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From: hank.walker@UNH.CS.CMU.EDU
Newsgroups: mod.politics
Subject: wealth
Message-ID: <12228444995.51.MCGREW@RED.RUTGERS.EDU>
Date: Tue, 5-Aug-86 15:34:35 EDT
Article-I.D.: RED.12228444995.51.MCGREW
Posted: Tue Aug  5 15:34:35 1986
Date-Received: Wed, 6-Aug-86 02:13:10 EDT
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This concentration of wealth is rediscovered or commented upon every
so often.  While a significant fraction is controlled by the old
family fat cats that might come to mind, a large part of it is simply
due to the fact that wealth is a magnification of income differences.
The more you make, the more you can proportionately save and invest.
A recent study of wealth among blacks and whites makes this obvious.
If you consider that the average income is something like $25,000, and
some people have incomes of several million dollars per year, then the
people at the top are earning 40 or more times the average.  The
amount available for saving and investment is probably double that.
So is it any surprise that the top 0.5% holds 33% of the assets?  If
the top 0.5% earn $1M, and the other 99.5% earn $25,000, then my
simple analysis implies the top 0.5% holds 29% of the assets, which is
close to the actual value.

The issue then is the range in incomes, rather than the range in
wealth.  Is it wrong that this huge range exists?  Should taxes siphon
it off?  I would claim that for the most part, these incomes reflect
value provided to the employer or customers.  If anything, I would
claim that we don't see enough variation.  It is well-known that some
programmers are ten times more productive than others, but I don't see
a 10:1 range in pay scales.  Is it wrong for Sam Walton to amass $4B
with the success of WalMart stores?  I know several people that became
millionares by founding a small company that grew big.  They certainly
took a big risk, and provided their customers with value at least as
great as their wealth.  I say don't begrudge their success.
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