Monday, October 10, 2011


I have found I am particularly distrustful of stories of economic inequality based on worth. There are several reasons for this, including an inaccurate mixing of statistics, a person's actions that do not accumulate worth, and a lack of indication of remedies.

First, many of these articles seem to mix worth and income, gliding from one to the next with the ease of a smiling car salesman asking you what payment you want. They neglect that although Bill Gates is worth $40 billion dollars, the worth is mostly in Microsoft stock. Bill Gates' worth is not a big bank balance with the first five digits reading something like 40,272 and the next six digits ticking steadily upwards as interest accumulates. His worth is in the form of stock, whose value is determined by the market. The same can be said for Warren Buffett and dozens of other billionaires and thousands of millionaires. Admittedly, their income is extremely high, but if you want to talk about income inequality, use income figures. Don't shift sneakily over to worth in mid paragraph, or even mid sentence.

Next, lets face it, most people don't really think about increasing their net worth. Imagine a person making $40,000 a year, well below national median income. They are frugal and have no ongoing debts, and even possess a small emergency fund against things like needed car repair or emergency room visits. Give this person a $2000 bonus and do they really rush home and invest in Disney stock? No, its spent on a new HDTV, or a gaming laptop, or new furniture, or a trip to Paris. People in middle and below income brackets simply don't think about long term gain of worth.

I agree that many people in these income brackets are struggling financially, burdened with expenses such as school loans or credit card debt. And the credit card debt is not necessarily from unwise consumer spending, but from something like necessary car repair when the savings balance showed zero, or a long spell of unemployment. Any windfall would most wisely go to reducing expenses, not investing in new worth.

Also, the road to increase one's worth is currently very murky. The fickle stock market will eat your windfall like a hungry West Virginian after an evening smoking pot. Real estate will take years to show a profit, if ever, and still requires a large initial investment. The lack of clear direction for improving one's financial worth is actually a severe problem, worthy of another essay. Still, most people have a consumer mentality, and this prevents people from accumulating wealth.

Lastly, constantly pointing out worth inequality doesn't really indicate any long term path to remedies. More taxes? Republicans fight even mild increase in taxes on the income of the wealthy tooth and nail, so no increase on total worth will gain ground politically. And any substantial tax that required the Buffetts or the Gateses of the world to divest would drive stock prices down as they flooded the market with stock or real estate. Sorry, that $10,000 in Microsoft stock you diligently saved for, its worth $7500 now. So even if the Wall Street Protests gain ground, exactly what will they do with that political power to promote spreading of wealth?

So you can see that statistics and essays comparing worth are, well, worthless. They mix statistics to confuse the reader, they refuse to take into account the consumer mentality prevalent in the United States, and never mention any solid remedies. I'm all for moving people up the socio-economic ladder, but lets start with something more concrete than discussions of worth.

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