Thursday, February 24, 2011

More on Inequality

I thought this graphic was fascinating:

I think this is a great graphic that reflects more on the majority of Americans' numeracy than it does on their actual views on wealth distribution. But if we assume that everyone has a good grasp on percentages then we could conclude that the majority of Americans are advocates for more redistributive policies (not my preference).

I have long held the belief that if you hit the restart button on society and reallocated all of its resources equally to everyone, within a short amount of time, the distribution would shift towards the middle bargraph. I believe that certain people are ingrained to spend, even beyond their means, which certain other people finance because they are ingrained to save. So eventually we reach an equilibrium where the top 20% (extreme savers) accumulate a much larger percentage (multiples) of society's assets than the bottom 20%. Add on the compounding of interest over years - positive for the savers and negative for the borrowers - and you can quickly see how the gargantuan gulf in wealth is formed.

Hat tip: The Reformed Broker.

1 comment:

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