References:
en.wikipedia.org/wiki/Wealth_in_the_United_States#/media/File:1-US_Household_Wealth_-_Real_and_Nominal.png
en.wikipedia.org/wiki/Economi…
fredericbastiat1850.blogspot.c…
www.entrepreneur.com/article/…
www.fa-mag.com/news/most-mill…
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I want to explore this idea, because this is an assertion and we live in a time where we have statistics and data on many things, so it’s a time where opinion can be driven by fact rather than ideology which is of course what drove Karl Marx to say these kinds of things. I will compare left and right wing ideology pertaining to pretaining to the potential class jump and then introduce data to test which is correct.
This comment is based on the idea that wealth and future income is allocated at birth, the amount of wealth in society doesn’t change and there is nothing people can do to change their level of wealth from the level that they have inhereted. In others words we have the classic socialist, or far left wing theory and as I am increasingly refering to as matruachal view on the world. This ideology leads to the idea that all people should have equal income regardless of how productive, educated, smart or hard working they are.
Let’s contrast this ideology with the right wing idea where you are your own desiny, if you take risks, work hard become productive get some education you can determine your own destiny. We can all be rich together if we deserve to be and of course by deserve the right means that you make or contribute to making products that people actually want. Then if you are successful in this endeavour you get to take out more from the economy, i.e. You are paid more for more valuable work. This is market economics.
Look common sense tells us there is some truth to both sides, but let’s try to see which side is more true.
Today I am going to explore these ideas using various data. I’ll concentrate on the USA because they probably have the flattest income tax system in the the western world, however their system is still clearly progressive. This more moderate progressiveness makes it more difficult to “class jump” so we know that whatever happens in the USA that other western countries will probably be more mobile, i.e. Easier to changes income level compared to your parents in other western countries outside of the usa.
Let’s start with the big money first
According to a new report 62% of US billionaires are self made, that is the right wing theory of personal effort being the primary cause for almost 2/3 of billionaires. 18% of billionaires have a mix of inhereted and self made wealth which is a “centre wing” idea which I assumed would be the most common but i was wrong while 20% of billionaires inhereted their wealth which is the left wing socialist idea. So it looks like the right is, well right. However, the absolute number of billionaires is quite small, so Jodie Fosters and Karl Marxs theory is not debunked yet. so let’s look at the proportion of millionaires who are self made. 67% of millionaires in the USA are purely self made which is surprisingly high. After my reaction to this being surprise, I considered why I found this so surprising. I have never looked this data up before. I realise that I have been exposed to constant socialist ideas like from Jodie Foster my whole life and had internalised this left leaning idea which is perpetuated by the West that your future is more or less dterminied by your parents income. So the constant passive absorption of comments like Jodie’s do effect people and we absorb this information and adopt opinoins based on this information in a passive but definite way.
This is very concerning when extremely unqualified people with no knowledge of the problem are so vocal and influential with their emotional and factual baseless commentary. Again we live in the time where teh data is out there we don’t need ideology to dirve these ideas, we have the facts.
Let’s zoom right out now and look at income quintiles in the Usa in particular look at intergenerational influence on your income. What is the chance of you having an income in the top 20% in the USA if your parents did and what’s the chance of you dropping out this income bracket. 39% percent of people in the top 20% had parents who earned in the top 20% while 61% of people earning in th top 20% didn’t have parents earning in this range. When you consider that random chance says that 20% of high earners will have high earning parents there are only an extra 19% of high earners with high earning parents, so in effect over 3/4s of the non random high earners jumped up to the highest income quintile.