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If You Can Read This, You’re Rich
Earlier this week, Megan McArdle made a point that cannot be emphasized enough: that the material luxury most of us take for granted — indeed, that most of us still find worth grumbling and fretting over — is not only unique in human history, but still relatively rare in the world:
The cutoff for the global 1 percent starts quite a bit lower than the parochial American version preferred by pundits. I’m on it… [a]nd if your personal income is higher than $32,500, so are you. The global elite to which you and I belong enjoys fantastic wealth compared to the rest of the world: We have more food, clothes, comfortable housing, electronic gadgets, health care, travel and leisure than almost every other living person, not to mention virtually every human being who has ever lived. We are also mostly privileged to live in societies that offer quite a lot in the way of public amenities, from well-policed streets and clean water, to museums and libraries, to public officials who do their jobs without requiring a hefty bribe. And I haven’t even mentioned the social safety nets our governments provide.
As she later describes, this is not to say that we one-percenters are free from anxiety and scarcity, though a little perspective and gratitude for our fortune — in both senses — would suit us well.
What makes this all the more spectacular is that the rest of the world is getting richer as well, or at least less poor. As the Economist reported last year, noting that capitalism and freer markets were largely responsible, the number of people living in abject poverty has fallen dramatically:
Between 1990 and 2010, their number [those making less than $1.25/day] fell by half as a share of the total population in developing countries, from 43% to 21%—a reduction of almost 1 billion people.
…
Poverty rates started to collapse towards the end of the 20th century largely because developing-country growth accelerated, from an average annual rate of 4.3% in 1960-2000 to 6% in 2000-10. Around two-thirds of poverty reduction within a country comes from growth. Greater equality also helps, contributing the other third. A 1% increase in incomes in the most unequal countries produces a mere 0.6% reduction in poverty; in the most equal countries, it yields a 4.3% cut.
Of course, trajectories are never constant and, as the Economist piece notes, it’s probable that making similar improvements will be tougher in the future, as much of the low-hanging fruit (e.g., China) has already been gathered.
Improvement is improvement, however, and should be celebrated. We’re rich and the rest of the world is — unevenly, and in fits and starts — going in the same direction. With all the murder, suffering, and evil in the world, it’s worth remembering that.
Published in General
As I’ve now failed twice to work this quote into a post, I’ll just share it here. It’s from Jacob Bronowski — a British-Polish mathematician/scientist whom I’m a huge admirer of — on the attitude held by members of the Lunar Society, of whom Josiah Wedgwood was a member:
Thanks for writing this, Tom, it’s a great reminder not to forget the underappreciated virtue of gratitude. But what on Earth does this quoted excerpt mean? “Greater equality” — an abstract mathematical measure of “spread-outness” of the data points — helps reduce poverty? It seems to me that a 1% increase in incomes is a 1% increase in incomes, and it doesn’t matter what the people around you are making. They must not be doing a true apples-to-apples comparison to arrive at this conclusion.
TM – I’m not one to fall into economist nonsense jargon (at least too often), but those numbers need a little PPP ( purchasing power parity) adjustment. Meaning, on $32k in Southeast Asia you could probably get an ocean side villa with a butler, whereas in NYC you are looking at a studio and SNAP funded dinner
According to he 2014 Credit Suisse Global Wealth Report:
• If you have $3,650, including the value of your home, you’re among the wealthiest half of people in the world. (This is net wealth – so, once debts have been subtracted.) The other half own less than 1pc of global wealth, while 77pc of adults – that’s 3.3bn people – have less than $10,000.
• The top 10pc of people – membership requirement is $77,000 – hold 87pc of the world’s wealth.
• You need $798,000 to make it into the top percentile of the world’s wealthiest. This select group accounts for almost half – 48.2pc – of global assets.
Remember, this does not take into account certain present value of benefits such as social security or pensions. As a large number of the US population qualifies for social security, and this is not included in net worth due to the uncertain of collecting, such as early death, then Americans may be better off than these statistics show.
I read it to mean that income distribution has changed (flattened?). So, it’s not merely that people are getting more pie because pies are getting bigger, but because the slices are of more equal size than they were before.
Even if I have that right, it’s still lousy phrasing.
Like.
This sounds inaccurate. Let’s assume, for sake of argument, that in a world of 6 billion people, that 300 million Americans are all in the very top of wealth and that the poorest American is richer than the richest foreigner. In other words, the 5% of Americans are richer than the other 95% of the world (this overstates America’s wealth, which is sort of the point).
To be in the top 1% globally—the richest 60 million, all Americans—an American would have to be in the 80th percentile of wealth in America. According to the Census Bureau, the median household income (or 50th percentile) in America is $53,046, which is $20,000 higher than McArdle’s figure. I realize that personal income isn’t the same as household income, of course. Per capita income (again, from the Census Bureau) is $28,155. McArdle’s $32,500 is barely above the per capita income of Americans, and certainly is nowhere near the 80th percentile one would need to be in the richest 60 million.
I agree with McArdle’s larger point that we ought to be grateful and that we’re doing well in the grand scheme of things, but she doesn’t seem to be supporting her point with accurate numbers.
Let me push this one step further: Within the lifetimes of most of you reading this — certainly within the lifetimes of today’s high-school and college students — the world will cross a line that’s never been crossed before and which most people never even imagined could be crossed: For the first time in history, the overwhelming majority of human beings won’t be poor. This is simply astounding — and it’s the world’s biggest under-reported news story.
Put another way, the world is becoming “modern” and in a sense, this is what the war is really all about: Judaism and Christianity reconciled with modernity a long time ago; now — finally — Islam has begun. Of course it’s messy, sloppy, violent, and all too often going backwards rather than forward. But this is what “becoming modern” looks like.
It’s a real shame that young people aren’t being taught about this, and aren’t being told why they’re living through one of the most dynamic, exciting — and optimistic — times in all of history.
During this morning’s commute, I was behind a newer Subaru Forester with a sticker that said simply “99%” and another sticker that was a souvenir for a vacation spot in another state. Also, the roof held a Kayak rack (no kayak-it’s -10 degrees today after all).
I also drive by a house with a yard sign saying “we are the 99%” everyday. This is a single dwelling home, two stories, two cars in the driveway, a park across the street, etc. I guess the fact that they have to park their two cars outside is evidence of great suffering.
A month ago, while waiting for our daughters to get done with choir practice, another dad was complaining about the 1%. Meanwhile, his younger daughter was playing on an iPad.
Last week, I was at a homeless shelter and did not see a single 99% sticker. Indeed several people openly thanked me for providing a little token of volunteer work.
This whole “we are the 99%” movement fascinates me because most of these people are simply not suffering in any material way.
What are people’s thoughts on why people think they have a legitimate complaint when they are swimming in material goods.
Hmm. I was thinking more along the lines of a psychological defense mechanism. It seems to me that we are all really really frustrated with modern life.
1. We are insanely busy. We have no time to simply be–with family, with God, with self. Most people don’t even know their neighbors names anymore.
2. We are constantly being bossed around by “the man”. The school teaches some ridiculous social ideas to our kids and we have to jump through several hoops, attend meetings, fill out forms in order to opt out of this. Or, my check engine light goes on because I didn’t get the gas lid on tight enough. I bring it to the shop-$50. Who do I blame for this?
3. Very few of us can claim we work for ourselves. We work at the pleasure of some outside force. We are cubicle farmers in Dilbertville.
All of these trends make our lives ones of being pushed around by mindless forces. There are so many little insults that we can’t take the time to figure out who to blame for all of them, so we are attracted to a grand theory that “the 1%” is to blame. Surely, the idiot bureaucrat in the Dept of Energy that cooked up the Tighten your Gascap regulation isn’t in the 1%. The flakey people who devise your schools social policies are not in the 1%.
I think these nameless, faceless busybodies among the 99% are the true targets of all this anger, not the wealthy 1%.