How Come 1% Control 40% of the Nation’s Wealth?

Posted on 10/30/2011. Filed under: Uncategorized | Tags: , , |

The accumulation of great wealth is mostly luck according to a mathematical model developed by the University of Minnesota and published in the peer-reviewed journal PLoS ONE. Joseph Farigione, leading author of the paper found the results of the research quite surprising.

http://www.plosone.org/article/info:doi%2F10.1371%2Fjournal.pone.0020728

According to the paper, one in nine Americans are entrepreneurs and by the inexorable effect of chance and chance alone, a small proportion of entrepreneurs come to possess a disportionate portion of the  total wealth and once they are ahead with exponentially growing capital, they tend to stay ahead. If this tendency is left unchecked, the total wealth of the nation will eventually be accumulated by a few and the result is a permanent plutocracy.

The cause and the results are comparable to a poker game where if the stakes are everything each player possesses, one player ends up with everything. It’s the luck of the draw, not the skill or greater effort by the winner.

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4 Responses to “How Come 1% Control 40% of the Nation’s Wealth?”

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I would sure like to find the paper cited above; I know too many weathly entrepreneurs riding for a fall because they think they’re geniuses.

Barry

Here is the site where the paper is located.: http://www.plosone.org/article/info:doi%2F10.1371%2Fjournal.pone.0020728

There are geniuses but its likely they are not in the 1%. In addition to being lucky it is necessary to take risks to accumulate enough wealth to be part of the 1%. Of course if you are inheriting your way into 1% you just have to be lucky.

There seems to be a cart-and-horse issue as well: how can the first risk be taken without having capital to put at risk? What is the typical source of that capital? I worry that rich people will not exist in numbers sufficient to constitute a significant new food source…

Barry

Point well taken. The 1%’s are the go-to’s for people who have a bright idea but no money, so the 1%’s accumulation of more and more of the pie continues.


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