# Inequality for all

So, we\’ve a new movie, an Inconvenient Truth about inequality it is said, coming out. In which we are told:

Half of the US\’s total assets are now owned by just 400 people – 400! – and, Reich contests that this is not just a threat to the economy, but also to democracy.

This is entire bollocks.

As shown in Table 2, the top 1%
of households accounted for a little more than one-third of total net worth in 2010.

The top 400 people are a very much smaller group than the top 1% (in the US, the top 1% is some 3 million people or perhaps 1 million or so households). In fact, the top 400 people is, to an acceptable level of accuracy, 0.01% of the country. UPDATE! Hah, yes, as in the comments, the top 400 are 0.01% of the top 1%, not of the population. So, 0.0001%.

Agreed, leftist mathematics can be a little odd but in the maths they teach us in this universe the top 0.0001% cannot have more of the total wealth than the entire top 1%, including that 0.0001%, has. Well, not unless many of the top 1% have negative wealth that is, which isn\’t something that anyone at all is asserting.

So, it\’s bollocks.

What would be interesting is to find a script of this movie, \”Inequality For All\” and plough through it for similar nonsenses.

There\’s other great stuff in it too:

There\’s Erika and Robert Vaclav, for example, who pay \$400 a week to keep their daughter in after-school care so that Erika can work on the checkout at Costco. \”And I\’m trying to work out if I should get her a phone so that she can walk home from school alone, and I know she\’s OK, or if I should continue paying the money.\” They lost their house when Robert was made redundant from his job as a manager at the now defunct electrical retailer Circuit City. And, it gradually transpires, that he\’s a student in Reich\’s wealth and poverty class at Berkeley.

\”How much money do you have in your checking account?\” Kornbluth asks Erika from off camera as she drives her daughter to school. \”\$25,\” she says and her voice starts to crack and waver.

Fancy that eh? Family of mature student don\’t have lots of money. I\’m shocked I tell you, shocked.

Hmm:

One of the key pieces of research that Reich cites is a study of tax data by Emmanuel Saez and Thomas Piketty which shows that the years of peak income inequality in America were in 1928 and 2007. Right before both crashes. \”The parallels are striking,\” he says.

What\’s actually striking is the incredible difference between the two sets of inequality. In 1928 it was largely income from capital which led to it. In 2007 it was largely income from labour which did. It\’s actually entirely different in fact.

## 26 thoughts on “Inequality for all”

1. Don’t really expect much mathematical prowess from the left but being a few zeros short, to the right of the decimal point doesn’t help when criticising it.

2. Got to say the reference to the Al Gore flic is appropriate, though. Another movie advocating taxes to solve a non-existent problem.

Can’t imagine anyone sensible doing that.

3. Someone will be along shortly to complain about how rich Her Majesty is; in his estimate of her wealth he will include everything owned by the Crown Estate, the Duchies of this and that, the MoD, the CoE and God knows what else.

In the wealth of everyone else he will omit their pension rights, their rights to use the NHS, and suchlike bagatelles.

Stupid or dishonest? The two ain’t mutually exclusive.

4. He’s studying some obscure leftist bollocks at Berkeley when he has a young family? And this is somehow someone else’s fault?

5. “Stupid or dishonest? The two ain’t mutually exclusive”

In my experience I’ve noticed a ridiculously strong correlation between the two. You really have to over-estimate your own IQ to think you can’t get away with dishonesty for long.

I consider myself to be a pretty much unimpressive sort of person but I know a retard when I meet one and dishonesty seems endemic among them

6. As you’ve noted, the Vaclavs are struggling because they have one former income producer now taking courses in things like “Wealth and Poverty” at UC Berkeley… a not inexpensive proposition.

I am not impressed with the Vaclavs’ life choices here.

Mr. Vaclav could have taken taken courses in, say, accounting (or electronics, or programming, etc.) at a local community college and picked up some real-life, actually marketable skills for a fraction of the cost of dicking around at UC-B taking courses about “Wealth and Poverty”.

You know what kind of jobs courses about “Wealth and Poverty” are going to get yoou ready to compete for?

Retail.

7. What people like Reich fail to see is this:

Much inequality results not because of the violence inhernet in the system, but because people make extremely poor life choices.

And that ain’t our problem.

8. If you chucked money at people making poor life choices, they’d still make poor life choices.

Lost count of the number of times I’ve been told so and so has had a hard life. So for some reason they decided not to make a change then?

Put a free opportunity in front of a hundred people and you won’t have all of them choosing to use it.

9. The problem with Robert Reich, Dennis the Pheasant and Martin Davies prescriptions is that they simply ignore the limitations of poverty.

A recent paper by Shah, et al in Science demonstrates that it is a lack of resources that is the source of bad choices by both the poor and the overscheduled.

10. Seldom have I read so many quotations of a paper that appears to comprise only conjecture.

Perhaps the good Prof might heed Ms Rabbett’s observations more often.

11. @Rabett ‘The problem with Robert Reich, Dennis the Pheasant and Martin Davies prescriptions is that they simply ignore the limitations of poverty.’

In the specific case quoted, there were no ‘limitations of poverty’. The guy was the *manager* of a branch of Circuit City. He wasn’t *poor*.

There are consequences to that, one of which is that it becomes hard to pay your \$400 a week childcare.

You think it this a sensible and praiseworthy course of action, and that ‘we are all responsible’ for what happens next?

12. Of course, Rabett appears to be some sort of university lecturer (and a rather immodest one, too).

So people deciding not to go to college to study entirely pointless courses may not be absolutely in his best interests, financially speaking.

13. In the specific case quoted, there were no ‘limitations of poverty’. The guy was the *manager* of a branch of Circuit City. He wasn’t *poor*.

Sure, but how typical is his case? People who are poor are more likely to be from poor backgrounds, it’s not simply about making bad choices. And to the extent that bad choices are a factor then being poor to start with does, es Eli points out, somewhat alter the range of choices available.

14. @andrew

Well, the people who made the film seem to think it’s some kind of examplar of a case, so it seems fair to rebut it.

It’s true that poor people often come from poor backgrounds; the question is, whose ‘fault’ is it that they are poor?

I contend that – in the modern UK – when the rest of us pay for 11 years of free and compulsory education, plus provide free healthcare, free money, free housing and assistance with the necessities of life, we’ve really kind of done our bit.

Some poor people – notably in this country the children of Indian immigrants, for instance – value education, work incredibly hard, and get their offspring out of poverty in a couple of generations.

Some other poor people – many of our own indigenous poor – are bone idle and do not value education, to the extent that they will march up to school and thump (or at least abuse) the teachers if they try to discipline their kids.

Meanwhile, films like this and the culture propagated by Rabett and Reich (and a lot of soft left Britons) insist that the failure of our own indigenous poor to lift themselves out of poverty, despite the evidence that other people can do it and have done it, is everyone else’s fault, and that their position is permanent and hopeless; and they drink this in and believe it in the marrow of their bones.

It’s quite wicked, actually.

15. Interested,

I don’t believe that the position of the poor is necessarily permanent and hopeless, but neither does the fact that some people born into poverty manage to escape it mean that it is easy for everyone to do so, and there is nothing “wicked” about acknowleging the actual realities of poor people’s lives.

As for whose “fault” it is, well for all of us how well we do in life is going to be determined by a combination of our own efforts and circumstances that are beyond our control and the fact remains that in the UK our social background remains a very high factor in how successful we ultimately become. I’m sure those of us who are relatively successful like to kid ourselves that this is entirely due to our own efforts, but it often just ain’t so.

I agree that as a society we do, rightly, expend a certain amount of resources and effort in trying to assist the poor but that whilst this no doubt has a value in preventing them being even worse off it doesn’t seem to be very successful in actually enabling people to change their lives in the long term. Is this because poor people are inherently lazy and/or ignorant or is it perhaps because the peoblem is a somewhat difficult and complex one with a number of underlying factors?

16. The experience of having some one close to me come from poverty – shanty town in S,America, move to Europe financed by the area’s main export, employment in the oldest profession – makes me believe the poor’s poor choices don’t arise from lack of resources. However small they are, they can always be built on. It’s lack of mental horizons.
When I first met La Colombiana, I don’t supposed her horizons extended much further than hours. Tomorrow uncertain, next week a mysterious foreign land. It’s what that life does to them. If you have little power over your own destiny you don’t think much further than the next meal. It’s taken a very long time for her to adjust to things we might take for granted. She’d never considered accumulating anything in the way of savings or possessions because what’s the point if the chances of enjoying them are so low? They’ll just get taken away. Even now,slightest stress & she’ll default back to living for the instant.
The whole way the ‘disadvantaged’ are regarded & supposedly ‘helped’ has a similar effect on them as her origins. There’s too much emphasis given to assisting them in the short term. If you don’t need to worry about the next benefit check arriving, whether you’ll have a roof over your head or the kids’ll get fed, there’s no encouragement to think past the present. And the ‘system’ does much the same for them as life’s done for her. The harder they try to improve themselves the more gets taken away from them. That’s how benefits work, don’t they? Earn a few quid but the entitlements lost pretty well cancel them out. The band between being ‘disadvantaged’ & being ‘advantaged’ is such a struggle to cross it’s not worth the attempt. They’ve no confidence it’s possible to get to the other side.

17. Eli Rabett: “The problem with Robert Reich, Dennis the Pheasant and Martin Davies prescriptions is that they simply ignore the limitations of poverty.

A recent paper by Shah, et al in Science demonstrates that it is a lack of resources that is the source of bad choices by both the poor and the overscheduled.”

I was in no way narrowing my comment to “the poor”, in large part because the specific example had nothing to do with “the poor”. The Vaclavs are very much middle class. And it seems apparent, based on the limited data provided, that their specific difficulty is a product of resource allocation choices they have made since Mr. Vaclav lost his job. That’s at least as much a matter of poor decision making about how to use your limited resources as it is about how limited your resources are.

That being said, I spent about 10 years of my career working with (or for) organizations that ministered to “the poor”, including a homeless shelter. One of the things that really jumped out at me during that time was how often those with very limited resources chose a course of action that, in effect, squandered those assets. It was something that didn’t happen all the time, or even most of the time, but it happened enough that it was striking. Anyone who ignores just how important bad decision making is in generating and perpetuating poverty isn’t dealing with it in real world terms.

18. @andrew adams ‘As for whose “fault” it is, well for all of us how well we do in life is going to be determined by a combination of our own efforts and circumstances that are beyond our control…’

While acepting that there are variants in all lives, I don’t know how much clearer I can make it for you than I already have.

We are living in England in a large lab experiment, full of controls, and the results are starting to come in.

They don’t make good reading for people who blame ‘circumstances that are beyond our control’.

My neice goes to a private school in Leicester (but you could choose pretty much any city in the country) whose classes comprise more than 50% kids of Indian extraction, whose grandparents in most cases came to the UK with virtually nothing.

They have worked and striven to get to where they are now, while the local whites have spent a lot of their time and income on Sky telly, cider/alcopops and producing sprogs in various loosely-connected ‘families’.

I guess the whites just suffered more from ‘circumstances’ that are ‘beyond control’ than the Indians?

19. I’m not sure the film says any such thing. That was the Guardian. The Guardian is not the film, it’s a newspaper. And we all know what newspapers and think tanks are like.

I believe (second hand, I haven’t seen the film, or even checked the fact for that matter) the film actually argues that the richest 400 people in the US account for as much wealth as the poorest 50%, which is very different.

20. Interested,

I guess the whites just suffered more from ‘circumstances’ that are ‘beyond control’ than the Indians?

Well what’s your explanation? That Indians are inherently harder working and more ambitious than white people?

21. Further to above comment, it seems to me (and I have no hard evidence to support this but I come from an area which is not exactly well off) that part of the reason many people do not manage to break out of the poverty cycle is a problem of low aspiration/expectations and/or negative peer pressure. You mention above people whose reaction to their kids getting into trouble at school is to go and thump the teachers, and rightly suggest this shows that they do not value education – so what effect do you think this has on the expectations and aspirations of their kids?

What I find odd is that you paint a negative picture of the kind of lives lived by a certain part of the population but seem to dismiss the notion that people born into this particular environment might have their life chances negatively impacted by it. And it does seem to me the circumstances of someone born into such an environment are different from someone who has made a conscious decision to move to another country with the expectation that they will have to start with very little and work their way up.

22. Better explanation was they started a fair way up the ladder in India. or they wouldn’t have the resources to immigrate. They start from the position of being aspirational.
Our whites do indeed suffer from circumstances “beyond their control”. Unlike the Indians, they won’t be allowed to fail. They or their kids are never going to suffer hunger or lack of a roof over their heads unless they contrive to find a hole in the safety net to fall through. Conversely, they’ll have to work quite hard to gain much more than the Sky subscription, alcopops & fags they have already. As fast as they’d earn more money it’d be taken away in loss of entitlements. The jump between the fortnight’s wait for the next benefit payment & the year or more it might take for a paid job to start providing a real change in circumstances is beyond their mental horizons. Systems designed to keep them where they are. Not without intention, I’d guess.

23. @andrew adams ‘Well what’s your explanation? That Indians are inherently harder working and more ambitious than white people?’

The word ‘inherently’ carries an awful lot of baggage. All other things being equal, I doubt it. But all other things are not equal.

‘…part of the reason many people do not manage to break out of the poverty cycle is a problem of low aspiration/expectations and/or negative peer pressure. You mention above people whose reaction to their kids getting into trouble at school is to go and thump the teachers, and rightly suggest this shows that they do not value education – so what effect do you think this has on the expectations and aspirations of their kids?’

If your argument is, ‘Some parents are utter scum and it’s a tragedy that they bring kids into the world, and it’s no terrible surprise if lots of the kids turn out badly,’ I’m in complete agreement.

If you’re saying that this is a life sentence, and that there is no way out, I am not in agreement. There are lots of ways out – people take them all the time.

Who do I blame for the fact that so many modern parents are scum, and so many kids with a crap start in life don’t break the cycle?

The people themselves – I don’t accept the idea of inanimate ciphers to whom things are done.

But more than that, successive governments and cultural leftists who have wrecked the family; ministers, teachers and unions who have wrecked education; the government and culture which has made a prolonged life on benefits a (n unpleasant) possibility.

24. I think a clarification in the original blog post is in order. As JayPettitt points out in the comments it’s the Grauniad’s cock up, not the film’s. The richest 400 Americans own the same amount of wealth as the poorest 50% or 150 million. That is genuinely shocking.

Tim adds: So people can read the comments and see that it was the Guardian that screwed up.

As to the second statistic, why do you find this shocking? There’s at least 30 million Americans who have negative net wealth. Indeed, anyone with \$10 and no debts has more wealth than that 30 million Americans put together. These 30 million would include most students graduating with some tuition debt for example.

Quite why anyone should find inequality in wealth distribution shocking is beyond me. It’s always much more skewed than income distribution. It has to be given lifecycle savings habits.

A couple of further thoughts. Household wealth in the lower 50% is almost exclusively housing equity. You’ll note that we’ve just had a real estate bust.

Total wealth in the US is around \$50 trillion. The Forbes 400 have some 1.4 trillion of that. That the gilded plutocrats have 3% or so of the nation’s wealth really doesn’t surprise me in the least. Nor that the ration compared to the bottom 50% changes in the aftermath of a housing bust.

It’s just not a surprising figure to me at all.