Income Inequality in the U.S. III. Are Billionaires a Problem?

My last two posts, here and here, demonstrate that income inequality in the U.S. is really fairly mild, after taxes (state, local and federal) and government transfers are taken into account.  In fact, the average disposable household income of the bottom quintile is a surprisingly high $50,901. 

I also discuss several ideas for helping those in the lower echelons increase their chances of moving up to a higher level.  Equality of opportunity is an important American ideal and we can certainly do a lot better in trying to meet that ideal.

Are billionaires a problem because they create more inequality?  There are about 600 of them in the U.S. today.  But consider:

  • Innovators such as Jeff Bezos, Bill Gates or J.K. Rowling capture only about 2% of the economic value they create. The rest of it accrues to consumers.
  • The U.S. ranks 13th in the so-called Human Development Index which measures qualities of life such as longevity, amount of education and income levels for 189 different countries around the world.

    Capture79

  • The countries ranking ahead of the U.S. for HDI are mostly European and especially Scandinavian.
  • Believe it or not, ten of these high HDI countries have more billionaires per capita than the U.S! including the supposedly socialistic Sweden which ranks 6th in billionaires per capita.
  • The high ranking HDI “liberal-democratic welfare-state capitalist” countries are the most desirable countries in which to live and they all have lots of billionaires.

Conclusion.  Income inequality is simply not a significant problem in the U.S. and is blown way out of proportion by the media.  Even though billionaires are sometimes viewed as the public image of rampant inequality, in reality they are the highly visible sign of a successful society.

Follow me on Twitter 
Follow me on Facebook 

4 thoughts on “Income Inequality in the U.S. III. Are Billionaires a Problem?

  1. Well, who would have guessed? We really are not the richest nation among the world-wide nations and not even rankable among the top 10. In spite of this, our nation’s agriculture industry is the most effective and efficient among the world-wide nations, by a wide margin. Remember again, our nation’s President Woodrow Wilson signed the Smith-Lever Act enacted by Congress in 1914. This act established the Cooperative Extension Service, county by county, to connect the rural and urban farmers with their State’s Univeristy-based College of Agriculture. In effect, it produced a level of immediacy between each state’s education/research commitment with local farmers that fostered the effectiveness and efficiency of its production output. The Design Principles underlying the benefits of the Cooperative Extension were broadly validated initially during the career of Professor Eleanor Ostrom. Nobel Prize winner in 2009 for economics, Professor Ostrom was the first woman awarded a Nobel Prize in economics.

    Although the principle adversities underlying our nation’s HEALTH are related to uniquely community based ecologic and cultural attributes, a new semi-autonomous institution for HEALTH reform as adapted from the Cooperative Extension Service for agriculture would assure that each community is commited to a broadly coordinated-national strategy for healthcare reform. Established with a fixed budget and no involvement in the direct distribution of economic support for each person’s healthcare, a Cooperative Extension Service for healthcare would have much to offer our nation’s future adaptation to the world-wide problems associated with its economics, climate change, and human dignity.

    • Well, we’re still the richest nation on earth even though we’re only 13th ranking in the Human Development Index. But I certainly like the idea of a nationally organized Cooperative Extension Service to coordinate community ecologic and cultural reform.
      Why don’t we, perhaps with other interested parties, try to set up such an organization here in the Omaha area. The idea being to offer a model of how it can be done.

  2. I am up for the effort. We only need to understand that such an effort would potentially jeopardize the financial stability of our community’s largest source of employment. On the other hand, it would substantially decrease the costs associated with health spending by all levels of government especially for State and city governments. How about making initial contact with the local extension service!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s