Let me begin to say that I can understand the emotions of the occupy movements and they have some of my sympathy. For a lot of people things got worse because of the global economic crisis. I hope that their outlet are at the polls and not violently at the barricades as in a bloody revolution. But peacefully by electing political leaders and people in power that come to their needs. All through a democratic process. YES! We need strong leaders that guide the world through this economic crisis! OK! For this you got to stirrup public opinion and make your voice heard! But please do it with the right argumentations and reasons! The occupy movements do not use the right argumentations! They misuse the universal Pareto Wealth Distribution power law by their 99% of the people have only 5% of the wealth and money. So they are trespassing on my land because this is my field of expertise. In order to correct this I wrote this blog!
99% in connection with the world wide occupy movement is everywhere on the internet, CNN, Al Jazeera English, bulk emails requesting donations etc. etc. It is about the fact that the 99% majority of the people needs to share only 5% of the wealth in the USA. Consequently the Top 1% elite has 95% of the money in hand. “We are the 99%!” [1] Has become the slogan and the main reason for the occupy movement. I heard it first in the 2009 Michael Moore film Capitalism: A Love Story and consequently I regard that as the origin. [2] It is a classical conspiracy theory and it is mobilizing the masses. I would like to call it the “1% plutonomy” conspiracy, a kind of modern times “Protocols of the Elders of Zion” from the 2nd world war. As Josef Goebbels, Nazi propaganda minister, seems to have said: “The bigger the lie the more people will believe it!” [3] Its unclear who concocted this false fact, from what kind of statistical data or media manipulation it originates and who is to blame. I think even an intelligent and creative man like Michael Moore might have been mislead.
From two independent trustworthy sources [4][5] can easily be seen that in the USA 20% of the people have 84% of the wealth (numbers from 2001 [4] and 2011 [5], so a stable distribution for more than a decade):
|
Quintile
|
% Wealth
|
|
Top 20%
|
84%
|
Table 1: 2001 data from [4].
|
Quintile
|
% Wealth
|
|
Top 20%
|
84%
|
|
2nd 20%
|
12%
|
|
Middle 20%
|
4%
|
|
4th 20%
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< 1%
|
|
Bottom 20%
|
<< 1%
|
Table 2: 2011 data from [5].
From another trustworthy source (Wikipedia) here a quote: “…In 2007 the richest 1% of the American population owned 35% of the country's total wealth, and the next 19% owned 50%. Thus, the top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%...However, after the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 35% to 37%, and that owned by the top 20% of Americans grew from 85% to 88%...” [6]
It remains a matter of debate whether the (small) difference in the [4][5][6] sources are significant because they render a clear picture. It takes no mathematical genius to figure out that the 1% – 95% cannot be true. It is unfortunate that this casts a blemish on the sometimes educational and certainly amusing film Capitalism: A Love Story. In a recent CNBC interview Michael Moore also said that the 400 richest US-people combined have more wealth than 150 million poorest US-citizens combined. [7] I think that we also have to take this “fact” with a grain of salt, because we do not know from what kind of statistical research it comes from since no scientific reference is given. I am tempted to check this with the Pareto power law [8], feeding it the numbers in this blog, calculate Top 400 and Bottom 150 million wealth, and then check Michael Moore’s claim, but opponents could always say that the "measured" Michael Moore values are an anomaly or a fluke deviation from normal Pareto behavior. To check this properly one would need hard statistical and scientfic data.
By the way: If the 2011 numbers from Wikipedia [6] are correct, and they certainly come from the occupy movement page, which must have made by adepts and followers, than the 99% majority still has a 63% major part of the money and not 5%!
As a matter of fact the 20% – 84% relation is a genuine example of the approximate 20% – 80% rule (of thumb) or in other words Pareto Principle. [9] Which by its universal nature I regard as God given. The spontaneous formation of hierarchies in human communities based on differences in physical and mental capacities will always spontaneously form this more or less 20% – 80% distribution. I personally believe that even in the old communistic USSR: 20% of the people had about 80% of the privileges (i.e. a form of communistic wealth in natura). You feel lucky when your skills brings you to the Top 20% and it feels like injustice when you only have the skills for the Bottom 80%. But this is all in the game and part of the American Dream and the USSR Nightmare.
But make no mistake: After every (bloody) revolution, because of this 20% – 80% inequality, initiated by a conspiracy theory, which by definition and purpose are never true, a new 20% – 80% distribution is formed sooner or later, and at most a hierarchy reset (shuffle around) was achieved. The world will not have become any better or more equal and just!
What actually is the problem that mankind is slave to the outcomes of this constant battle between order and chaos in human society, never achieving everlasting harmony. However this always seems to be the promise of the chaos forces wanting to overthrow the current regime (order): “This is the last revolution to end all inequality!” Or: “This is the last war to end all wars!” I am trying to work out at least a theoretical fix for this problem. When I succeed than that is a topic for another blog.
And for you stock investors read also my index fund blog: X-INDEX FUND Magazine Blog
[6b] Occupy Wall Street And The Rhetoric of Equality Forbes November 1, 2011 by Deborah L. Jacobs
[6c] Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze—an Update to 2007 by Edward N. Wolff, Levy Economics Institute of Bard College, March 2010
[6d] Wealth, Income, and Power by G. William Domhoff of the UC-Santa Barbara Sociology Department