wealth

2016: the “Year of the 1%” or the Year Poverty Fell to a New Low?

This past weekend, The Economist uploaded and shared a short video to its Facebook page called, “The year of the 1 percent.” The video shows a graph superimposed over the Earth seen from space, while a voice narrates, “2016 is set to be a more unequal world than ever before. For the first time, the richest 1 percent of the population will enjoy a greater share of global wealth than the other 99 percent.” The video has been viewed more than one hundred thousand times.

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High Turnover Among America’s Rich

Your odds of “making it to the top” might be better than you think, although it’s tough to stay on top once you get there.

According to research from Cornell University, over 50 percent of Americans find themselves among the top 10 percent of income-earners for at least one year during their working lives. Over 11 percent of Americans will be counted among the top 1 percent of income-earners (i.e., people making at minimum $332,000 per annum) for at least one year.

How is this possible? Simple: the rate of turnover in these groups is extremely high.

Just how high? Some 94 percent of Americans who reach “top 1 percent” income status will enjoy it for only a single year. Approximately 99 percent will lose their “top 1 percent” status within a decade.

Putting Income Inequality in Perspective

Debates about income inequality, “the top 1 percent,” and poverty typically examine those issues within the context of a single country. But, consider a global perspective. This web tool lets you find out which income percentile you belong to relative to all the other people in the world. If you make more than $32,400 per year, you are in the top 1 percent of the richest people in the world! 

And, bear in mind that the world is more prosperous than it has ever been in the past. Compared to you, the vast majority of people who have lived on this planet were desperately poor. Poverty, as Cato’s David Boaz put it in this online lecture, used to be ubiquitous. “Why are some people poor? That’s always the wrong question. The question is why are some people rich? Poverty is the natural condition of mankind, but it’s easy to forget that.” 

Fortunately, prosperity is rising and global inequality decreasing. Even as the world population has exploded, the number of people living in poverty has fallen. As a result of spreading prosperity, infant mortalityilliteracy, and malnutrition are in decline, and people are living longer. Extreme poverty’s end is in sight.

Farm Subsidies Benefit Landowners

Almost half of America’s farmland is operated by someone other than the owner. Critics of farm subsidies often point to examples of famous wealthy landowners receiving handouts as a reason to end the federal government’s agriculture gravy train. Notable recipients have included Ted Turner, Larry Flynt, Charles Schwab, and numerous members of Congress.

How to Explain Free Trade in Less Than Three Minutes

The professionally ignorant (and I’m thinking here of Lou Dobbs, among others) never “get it” about trade. They think it’s some complex swindle, in which we deny ourselves “jobs,” or that it should be about being “fair” or “balanced.” They don’t see how free trade creates prosperity and peace. I was inspired by the outstanding trade economist Doug Irwin of Dartmouth to explain what goes on when people trade. The challenge was to explain international trade in under 3 minutes.

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