Blog #18: The poor, the rich and riots in the streets

Notebook May 8, 2015 at 2:38 pm

HG_Notebook_color-pic“Oh, people don’t even know. If poor people knew how rich rich people are, there would be riots in the streets.”

This is from the very first sentence of an article in Scientific American online publication. It’s a quote from comedian Chris Rock.
As I read the article, it turns out that the statement was not an exaggeration. Americans don’t know how serious economic inequality is in their society.

Citing findings from three studies conducted in the past few years, here are are some of them:

Blog#18“The average American believes that the richest fifth own 59% of the wealth (reality: 84%) and that the bottom 40% own 9% (reality: 0.3%).”

Example, the Walton family (Walmart) “has more wealth than 42% of American families combined.”

For more of the very revealing findings from the article Nicholas Fitz titled “Economic Inequality: It’s Far Worse Than You Think,” here’s the link:
Here’s another shocker:

“The median American estimated that the CEO-to-worker pay-ratio was 30-to-1, and that ideally, it’d be 7-to-1. The reality? 354-to-1.”

The CEO-to-worker pay ratio was underestimated ten times over.

The story provided a link to an infographic video of one the studies cited:  The video is said to have been watched more than 16 million times.

For the global version of wealth inequality, here is the infographic video.

To say that that video is enlightening about wealth distribution in the U.S. is an understatement. It is shocking how a widely perceived leader of the democratic countries could be so undemocratic when it comes to wealth distribution.

More shockers:

1% of Americans own 40% of the country’s wealth.

80% of Americans own 7% of the country’s wealth.

1% take home 24% of the national income today.

In 1976, the 1% took home only 9% of the national income. Their income nearly tripled in 30 years.

The top 1% own 50% of stocks, bonds and mutual funds.

The bottom 50% of Americans own only half a percent of these investments.

The CEO makes 380 times more than the average worker’s pay.

The average worker needs to work more than a month to make what a CEO makes in one hour.

If those figures and ratios do not define economic inequality, I don’t know what does.

The article goes on to assert from the findings about how “Americans overestimate the amount of upward social mobility that exists in society.”

“According to Pew Research, most Americans believe the economic system unfairly favors the wealthy, but 60% believe that most people can make it if they’re willing to work hard.”

Does this mean that the 80% of Americans who own 7% of the country’s wealth are not working hard enough? Is that the reason why they can’t make it to the higher 20%?

The 60% who believe hard work alone will lift the 80% from poverty or state of merely surviving, actually insult the 80%. Just think about this — ordinary, low-income employees and workers — even if they work harder in their low-paying jobs, they still can’t make it. They have to look for other sources of income, like part time second jobs, part time entrepreneurial ventures, small investments — but still small precisely because they have no savings. But how much time and energy do they have left after a daily grind at their day job or night-shift job?

“Sure, we love a good rags-to-riches story, but perhaps we tolerate such inequality because we think these stories happen more than they actually do,” the author wrote by way of explaining why Americans withstand social inequality, that is, because they believe too much in rags-to-riches stories.

“At the core of the American Dream is the belief that anyone who works hard can move up economically regardless of his or her social circumstances.”

Here are the conclusions of the author:

“We may not want to believe it, but the United States is now the most unequal of all Western nations. To make matters worse, America has considerably less social mobility than Canada and Europe.”

“By overemphasizing individual mobility, we ignore important social determinants of success like family inheritance, social connections, and structural discrimination. The three papers in Perspectives on Psychological Science indicate not only that economic inequality is much worse than we think, but also that social mobility is less than you’d imagine. Our unique brand of optimism prevents us from making any real changes.”

Of the “social determinants of success” mentioned above, “structural discrimination” seems to be the strongest factor why the poor and the lower middle class can’t make it. The cards are stacked against them. This translates to the concept of a “glass ceiling” — the invisible ceiling in the workplace, profession or business that limits people’s opportunities for advancement economically.
Whatever these are, they need to be reduced significantly or demolished completely to build an equal playing field for the 80%. Working hard doesn’t look like the solution. Changing the game or changing the rules of the game will do the job, if you consider the statistics and wealth and income ratios mentioned above and if you believe the author that social mobility is largely a myth.

In the meantime while the basic changes are not coming anytime soon, what is left for the 80% or maybe even the 95% is to play the current game smartly. Don’t spend your whole productive lives as a cog in the machine of the system that has made the 1% filthy rich. Create your own machine and build your own sources of income. Remember the phrase, “living lives of quiet desperation”? That is what happens when people accept and endure what is handed to them. There is a way out in one’s lifetime while the system works to morph slowly into something better and other forces work to change it.

For starters, check out this video:

This is for serious-seekers, not for tire-kickers. View the video for free. As they say, tomorrow is the start of the rest of your life. Will it be a real new beginning? Or will it be more of the same? You decide. It’s your life. But for most of us, our family and loved ones depend on what we make of our lives. Here it is again:


From the blog: