I think most people don't realize just how much money the richest people have. People generally think of normal(ish) distributions like height, where if you're 10% taller or shorter than average, you're a tall or short person, and 40% taller makes you the tallest person in the world. In comparison, wealth has a very, very long tail, making it hard to comprehend.
Here's what I've come up with to visualize wealth in the United States. Suppose you start counting, going up by 1 million dollars every second, and people sit down when you reach their net worth. Most people will sit down immediately. After about 9 seconds, people in the "1%" will start sitting down. Near the 17 minute mark, billionaires would start sitting down. Donald Trump would sit down just before the hour mark. A day later - an hour and 10 minutes into the second day of billionaires sitting down - Bill Gates would sit, followed by Jeff Bezos just three minutes later.
The point of this is there's a huge range of billionaires (analogous to comparing 17 minutes to a day). The 1% hardly even registers on this scale (a few seconds). (I should also mention that there should be huge error bars on reported net worth numbers.)
>The 1% hardly even registers on this scale (a few seconds).
I really wish this point was better understood. The rhetoric around the "1%" has completely missed the point, as the vast majority of the 1% is comprised of our doctors, lawyers, small business owners, and other normal successful people. Pitting the poor and working classes against them makes no sense. The real problem is the 0.00000001% of people who control now half the world's wealth [0].
> the 0.00000001% of people who control now half the world's wealth
This is nonsense. Your source compares the wealth of the richest few people to the net worth of the "poorest" 50% of people. Net worth takes into account debt, and it happens that the half of the population with the lowest net worth has a total amount of debt about equal to its total amount of assets, so its total net worth is almost zero. A little more credit card spending, and an eight year old with a nickel in his pocket will have "more wealth than the poorest half". Needless to say this is not anything like half of the world's wealth. The total wealth of individuals is (according to my quick Google search) something like $250 trillion, and that presumably doesn't take into account wealth held by governments.
It's also silly to use net worth to identify the "poorest". Supposedly Donald Trump had a net worth in 1990 of negative 900 million. Your source's calculation would presumably call him the "poorest" person in the world and his presence would subtract $900 million from the wealth of the "poorest half". Is that sensible?
The richest people are very, very rich compared to most individuals. But no individual has much compared to the wealth of the whole world, and I suspect the share is shrinking. In the 19th century JP Morgan bailed out the US government, rather than the other way around!
A more interesting analysis would be to look at the distribution of total lifetime consumption.
None of these net worth calculations of poor people make any sense. If I take out $100k in loans to get an education, the wealth of the world has increased, but the only thing that's recorded on the ledgers of net worth is that I'm $100k in the hole.
You're not getting my point. Education itself is a form of wealth in terms of increased future earnings; otherwise few would pay for it. That wealth doesn't show up on anybody's balance sheet because it's hard to measure, but it still there. When some millennial says they have negative net worth due to student loans, they're not accounting for the positive value that their education affords them due to the fact they can do skilled labor.
Look at it this way -- if a company A has an EBITDA of $20k/year and company B has an EBITDA of $40k/year, the MBAs will have no problem assigning values to these companies. And companies can increase their earnings by going into debt such that their net worth as measured by these calculations can increase. But substitute a human in, and suddenly everybody has negative net worth.
The "1%" is weird because it simultaneously includes a lot that people didn't want it to and doesn't include a lot that people think it does.
The 1% is roughly half a million in yearly income or ten million in net assets (remember to subtract your mortgage from that!). It is true that this goes beyond the ultra wealthy to largely include "doctors, lawyers, small business owners, and other normal successful people", but that doesn't mean most doctors, etc. are in the 1%.
There's an urban legend that 19% of people think they are in the 1%, but the actual poll was that 19% of people think they would be affected by tax cuts affecting the 1%. I'd like to see a study of what percentage of people think they are in the 1% or soon will be, because I bet it's a lot more than 1%.
So you have a term that was meant to vilify the ultra-rich, but makes the average doctor, etc. worry about being vilified.
Actually, it does make sense. While the ability of the super-rich to affect society is enhanced by their wealth, their ability, and need to do so, are reduced by their small numbers. They do not form the kind of large, broadly homogeneous social group that drives long-term changes in society. The sheer scale of their exceptional wealth also lets them make special, individual arrangements that preclude the need to act en-masse.
The 1% on the other hand, are rich enough to enjoy outsized political influence, but poor enough to retain some economic anxiety, and be genuinely affected by changes to taxation, inheritance, redistribution, etc. And they are numerous enough to form a corporate whole that acts to protect its own interests.
The 1% are the middle managers of the world's socioeconomic hierarchy. They don't possess great power individually, but their collective power to shape the culture is vast, and has a tendency towards toxic outcomes as they attempt to safeguard what wealth they have managed to accumulate.
I prefer to realize that even at ninety billion dollars of personal wealth; the full amount is not actually available; is that the US government would consume it in less than ten days.
Even if we could confiscate his and all similar holders of wealth money we could not pay for government for even a year.
the realization we must have is that this amount of personal wealth is not harming the worlds poor and it really doesn't harm those of us here.
the world has such incredible poverty because of government. Government that does not respect property rights, rights to one's self, nor the product of their work.
What makes capitalist societies work is property rights and it is that incentive which provides the stable society many of us enjoy.
If you want to raise the poorest in the world up you do so by encouraging their governments to respect the property rights of even their weakest citizen. To respect the earnings of those who work.
Yes, I've been learning that this is a fundamental realization to make that the pie grows and the economy is not this fixed sum game where someone grows rich at the expense of others. Thomas Sowell has written well of this topic and I like his perspectives on the matter. Milton Friedman his PhD advisor is fun to watch too on YouTube.
Some Uncommon Knowledge video of Thomas Sowell makes an interesting point about how the real question is not to ask why people are poor, that's the default position he claims. The real question to ask is why is there wealth in the first place.
I'm as pro-capitalist, pro-democracy, pro-make-a-fuck-ton-of-money as you can get... But even I am blown away by the wealth of some of the top billionaires.
Just think about the good that some of that could do for the country. Put it into science. Put it into social welfare systems. I don't care, put it into something!
I don't know what the solution is. The naive comment would be if you make above X billion everything else goes to some re-distribution fund... Obviously that will turn a lot of people off. But the point is, I just don't think anybody needs that kind of wealth.
It doesn't boggles my mind at all, and I prefer Jeff Bezos and Bill Gates rather than more corrupted people.
"All the good you can do with this tons of money" Money at that scale is power. Bezos could give away a little each year to a science institut for example, but it would not work for short term stuff. You are not going to discover 1000x more stuff tomorrow by pouring billions in science. But for a long term goal yes Jeff Bezos could nudge more people getting into science if he wanted that. And that's what he might do for Space exploration / technologies (at least that's what he publicly says) and that is called... Investment.
So which investment is the best ? Who knows ? Who has the power to decide it ?
PS : not spending its own money is NOT throwing it away, it increase power purchase of all others people that uses the same money. Spending it increases money circulation and can cause inflation for example.
PS2 : "I just don't think anybody needs that kind of wealth" who said anyone was given money because he "needed" it ? We don't live in a communism utopia
Capitalism: pro competition, pro markets. Corporatism: anti-competition, Freedom Markets™.
Conflating the two is the biggest failing of modern leftists, such as myself. We can hardly criticize, mitigate our modern winner-takes-all economy until we stop defending it.
The billionaire himself would rarely have a significant pile of cash lying around. Someone somewhere decided to value AMZN at $1,046.00.
They could've done something for the country. They could've put $1,046.00 into science. Cut a $1,046.00 check to a social welfare system. Yet they chose to exchange $1,046.00 for a single share of Amazon.com.
> Just think about the good that some of that could do for the country.
It already has. Bezos has created value for millions of people and businesses, generated huge tax receipts and completely revolutionarised entire industries.
Universities, and I would guess charities as well, tend to liquidate their shares immediately to avoid conflicts of interest. Liquidating that many shares that fast would cause havoc in the markets.
Money begets money through investment, like gravity. In any random distribution of particles you'll eventually have black holes form with gravity.
People with this level of money are equivalent to kings or other monarchs. On some level it really isn't their money at the same time. When he dies, it's not his money any more.
The way I thought about it is that Bill Gates : Donald Trump :: Donald Trump : a wealthy-ish Silicon Valley employee. (This was after a NYTimes article on Trump's true wealth, which was several years before he ran for president.)
Say you have $1M. Then Donald Trump might have 200 times more than you, or $200 M (they were saying he's not really a billionaire). But Bill Gates has 200 times more than him -- $40 B. (And apparently now Bill Gates has $90 B).
And I guess you could extend it further say that an average young person working in retail might have $5K in savings, which is 200x less than the Silicon Valley employee.
So people think that there are three classes: poor, middle, class, rich (Donald Trump). But there is actually another full class above him: the super-rich like Bill Gates.
> say that an average young person working in retail might have $5K in savings
Doubtful. Even if you assume a minimum wage of $10, which is well above the Federal minimum (but slightly below some state minimums), that's 500 hours of wages. That's almost three months of 40 hours work weeks where you put every penny into savings. Before taxes. Before living expenses. The vast majority of Americans have far less than $5k in their savings account.[1]
How much you keep in your bank savings account has very low correlation with savings/net worth. Extremely low net worth people generally keep liquid assets in cash because then they don't need to pay crazy fees to banks. High net who do use savings accounts generally keep very little of their liquid assets in one.
Measuring the size of savings accounts != measuring the size of savings. Brokerage accounts exist. 401k plans exist. Hell, even paying into a mortgage is a form of savings.
Sure... but are you just making a distinction, or are you arguing that the average young person working in retail has any of those things? I agree with the distinction, I'm just not sure it makes any difference in this case.
I like to think about it like this: With a wealth of 92.3B, even earning a moderate 8% net return on that wealth, Jeff Bezos needs to spend $20.2M per day just to not get any richer.
Now I've spent a lot of time daydreaming about how awesome it would be to be rich. One day I added up what it would take to have the most obscene, ridiculously opulent lifestyle imaginable...private jets, presidential suites, chauffers, megayachts, basically anything and everything imaginable that I would possibly want if money were no object. I never surpassed a requirement for more than $20M per year. $20M per day is ludicrous...and that's just what it would take for him to not get any richer.
> One day I added up what it would take to have the most obscene, ridiculously opulent lifestyle imaginable...private jets, presidential suites, chauffers, megayachts... I never surpassed a requirement for more than $20M per year.
Then you grossly underestimated your requirement. The first Google result on the subject of megayachts, for example, tells me that they cost tens or hundreds of millions to build (the record is 600M) and that their yearly upkeep can be on the order of 10% their build cost.
So that alone would eat a good chunk of your 20M. Now consider how much more you could spend on palaces (plural, because they don't move) than you could on your humble dinghy.
Nope. A $30M yacht is more than I would ever want, and with a 15 year loan will set me back around $3-3.5M per year, including maintenance. Nobody buys with cash in the yacht industry.
Yeah, I only included things that I'd actually want. If I didn't want something (like a trip around the moon, or a patek philippe watch), it wasn't included. Maybe I'm pretty low maintenance, but everything I added up seemed unmaintainably ridiculous to me.
If Bezos gave all his money to everyone in the world we would all get maybe $13 or so. If all the billionaires did the same we would all get $1000 or so.
So you are saying the richest still have potential? I mean we can expect the average person around the world to be able to "yield" $500 for the richest person in this global era. That's like trillions for the worlds richest.
I don't speak for your comment's parent, but anytime I see these types of figures, it brings to mind Iain Banks' comment "Money is a sign of poverty" [1]. You'll see rants [2] against this sentiment, but I have yet to find a rant that doesn't essentially deify money. It's just a tool, and if it doesn't help us sufficiently move the needle towards greater human satisfaction (which I believe is very congruent with moving us towards post-scarcity factors), then it is upon us to find another, better tool.
Democratize their companies. control them by employment or by employee or government committee if they are too big. Make the big corporations work for the benefit of everyone, rather than shareholders and owners.
This tends to realign the systems around serving the interests of that one large company, and historically has been a mixed bag. Finland's reliance on Nokia, Russia's on Gazprom and Saudi Arabia's on Aramco was good while it lasted.
For what it's worth US laready has large ownership stakes in such corporations as AIG, Amtrak, USPS, Freddie Mac, etc.
Forbes and Fortune, both of which are cited by Wikipedia. A commenter further down questions their methodology.
Honest question - can anyone refute the claim that it is currently not the point in time when the largest share of wealth is in the smallest number of hands?
That source says that Rockefeller's net worth was $30 billion in current (2014) dollars.
The $340 billion figure is from a semi-nonsensical calculation that is popular because it yields eye-popping large numbers. They figured Rockefeller's assets equaled 1.5% of the US GDP at the time. And 1.5% of the current GDP would be about $340 billion dollars. But assets as a fraction of GDP is not very meaningful. It's like saying if I moved to a country with a small GDP such as Samoa I'd be richer than Bill Gates.
In effect, the $340B Rockefeller number is big because the US economy has grown. The worst part is many websites often confuse the scaled-GDP numbers with constant-dollar numbers, resulting in much confusion.
I would just go for using height like you mentioned, if you, an average person is 6ft tall, someone with a better job than you would be up to a foot taller than you, a millionaire would be tall building sized and a billionaire would stretch into space.
I guessed all of these values, I might do the actual math at some point, but not right now.
I did the rough math. If average net worth in the US is 80k, and bezos is worth $90 billion, then compared to an average 6 foot tall person, Bezos would be ~1300 miles tall; in space altitude from earth, that would be geospatial orbit
Our culture tells us that our motivation to do better (or more) work should be the power to dominate others (being rich is just that).
And that's just what humanity will have to change in the coming years: Change our culture to replace the incentive of domination with humane incentives and values.
Yes we hear in log scale, but why would that be intuitive? Ask someone how loud or soft any sound is - a dog bark, a cymbal crash, a whisper - and you won't get a numeric response. We're used to measuring distances, weights, etc but not volume, aside from the volume knob which goes from 0-100%, and the logarithmic scale is already built in
Both dB and the magnitude system have nothing to do with difficulty, and everything with practicality. The dB scale is defined in terms of air pressure, which runs on a linear scale.
What does that mean? I wouldn't say we hear in any scale. Log scale is an academic construction, it makes things easy to think about, it's not a physical property of hearing or seeing.
The linear scale however is a physical property of the world (photons per seconds for example) and if we change the intensity in a linear way we notice that the perceived change is not linear, but logarithmic.
Hence volume or brightness controls typically aren't linear but logarithmic - people want it to change linearly instead of not at all at the one end and a lot at the other end.
The root of the magnitude system in astronomy can be found in the logarithmic nature of the eye as a sensor as well.
Yes, good point. Perception of some things has logarithmic response. Within in certain ranges, of course.
It's funny because I first imagined the seeing/hearing comment as pitch & color, rather than volume & brightness. Pitch certainly feels somehow naturally logarithmic. But we can hear linear differences as easily as we can hear logarithmic differences. Within certain ranges, of course.
Sure, here you go. I said "within certain ranges" because there are absolute limits on either end. I hope it's obvious to you that the logarithmic approximation is only logarithmic until it isn't. The human visual response to staring at the midnight sky and staring at the noon sun are both non-logarithmic relative to the well lit everyday objects you usually look at. The valid range does not extend infinitely in either direction, and at the ends response ceases to be logarithmic even if the middle of the range works out well.
So, I think no citations are needed to explain basic absolute limits and the simple fact that logarithmic perception is only valid "within certain ranges." But, since you asked for citations, here are some starting points for understanding lightness perception, and how it's not quite logarithmic even in the middle of the valid range.
"All this only scratches the surface of the complexities of eye response to light intensity, but should illustrate well that the common notion of it being described as simply logarithmic is oversimplification, to say the least."
"At first glance, you might approximate the lightness function by a cube root, an approximation that is found in much of the technical literature. However, the linear segment near black is significant, and so the 116 and 16 coefficients. The best-fit pure power function has an exponent of about 0.42, far from 1/3."
If your goal is to be able to plot incomes of a wide variety of people and be able to visually see the difference between poor and average as well as you can see the difference between average and super-rich, then a log scale is the way to do it.
The goal of the comment you replied to, however, is to demonstrate the vastness that orders of magnitude have. It's to compare average people to super-rich, and get a stronger intuitive sense of how much wealthier a billionaire is than the average person, and how much wealthier Bezos is than the average billionaire. Using a log scale doesn't help that goal at all, a log scale actively compresses the range and prevents intuitive physical comparisons & analogies.
But a log scale is interesting because when you switch of scale, you change the meaning of money.
1) First stages of the visualization would show people from country where the money measure doesn't mean anything at all
2) Then powers of ten later it show how disparately "rich" people are in countries where this measure has a little more significance
3) Powers of tens later you see big companies and rich billionnaires like in this article == Money Is Power (Jeff Bezos is not going to buy one billion baguette de pain tomorrow I can assure you that)
4) Then of course you see higher in the scale huge aggregate of macro economics stuff which no one really have control over or understands
Log scales are interesting for lots of reasons, and they are incredibly useful. Everyone here knows that, and nobody disagrees. But you asked why not think about log scale in response to someone who was attempting to demonstrate absolute differences. Log scales are for showing ratios, they are not for showing absolute differences.
The point here isn't to say that Bezos will buy a billion baguettes, but it is show to show that he could buy 90 billion baguettes and feed every single person on the planet several times over. There are only a few people who could do this. And, of course, they won't.
EDIT: I meant simply that 90B baguettes would go as far as they go, and 90B baguettes is several times more than 7B people. I was only demonstrating magnitudes in the context of a thread about magnitudes. I am not suggesting that either baguettes or Bezos are a permanent and global solution to world hunger & politics, but either way I can't afford to buy very many people baguettes.
> The point here isn't to say that Bezos will buy a billion baguettes, but it is show to show that he could buy 90 billion baguettes and feed every single person on the planet several times over. There are only a few people who could do this. And, of course, they won't.
Because, even if they did, buying baguettes won't fees the hungry; acquiring food isn't the hard/expensive part, distributing it is. And it's not hard in a “We know how to make it work but have insufficient funds dedicated” way, but in a “we don't know how to do it effectively at any cost” way.
Even if Bezos wanted to feed every person on the planet, how exactly would he be able to do that?? People are controlled by governments, and governments are highly corrupt. They'd probably keep all the baguettes for themselves.
I agree with the first part of the comment, but then if you really think the second part of your comment is true, then I was right to make my comment.
Jeff Bezos CANNOT solve world issues like this (food crisis for our example). This is so silly I don't know even where to start. Theses issues were not solved in our countries thanks to the Jeff Bezos of 1817... What makes you think that giving 1 / 10 / 100 billion dollars would feed Africa for example ? Describe to me all the steps I'm very interested
It seems like you misunderstood my comment and started arguing your own straw man issue. I'm going to pass on that one and stick to the point: using linear scales is more useful for physical analogies and cartograms than log scales. I like log scales, and I, like you, think it's really useful to evaluate rich people and global finances on a log scale in addition to appreciating the magnitudes by thinking about them linearly and using physical analogies. I don't think there's any good way to say what @kens' said using a log scale. So if you agree and acknowledge that linear scales and log scales are both useful, then we agree. If you disagree that linear scales are useful or should ever be used, but you are genuinely still asking why, then I can try to help. If you disagree that linear scales are useful and you don't want to hear about why, maybe we should stop arguing?
Each panel is a financial cartogram that compares things within the panel to each other by showing the amount of money as an area. That's exactly what the top comment was doing -- making an analogy to a physical unit to make the comparison more visceral and intuitive.
You may notice that comparing things across panels is more difficult than the effortless comparison of two categories within a single panel. It's easy to understand conceptually when you study this map that the insurance industry in the US is a lot more money than Kate Middleton's wedding dress. But you don't see visually and immediately how much more money, because they're not side-by-side in the same units.
On a log scale, plotting everyone's income puts Bezos and Gates side by side with very little visible difference, while the difference between someone who makes 20k a year and someone who makes 10k a year has a larger log difference. That emphasizes the ratio of difference, rather than the absolute difference. The log scale completely hides the fact that you could pay 75,000 people 20k a year with only the amount extra that Bezos has over Gates.
You can also give decent salaries to a lot of African people with the 10k difference between the 20K/year person and the 10K/year person... so what's your point :) ?
So you just answered your own question. The absolute difference is worth a lot more. It's better to have the $1.5B difference between Bezos and Gates pay Africans than it is to use the $10k between our two people in poverty, even though one makes more than the other.
Your suggestion to use log scales hides that fact, and shows the ratio of $20k to $10k as visually larger than the ratio between $92.3B and $90.8B. That is why log scales are counter intuitive and not great for physical analogies. You asked, I answered.
We couldn't even put all people on the same linear scale if we wanted to ^^ . It would look like : almost everyone at the bottom, and some people at the top. So yeah, it would be obvious then that the only money we could take is located at the top points.
Nitpicking but... Africa is a big continent, with a great deal of nations, and a large variety of income levels, with some of those incomes much higher than yours.
Here's what I've come up with to visualize wealth in the United States. Suppose you start counting, going up by 1 million dollars every second, and people sit down when you reach their net worth. Most people will sit down immediately. After about 9 seconds, people in the "1%" will start sitting down. Near the 17 minute mark, billionaires would start sitting down. Donald Trump would sit down just before the hour mark. A day later - an hour and 10 minutes into the second day of billionaires sitting down - Bill Gates would sit, followed by Jeff Bezos just three minutes later.
The point of this is there's a huge range of billionaires (analogous to comparing 17 minutes to a day). The 1% hardly even registers on this scale (a few seconds). (I should also mention that there should be huge error bars on reported net worth numbers.)