Who are the 99%? Which 99%? What is their income?

Occupy Wall Street. A minor leftist interest group which presumes to speak on behalf of 99% of Americans. Do they? Even if not, are their grievances well-founded? Are they even self-consistent? Is this really about anti-corporatism, or is that a red herring? Whose interests, exactly, does the OWS group represent, if not Americans at large? What is “Wall Street’ and how much of the finger-pointing of OWS genuinely belongs there? This is the first of a series of articles intended to address these questions.

Let’s begin at the beginning, with the most visible aspect of the OWS movement: the rhetoric. “We are the 99%” they say. They oppose “the 1%” which is supposedly embodied most appropriately (conveniently?) by Wall Street. This rhetoric is meant to be a statement about income inequality.  Thus, let’s discuss income and income inequality, with respect to this 1%-vs-99% nonsense.

To actually be among the richest 1% of Americans, one must make in excess of about $500,000 per year after taxes. Globally, however, those Americans are actually among the richest 0.00156%, and anyone who makes in excess of about $40,000 - $50,000 per year is in the world's richest 1%. The median personal income of Americans in 2005 was about $32,000, whereas the median personal income of all the world was about $1,000. Suddenly income isn’t so politically convenient a metric, and many of the OWS crowd would have to count themselves in the camp of the enemy. Needless to say, the OWS propaganda machine doesn't use those global statistics in their calculations. They don't make flyers or spray paint sidewalks with "We are the top 6%, excluding the top 0.00156%".  Doesn’t have the same ring to it, and makes the cause look pretty stupid.

It's really no surprise that most people of the world – if they know about OWS at all – think they're whining about nothing. To anyone making near the median global income ($1,000 per year, remember? About $0.48 per hour for a 40-hour work week.), OWS represents a bunch of rich people complaining that they're not as rich as another bunch of slightly richer people. Even the 420 people in Allen, South Dakota – considered the poorest town in the United States, with 96% of its residents below the poverty line – have a median personal income in the top 15% of the world. Let me rephrase. The people in the poorest American town are still higher income than 85% of all people in the world. The middle class of the world makes between 1 and 7 thousand dollars per year per adult. No more. The residents of Allen are solidly within this income bracket. Anyone who gets the benefit of more than that amount per year (whether they "earn it" or not is irrelevant) is fabulously wealthy by even current world standards, and inconceivably wealthy compared to any state of the world historically, taking into account the purchasing power of that sum of money. Ask any illegal immigrant whether it’s better to be poor in America or middle class in their home country, if you don’t think their very presence in this country is sufficient answer. 100 years ago, kings of the world did not have access to the quality and wide variety of goods that even the poorest Americans today can acquire, despite the fact that those kings had levels of wealth that, adjusted for inflation, far exceed anyone alive today. The richest individual in the history of the world for which reliable wealth data exist, adjusted for inflation, was John D. Rockefeller, with an estimated $700 billion in modern dollars. He died in 1937, and thus his fabulous wealth could never have bought him a color television, a personal computer, a pocket calculator, a microwave oven, a ballpoint pen, a blotter of LSD, a helicopter, a Slinky, a Frisbee, a Barbie doll, a transistor radio, a credit card (not that he needed one), a Teflon pan, a photovoltaic solar cell, a cheeseburger at McDonald’s, penicillin (discovered in 1928 but not released for sale as a pharmaceutical until 1942), Valium, or essentially any of the medical technology that could have diagnosed his LDL cholesterol problem, plus the bottle of Lipitor that might have added a few extra years to his life.

OWS lacks perspective, and the organization’s grievances are petty first-world problems.

Let's instead examine income equality rather than absolute income, since that seems to be closer to what OWS is trumpeting as unsatisfactory in the US. There is an economic metric called the Gini coefficient, which is used to represent income inequality. A Gini coefficient of 0% represents absolute income equality (all individuals have the same income), and 100% represents absolute inequality (one person makes all the money). Intermediate Gini coefficients have no particular intuitive meaning but still correctly relate more-equal to less-equal on a scale. The highest Gini coefficient the United States has ever attained was 47% back in 2006. It’s slightly lower today. Real-world Gini coefficients range from 71% in Namibia to 23% in Sweden. The world Gini coefficient lies somewhere around 60%, a rating on par with the income distribution in Haiti, which is the poorest and most corrupt country in the western hemisphere.

So again, by world standards, the distribution of income in the United States is quite remarkably equal, and OWS has little of substance to complain about.

Of what relevance, by the way, is income equality in a country? Consider the following thought experiment. Suppose there is a country with a Gini coefficient of 0% – perfect income equality – where everyone has exactly the same income. We can call it Communistan, if you like. Let’s say it has a population of 99. These 99 residents of Communistan – let’s call them Communists, yes? – have a certain level of prosperity; it doesn’t matter what level it actually is for our purposes. One individual moves to this country from outside and happens to have an income equal to every other Communist in Communistan combined. Has the level of prosperity of the original 99 Communists changed? In what way are the 99% harmed by the coexistence of the other fellow, merely by virtue of income inequality? In no way whatsoever. This brings me to an extremely important point. So important, in fact, that I’m going to make it really really big so nobody misses it.

Income is not a zero-sum game.

 

The idea that there is a meaningfully finite money supply, that rich people are “hogging it”, that one person’s high income requires another person’s income to be lower, is purely mythological. That’s not how money works.

Let’s go back to Communistan again. The 99% feel threatened, for whatever reason that lies beyond imagination, by the superior income of the 1%, and they pull the strings of their government to take money from the 1% so that the Gini coefficient goes back to 0 and everyone is once again nominally equal. What of substance have the Communists accomplished by doing this? They’ve simply empowered the state to rob Peter to pay Paul. Is it just? Is it “fair” ? Is it a society you want to live in, where any interest group can empower government to take the property of a non-consenting third party?

If you said yes, be aware of certain terminology that applies to you. Strauss coined the phrase “political hedonist” to refer to the felicitous individual willing to accept the Leviathan state outlined by Thomas Hobbes – or in other words to refer to the individual willing to demand the machinery of government be operated for their personal benefit while simultaneously never supposing or suspecting that another individual may do the same at the expense of the first. If the state can rob Peter to pay Paul, it can just as easily rob Paul to pay Peter, or even rob Peter and Paul to pay itself. Jasay goes even further and argues that the political hedonist is, by definition, anyone who agrees to the “social contract”, since it stipulates that the individual must give away rights to the state. Anyone who is in that position of agreement would rationally expect to receive more benefit than harm from the state, and therefore equivalently expect to be the recipient of the benefit of the state’s actions more often or for greater impact than any other individual with goals contrary to their own. The obvious problem with that attitude, of course, is that it’s impossible for everyone holding it to be correct in their expectation, since for any policy the state enacts, some gain and others lose. Some will inevitably gain more than others, more often than others. Contrary to Hobbes’ intention, such usage of the state doesn’t solve the problem of bellum omnium contra omnes, but rather just introduces the state as another weapon in the struggle, to be wielded for one’s benefit as often as possible, and to be endured when the state is wielded against one until one’s turn comes again. Such a state is nothing more than a high-stakes game of musical chairs.

So, 99%, if you expect to use the state today to get what you want from the 1% against their will, you are thereby acknowledging the legitimacy of the 1% using the state yesterday or tomorrow to get what they want against your will… which is precisely what you’re complaining about. You can’t have it both ways.