The 99%rs

Factual Questions
1

A thought occurred to me the other day, among people my age group (18-30) there is a huge push for income equality, wealth equality, and generally just taking from the 1% and giving back to the 99%.

For simplicity sake, let’s just assume it is true that 1% of the population controls 99% of the wealth. I find those numbers exaggerated, but let’s roll with it.

Does it really matter to the 99% that they only have 1% of the wealth?

With our monetary system being FIAT and based on a fractional reserve banking system…isn’t that 1% basically infinite anyway? (maybe not infinite but extremely large)

2

What does the monetary system have to do with wealth? And where do you get the notion that the 99% control “basically infinite” wealth? I don’t know about you, but I’m painfully aware of just how finite my wealth is.

In case you aren’t aware, money isn’t wealth. Wealth is things like what home you have, what car you drive, how well you eat, and how much leisure time you have (as well as what you can spend that leisure time doing). Someone who lives in a mansion, drives a Ferrari, eats five-star meals every day, and goes golfing on tropical islands whenever he feels like it is very wealthy. But not everyone can live that way, because no matter what you do with the monetary system, someone needs to build the mansions, assemble the Ferraris, cook the five-star meals, and landscape the golf courses.

3

Where are you getting that the top 1% controls 99% of the wealth?

I’m not going to start with an assumption that no one is even claiming to be true.

4

I don’t necessarily agree with the premises of the OP, but let’s tackle just part of it for a moment.

It’s not especially helpful to know that something has no upper limit. Consider a mathematical series like this:

1 + 1/2 + 1/3 + 1/4 + 1/5 +…

That series has no upper limit. Add up enough terms and it will grow as large as you like.

Give it a try. Start adding up that series and let us know when you get to 20.

5

From the OP.

Why the hang up about the example numbers? OP never said those numbers were possibly real, they were a basis for a question that saves 3 paragraphs of explanation that would just make the question even harder to get an reasonable answer to.

Come on people… ::: sheesh ::::

6

Two year old article says that

So why is it a problem?

On the one hand, I heard Thomas Jefferson (Clay Jenkinson) say that wealth imbalance was [del]the[/del] a major cause of the French Revolution at the end of the 18th century. Not sure how accurate that is, but he is a very well-read scholar. Which is to say, when the imbalance reaches an extreme, you can guess that civil instability is probable.

The more wealth an individual controls (this is the operative word, not “earns” or “owns”), the more likely they seem to be to to use it to influence society in their own favor. Wealth imbalance is anti-democratic, anti-populist, possibly anti-social. Really, there is a threshold where wealth accumulation ceases to be for personal comfort, trending instead toward gaining control over people/society.

I get the impression that being very/absurdly wealthy tends to separate an individual from the real world. They control large or vast arrays of assets that are minimally meaningful to them, and they impose arbitrary pressures on the people below them, which is not good for a stable society. Their personal consumption of resources may often be out of scale, because they have the resources to obtain whatever they want.

So wealth imbalance put more power in the hands of persons who are generally less in touch with the effects they precipitate. That is probably a dangerous risk, especially if the imbalance is increasing.

7

That’s not how fiat money works. Just because a dollar isn’t equal to a specific amount of gold doesn’t mean its value is arbitrary.

I know some people keep beating this drum and insisting that any currency that isn’t backed by gold is sure to collapse. But I’ll point out despite theories, fiat dollars are still holding their value decades after their introduction. Enough so that dollars are accepted as a valuable commodity in other countries where the American government has no authority to impose a value. While the collapse may be inevitable, it doesn’t seem to be in any hurry.

8

No, the reason that it’s hard to get a reasonable is answer is because the question is difficult to make any sense of, and the OP has not returned to explain what on earth he means.

9

I’ve got a Fiat. And not one of these new POS Fiats! A real Goddamn Pininfarina Fiat!

10

Y’all are looking for the works of Vilfredo Pareto.

He warned that income inequality was growing and that such growth had historically correlated with revolutions: people are OK with certain levels of income inequality, but there is a point where that inequality becomes unacceptable and societies explode.

11

Not to mention that gold itself is just as ‘fiat’ as anything else.

Maybe the OP could re-phrase his question to elicit some GQ answers.

12

Most historians would say the opposite is true. The French government was deep in debt due to the American Revolution and the Seven Years war. When the King called the Etats General, the ascendant merchant class wanted political power commensurate with its economic clout. The aristocracy resisted and the clash is what caused the Revolution.

13

The problem is that most of “us” - first world, USA, Europe, Japan, ANZ, etc. - are the 20% with the extra money. The billion in China or India or Africa are primarily in the 80% that have the remaining 5% of wealth.

One common wisdom is that the French Revolution was a revolt of second sons, the ones with nothing to lose under primogeniture. The system broke down over the demand to tax the nobility same as the merchant class. The bottom 50% were just cannon fodder for the street demonstrations. At a certain point, a giant crowd coming from buildings can swarm a bunch of muzzle-loaders faster than they can re-load.

Bernie Sanders, for example, managed to seduce a huge proportion of the Democratic primary voters; enough to persuade Hillary to alter course on a number of policies. Speaking as a Canadian with a good income who pays about 28% in total income tax, and enjoys full medical care with no co-pays, no deductibles - I cannot understand why the USA puts up with the medical mess it currently has.

The bigger danger is when hefty big countries - Egypt, India, Pakistan, Indonesia, China, Nigeria - have the clout to challenge the 21% and demand a better share of the world’s resources. We are already beginning to see the fallout of this - the massive number of non-Syrian economic migrants trying to make it into Europe. Turkey already extorted a degree of cooperation in return for stemming the Syrian tide; however, it is only the beginning. (Law of unintended consequences - get rid of strong man Ghaddafi and Libya is a wild west for migrants…)

The problem is, the “hired help” - CEO’s and lawyers and executives - used to be paid decently more than the grunts. Nowadays, it’s changed; the CEO’s have stratospheric salaries, transforming themselves into the 1%; the grunts continue to get the short end of the shaft, lower wages, no pension, ludicrous health benefits, etc. This wealth is ot flowing to the third world - it’s accumulating in the top.

Trump so far defied the expectation to get elected by pushing all the right buttons with the lower 50%. It’s only a matter of time before some Bernie Sanders type figures out the same message - portray the rich as greedy pigs hoarding everything that belongs to the “hard working American patriots”… If that person can avoid sounding like a socialist - i.e. push the right buttons - he will get elected and transform the world’s (second) biggest economy.

But China is no better. nothing motivates a population better than envy. The Chinese government has managed to stay afloat by continually increasing the economic status of the population, while friends of the oligarchs get richer and richer. Any significant downturn in the next while could see than country implode, or explode to distract the population.

The major revolutions of the last centuries - English, French, Russian, Iranian, Soviet - all happened when the rising economy took a downturn and the peoples’ expectations were not being met.

May you live in interesting times.

14

What about as an experiment, instead of taking from the 1% we just stopped giving so much to the 1%?

15

Seems this thread has gotten hung up on specifics…

How about this?

In a fiat and fractional reserve system, is money infinite? If so, is it possible for a group of people to control a large percentage of an infinite system?

16

No, it isn’t infinite, because as you increase the supply of money to infinity, you decrease the worth of that money to zero. And money that is worth zero can’t be exchanged for goods and services.

You’re making a classic error of confusing money with wealth. Money is just a thing we use to make exchange easier. We could have a money supply of one dollar, and instead of buying things with $20 bills we could buy things with 5 nanodollar bills instead. But that’s irrelevant anyway.

The super-rich aren’t rich because they have vaults filled with $100 bills. And they also don’t have bank accounts with billions of dollars either. Bill Gates might have $30 billion dollars in wealth, but he doesn’t have a bank account with $30 billion dollars in it.

He owns assets like shares of Microsoft stock, and if you multiplied the number of shares he owns by the share price today, it would be worth some number, which I’m calling 30 billion dollars rather than look it up.

So if the government who manages our fiat money decided to just create more dollars, that would decrease the value of the dollar, but wouldn’t in and of itself decrease the intrinsic value of Microsoft the company, other than the general economic downturn of dealing with the new inflationary economy.

In other words, if you create more dollars that doesn’t magically create more wealth. It doesn’t make more houses, or food, or cars, or factories. We’d have the exact same things we have now, only with more dollars. And so what happens is the value of the dollar, which has increased in supply, is now lower. Now we have to change the price for everything, if a dollar is worth half as much that means we have to change the price tags on everything to be twice as much.

I hope you don’t mind the value of your savings account suddenly being cut in half. Everyone who has savings denominated in dollars has that money vanish. Poof! But real economic assets like houses and food and cars and factories are still there, except now they would cost more dollars to purchase because dollars are worth less. So Bill Gates doesn’t lose anything. The stock price for Microsoft doubles, so now he’s worth $60 billion, but that doesn’t increase his actual wealth because a dollar is only worth half of what it was. He’s no better and no worse off than before. The people who are worse off are people who had savings or who lent money, the people who are better off are people who had debts or who borrowed money.

In any case, hyperinflation is bad, and we don’t want it, even though the number on your money doesn’t mean anything it’s good if that number only changes very slowly and predictably.

17

If your question is: “Why can’t the government just print up some stacks of money and hand $100 bills out to the poor?”, the answer is that that they could do that, and Milton Friedman famously and facetiously imagined increasing the money supply by dropping money out of helicopters

A more serious idea is the “basic income” proposal, whereby the government just hands out a certain amount of money to every citizen. Some governments do just that, the State of Alaska permanent fund dividend is an example funded by the sovereign wealth fund from oil royalties.

Of course this doesn’t increase wealth, but it does create a new wealth distribution, especially since poor people are a lot more likely to spend that free money on stuff like food and consumable goods, while the super-rich tend to stuff it into their vaults for treasure-swimming purposes.

18

I’d be happy controlling a very small percentage of an infinite money supply. That’s a fact.

19

The OP failed to define the scope. So lets do that:

On a world scale, an annual income of US$32,400 place you in the top one percent. However, you must have a net worth of US$770,000, on a global scale to be in the top one percent.

But the debate on the one percent is America-centric. So using the USA as the baseline you must have an adjusted gross income (AGI) of at least US$450,000. By net wealth, the numbers jump to a minimum of US$7 million.

So says: Top 10 Wealthiest Families in the World

In terms of how much a particular “class” owns:

Wealth inequality in the United States - Wikipedia

Yes. Money is power. Money is influence. If you have neither, your voice will never get heard. If you have both, you might be heard.

20

I’m not sure this is a question, more of a debate.

As others have said, the real danger of unchecked income inequality is political revolution. Luckily in a democracy people can vote in new parties if inequality and poverty become severe. However large income inequalities lead to oligarchy which can either lead to dictatorships or ineffective democracy (no matter who you vote for, all parties work primarily for the rich).

In Latin America many nations elected leftist governments due to inequality and poverty. But thirty years ago when those nations were dictatorships, the only option people had was armed communist insurrection. The democratic election of socialist politicians is vastly superior to armed insurrection by communists.

Basically, too much inequality causes political instability. Not to mention that since wealth isn’t redistributed, people can’t pay their bills (which is a major culprit in revolution).