so severe that the bottom half of the world population only has a net worth of 1.7 trillion dollars. The Times says that this undermines democracy. There is no way to respond to this article on its own terms; the article is just too distorted.
First of all, if 3.5 billion people have a net worth of 1.7 trillion dollars, that means that the average net worth of these folks is about $500 each. That seems wrong. After all, the average net worth of the bottom quarter of Americans is zero or less. Don't confuse income with wealth. A person who graduates from law school with $150,000 in student loans and who then gets a job making $125,000 per year has a negative net worth so long as the student loans are larger than his or her other assets. Debt like a home mortgage, student loan or credit card reduces net worth. My guess is that in the developed countries, at least a quarter of the population has a negative net worth because of this. The number may even be higher. In the developing world, the issue of wealth is different. Certainly, people who still live in tribal communities have very little in the way of net worth. The massive numbers of poor in countries like India, Pakistan, and much of the rest of the developing world have essentially nothing when it comes to net worth. My guess is that the figure of 1.7 trillion used by the LA Times is too high.
But now consider using income rather than net worth as the test. Using that test, one quickly finds that a worldwide comparison is almost nonsensical as well. Many countries have income and expense levels that are wholly different from those in the West. Then there is the intervention of certain programs like welfare or Social Security in parts of the world. A comparison of actual income levels across the globe would disclose that essentially every American is in the top quarter of global income levels. There are close to two and a quarter billion people in India and China alone. What percentage of those folks have an income equal to the amount that someone on welfare, who gets food stamps and other forms of assistance receives in America. It is a very small percentage!
Inequality within a country may make sense to review in certain circumstances. Consideration of wealth inequality worldwide does not. It is like debating whether the best baseball team in America or the best football team in Europe would win were they to compete in a curling match at the Winter Olympics. It's just nonsense.
Not long ago, the Times made a correction and made clear that the 85 richest people in the world control just over half of one percent of the wealth. That makes a lot more sense. Even with this correction, however, the Times laments the income inequality worldwide. According to the Times, the inequality is so severe that the bottom half of the world population only has a net worth of 1.7 trillion dollars. The Times says that this undermines democracy. There is no way to respond to this article on its own terms; the article is just too distorted.
First of all, if 3.5 billion people have a net worth of 1.7 trillion dollars, that means that the average net worth of these folks is about $500 each. That seems wrong. After all, the average net worth of the bottom quarter of Americans is zero or less. Don't confuse income with wealth. A person who graduates from law school with $150,000 in student loans and who then gets a job making $125,000 per year has a negative net worth so long as the student loans are larger than his or her other assets. Debt like a home mortgage, student loan or credit card reduces net worth. My guess is that in the developed countries, at least a quarter of the population has a negative net worth because of this. The number may even be higher. In the developing world, the issue of wealth is different. Certainly, people who still live in tribal communities have very little in the way of net worth. The massive numbers of poor in countries like India, Pakistan, and much of the rest of the developing world have essentially nothing when it comes to net worth. My guess is that the figure of 1.7 trillion used by the LA Times is too high.
But now consider using income rather than net worth as the test. Using that test, one quickly finds that a worldwide comparison is almost nonsensical as well. Many countries have income and expense levels that are wholly different from those in the West. Then there is the intervention of certain programs like welfare or Social Security in parts of the world. A comparison of actual income levels across the globe would disclose that essentially every American is in the top quarter of global income levels. There are close to two and a quarter billion people in India and China alone. What percentage of those folks have an income equal to the amount that someone on welfare, who gets food stamps and other forms of assistance receives in America. It is a very small percentage!
Inequality within a country may make sense to review in certain circumstances. Consideration of wealth inequality worldwide does not. It is like debating whether the best baseball team in America or the best football team in Europe would win were they to compete in a curling match at the Winter Olympics. It's just nonsense.
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