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Saturday, February 07, 2009

 

what is meant by wealth disparity


some time ago i cited the work of james livingston in explaining how the concentration of wealth, though tax and regulatory policy changes, over the last thirty years helped to create the conditions of the financial and economic collapse we have seen over the last couple years.

quantifying the depth of the disparity between rich and poor has largely meant citing the gini coefficient. but yves smith relates a graphic from the journal that puts a historical spin on the striking chasm that has opened up in the united states by updating the efforts of alexis de tocqueville in his 19th-century classic, 'democracy in america'.

further, notes yves:

But Blankfein was far from the best paid American. Forbes told us that the 400 highest earning taxpayers reported $105 billion in adjusted gross income. That averages $262.5 million. $262 million versus the minimum wage level of $13,100 gives a ratio of over 20,000 to one.

Now some will protest that the $105 billion probably includes one time windfalls, like the sale of major businesses. Doesn't wash. We are looking for the disparity top to bottom. I haven't seen any estimates for 2008 yet, and hedge funds had a rougher year, but the Institutional Investor ranking of top hedge fund managers for 2007 showed John Paulson at $3.7 billion, George Soros at $2.9 billion, and James Simons at $2.8 billion.

So the popular perception is right. The super wealthy today are better off than royalty of old. And it's not due to indoor plumbing, either.

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