Myths of the 1 Percent: What’s Putting People at the Top

It&#x27;s interesting what words are not in the article. Words like heir, inheritance, profit, interest, rentier. The word rent is there, but assumed as a tenant, not landlord.<p>I assume the Forbes 400 richest are in the 1%. How did the Koch brothers get their $100 billion? Where did the Waltons get their $140 billion? Where did the Mars family get their $75 billion? The article makes it sound like these people became rich when they decided whether or not to go to law school.<p>It&#x27;s important to note how in the US how FIRE (Finance, Insurance, Real Estate) and health care affect the economy. But a lot of what puts people at the top is at which hospital they took their first breath.

Funny to see you people discussing petty caviar-allowance inequality so fervently within your own arbitrary Western borders yet never giving much mindshare to the rampant &quot;developing&quot; country exploitation that is the very source of your general prosperity.<p>I&#x27;m a citizen of third-world country that is being sucked dry by the West for its resources and getting its people shackled to the ground by direct support for the ruling dictatorial regime.<p>I don&#x27;t even know why I&#x27;m writing this..

Is inequality a feature or a bug of capitalism? Seems like the general thinking is that its a feature in-so-much as it encourages innovation, entrepreneurship, etc. It seems like it becomes a bug when it reaches a level in which it creates a positive feedback loop of more inequality.<p>As with anything, i&#x27;ve noticed the discussion is really about how much, not should it exist at all. Almost every debate in American politics is painted as black and white, whereas the actual debate is where we fall on a spectrum. It seems like everyone disagrees so much, but really I think we are haggling over a slight deviation to the right or to the left and because we have to talk about everything in such black and white terms, the real discussion gets lost. We all agree on much more than we disagree on.

<i>In the United States, the richest 1 percent have seen their share of national income roughly double since 1980, to 20 percent in 2014 from 11 percent.</i><p>Not true. The <i>highest income</i> 1% have seen their share of national income roughly double. But the <i>highest income</i> 1% is not the <i>richest</i> 1%.

I&#x27;m surprised the words &quot;capital gains&quot; are not mentioned at all in the article. It&#x27;s already well known that the richest of the 1% did not get there purely through a high wage&#x2F;salary.<p>Some might blame loose monetary policy for providing easy money for the 1% in the USA (if you can borrow money and speculate for free, why not, after all), but if that&#x27;s the case Japan really stands out; they&#x27;ve been QE&#x27;ing since their &#x27;80s bubble popped and they&#x27;ve managed to keep a relatively good Gini coefficient relative to the rest of the developed world (they&#x27;re more egalitarian than their East Asian peers). You&#x27;d think that having two lost decades with your economy stuck in neutral, the Japanese 1% would just leave their country in the dust.

Whatever the reason was, that a family or people where able to accumulate that much wealth: I believe, there should be an upper limit.<p>It is not okay for people like Bill Gates (i do think he is a good person) or Mark Zuckerberg to have that much power on such a small planet.<p>It is awesome that someone like Bill Gates spends tons of money for research etc. but he should not be able to make such huge decisions in a modern democratic society.<p>There is a good reason to allow people to accumulate wealth. Why shouldn&#x27;t someone be allowed to not spend all his&#x2F;her money for alcohol, party and cars or whatever and instead put the money into real estate for there children. But something like 5-10 Million per Child is still super reasonable.<p>Perhaps that leads the way to a more fair feature where it is not necessary for anyone anymore to horde money for the familiy heritage.

&quot;Workers at the 90th percentile of the income distribution for professionals make 3.5 times the earnings of the typical (median) worker in all occupations in the United States. Only Mexico and Israel, which have very high inequality, compensate professionals so disproportionately. In Switzerland, the Netherlands, Finland and Denmark, the ratio is about 2 to 1.&quot;<p>It&#x27;s hard to find comparable numbers, but aren&#x27;t the median wages higher in all those countries?<p>The article vaguely makes it sound like it&#x27;s just a matter of paying highly-paid professionals less, but would that lift the bottom or just concentrate the money to an even thinner slice of the population?

&gt;Almost all of the growth in top American earners has come from just three economic sectors: professional services, finance and insurance, and health care, groups that tend to benefit from regulatory barriers that shelter them from competition.<p>&gt;The groups that have contributed the most people to the 1 percent since 1980 are: physicians; executives, managers, sales supervisors, and analysts working in the financial sectors; and professional and legal service industry executives, managers, lawyers, consultants and sales representatives.<p>Not a surprising result at all when you consider that the bottom of the top 1% has an income of high 6 figures to somewhat above $1M. That number is something very achievable for the most successful &quot;professionals&quot; -- doctors, lawyers, bankers (not HF managers), traders, and there are <i>a lot</i> of these people out there!<p>It&#x27;s a natural consequence that if you look for a large number of people earning $1M, you&#x27;ll end up with highly successful &quot;professionals&quot; rather than outlier level wealth from business ownership, which is much more rare.

&gt;the political causes of the 1 percent’s rise are directly under the control of citizens.<p>Patently false. The political causes are directly under the control of the US state and federal legislatures, which are populated by whom?

What I find interesting is that it is in the &#x27;professions&#x27;.<p>I would have thought it was massively wealthy equity owners&#x2F;holders, hedge fund managers etc..<p>But yes - if we are paying doctors $1M&#x2F;year then this will happen.<p>At a nearby hospital in Canada, technology improvements have allowed doctors to diagnose using x-rays a lot faster ... but the Unions have kept pay scale the same. The doctor at the Orangevill hospital earns over a million dollars a year, and he works from home. Swipe, swipe, swipe, swipe - done.<p>Faster tech = more money for the doctor. Savings not passed on to taxpayers.<p>Innovators thought they were improving healthcare, but they really were throwing more surpluses onto the value chain, to be captured by those with the most power: doctors, possibly drug companies.<p>One would think a private system would be more efficient ... but it&#x27;s probably just as bad in the US.

TLDR: the public secret is that if you take away the top 0.01% who started businesses like Amazon, Microsoft, Google, etc, the big driver of inequality is not capitalism&#x2F;economy&#x2F;...<p>The big driver of inequality ( 0.01% to 1% ) is ... government regulation. Directly, as in the government hires tens of thousands of highly paid people. And, more offensive at least to me, government regulation giving massive advantages to specific businesses (most recent &quot;wtf&quot; example I think would be equifax, with the government rallying behind them <i>and</i> (worst of all) effectively forcing large banks to buy from them). Businesses pushed like this by governments include Boeing, Oil companies, Tesla, SpaceX, ... But this is only the very upper layer. There is a huge &quot;second&quot; layer that includes large parts of the legal space, the health care space, the education space, where hundreds of thousands of people make $400k+ per year because ... well because the government says so.<p>Which of course very much opposes most of the viewpoints taken on this site. Given that this is what gives over half of the 1% owes their wealth directly or indirectly to taxes (or in the case of things like equifax &quot;hidden taxes&quot;. Taxes, as in government forces you to pay, but you pay in your mortgage bill, you pay in charges on your bank account, etc ...) ... there is a strong case to be made that more taxes ... will increase inequality. At least as long as the government doesn&#x27;t slim down a LOT.

Few things are sadder than seeing Britain and China post equal &quot;gains&quot; for the 1 percent.

This is such an interesting article, attempting to answer one of the biggest questions of the 21st century in one fell swoop. However, I&#x27;m not sure all of the reasoning and analysis holds up. For example, software engineers with salaries over 390K are far from rare in the US, and Switzerland has both large numbers of bankers per capita and private doctors with incredibly high incomes.