Envy Never Sleeps: Attacking the Rich
Envy is basic to all Left-wing politics. The desire is to tear down the rich.
Let me give a recent example. The headline announced: The World's Top 1% has 50% of the Wealth.
Shocking! Incredible! A sign of serious social inequity! Something must be done!
Here is reality. You may have heard of Pareto's law. It is also known as the 20-80 law and the 80-20 law. It operates in almost every area of life. Read about it here. There is nothing controversial about it. There is also nothing new about it.
It was first discovered by economist Vilfredo Pareto in 1897. It has been studied for decades. No one knows why it operates, but it does.
The 20-80 distribution is scaled upward. Therefore:
Level 1. 20-80
Level 2. 4-64 (.2 x 20% = 4; .8 x 80% = 64%)
Level 3. 0.8-51 (.2 x 4% = .8%; .8 x 64% = 51%)
So, Pareto's law tells us that about .8% of the population should own about 51% of the wealth. But we are told by the headline that the actual distribution is slightly more equal than what Pareto's law would indicate. A larger percentage, 1%, owns less than 51%.
The haters of the free market never tell their readers about Pareto's law, and how it has operated as far back as any economic historian has been able to trace capital ownership and income distribution.
So, we read this.
The wealth of the entire world is now divided in two, with almost half going to the richest one percent, and the other half to the remaining 99 percent.In November 2013 the World Economic Forum released a 49-page report titled Outlook on the Global Agenda 2014. It says that, based on those surveyed, inequality is "impacting social stability within countries and threatening security on a global scale."
According to a 32-page study by Oxfam titled Working for the Few, they have calculated:
In a world of 7 billion people, 85 of the richest people on the planet now have the combined wealth of 3.5 billion of the world's poorest people.The wealth of the richest 1% in the world is $110 trillion, and this is 65 times the total wealth of the bottom 50% of the world's population.
1,426 individuals have a combined net worth of $5.4 trillion.
The author is unaware that nothing has changed since 1897. He thinks this is something new. It isn't. The 20-80 rule prevailed in Western Europe two decades before the welfare state's programs captured the West.
Fact: The welfare state has not changed wealth redistribution. It has only changed who has gotten to the top, and by what rules. The defenders of the welfare state never admit this. The outcomes of their reform programs have conformed to Pareto's law.
This massive concentration of economic resources in the hands of fewer and fewer people presents a real threat to inclusive political and economic systems, and compounds other inequalities. Left unchecked, political institutions are undermined and governments overwhelmingly serve the interests of the economic elites--to the detriment of ordinary people.
Wrong. It has not posed any threat to political and economic systems. That is because political and economic reforms do not break Pareto's law.
When wealth captures government policymaking, the rules bend to favor the rich, often to the detriment of everyone else. The consequences include the erosion of democratic governance, the pulling apart of social cohesion, and the vanishing of equal opportunities for all.
But this is true everywhere. The welfare statists have changed nothing.
As U.S. Supreme Court Justice Louis Brandeis famously said, "We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both."
Brandeis was a liberal. He knew nothing of Pareto's law, which prevailed in his era, before his era, and prevails today.
Those gathered at Davos for the World Economic Forum have the power to turn around the rapid increase in inequality.
No, they don't. So, they won't.
Global elites are increasingly becoming richer. Yet the vast majority of people around the world have been excluded from this prosperity. For instance, while stocks and corporate profits soar to new heights, wages as a percentage of gross domestic product (GDP) have stagnated.
Everyone is growing richer. But global elites grow richer faster. They did in 1897, too. Nothing has changed.
Since the late 1970s, weak regulation of the role of money in politics has permitted wealthy individuals and corporations to exert undue influence over government policy making. A pernicious result is the skewing of public policy to favor elite interests, which has coincided with the greatest concentration of wealth among the richest one percent since the eve of the Great Depression.
Wealth begets wealth, and once the political and institutional system is rigged in favor of an elite, the consolidation of their privileges cascades down through different mechanisms.
But the system was "tipped" this way in 1897. Why should anyone believe that higher taxes, government-mandated wealth redistribution, and massive regulation will change anything? This program did not exist in 1897. It was imposed after World War I. It has not changed the Pareto distribution.
The large and rising concentrations of income and wealth in the U.S. and many other countries represents a global threat to stable, inclusive societies for one simple reason: the unbalanced distribution of wealth skews institutions and erodes the social contract between citizens and the state. The checks and balances that were put in place to ensure that the majority of the population are heard, now tend to be weakened. Concentration of income and wealth actually hampers the realization of equal rights and opportunities because it makes political representation harder for disadvantaged groups (to the benefit of affluent groups). It has happened in the past, and unless we pay close attention to the worrying trends outlined here, it will happen again.
This has been the Party Line of the Progressive movement in the United States and "industrial democracy" in Europe since 1897. They took over after World War I. Result: nothing has changed.
The time to act on inequality is now. Rising inequality, a trend that has grown apace over the past 30 years, must be reversed--starting today--but members of Congress refuse to budge one inch.
That is what they said in 1897.
But it might be too late--the peasants with pitchforks may already be coming. . . .
There are no peasants. The farm population is down to 2%.
No one is coming. Taxes collected by the U.S. government have not exceeded 20%, except in 1944, in World War II, when they rose to 21%. That was the high point.
The welfare state's advocates never change their tune. The Pareto distribution never changes much, either.
And so it has gone since 1897.
The welfare statists want to strip today's rich of their wealth. They are driven by envy. Their policies will only change the faces at the top. But they hate the faces now at the top. They want to expand the state's confiscatory powers in order to "get even with the fat cats." This will only fatten other cats, who will replace today's fat cats.
Envy is a destructive sin. It cannot be placated.