No matter where you are …
No matter what the season of the year …
One component always influences the life you live.
It makes no difference whether you are rich …
It makes no difference whether you are poor …
Its influence will always be felt – for your benefit or for your harm.
In an election year the topic is on the lip…
Sometimes loud
Sometimes in the background.
Always present.
Always important.
In quieter moments …
government, political, and business decisions move it … and are continuously moved by it.
No one escapes it or its influence.
The argument will go out that only malcontents, protesters, and near-do-wells dwell on income distribution…
Wrong.
Everyone, every citizen, every CEO, every stockholder, every worker needs to know how it works.
The 2012 election has been touted as one in which the outcome for the Middle Class is crucial.
The income-distribution topic in the early fall of 2012 was skirted precisely by those who should have been most
attentive to it.
[min:sec : 1:21]
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The US Census Bureau does not even report Top1% income shares.
The Middle Class for its existence depends on fair income distribution.
Is the public debate looking in that direction; and is it looking at the numbers that back it up?
[1:40]
It may come as a surprise.
Routinely economists do not work income distribution into their plans.
[1:48]
Listen to Nobel Prize Winner Joseph Stiglitz.
In 2012 he wrote “standard macroeconomic models don’t even recognize that the distribution of income matters.”
“standard macroeconomic models don’t even recognize that the distribution of income matters.”
But that quotation, even during the 2012 election season, did not get much attention.
[2:11]
In Distribution of Lives … the maldistribution plague 2012, Jeanes similarly showed that economic growth, depth of
economic crises, social spending, job creation, and the wellbeing of the bottom 60% majority all depend on income
distribution. In 2011 the income of the bottom 60% US majority ranked eighteenth among nations worldwide.
This video argues that the United States is ranking far lower than it should because income distribution has
debilitated the MAJ.
The United States has been given unsurpassed geographic advantages. Its citizens are hard working and able. The
USA should perform far better for its majority.
If you have not heard the term before, the MAJ refers to the bottom 60% majority. It is a group that democracies
depend on for their economic success.
The MAJ number is the percentage of income that they receive.
At the founding of the nation the majority of freemen in the United States received about 30% to 35% of the total
income earned. Similarly they received about the same income share in the 1950s through 1970s.
Now in 2012 the MAJ receives closer to a mere … 25%. [pause and emphasize “twen…ty-five” (“25%”)]
The United States now plainly has a maldistributed economy. The last time the economy was similarly
maldistributed was at the onset of the Great Depression.
Our economic success that was caused by equitable income distribution in the 1950s through 1970s is easily
forgotten.
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Our memories are not short. It is our population that is young. More than half are too young to remember the 1970s,
much less the 1950s and 1960s. In that era equitable income distributions advances produced the highest US per
capita economic growth rates on record.
The maldistribution plague has struck worldwide. It is hobbling economies. 75% of major economic powers have
worsened their income distributions in the past 20 years. It is a contagion that has yet to stop.
[4:42]
The Lookup-Table spreadsheet is the one in front of you.
Let’s take the case of a CEO in a company that has 60,000 workers. While the MAJ … the 60% majority … of his
company get only 25% of the compensation, he earns more than 200 times the average worker. This is what income
maldistribution is all about.
If we roll back history and look at a distribution where the MAJ received 33% of the income, we see that his pay
was closer to a more modest 43 times the salary of the average worker.
[5:30]
When we look at those numbers converted into dollars we see that the CEO would have earned about $2 million at
MAJ33. But with MAJ25 he gets $10 million. The workers did not change. The CEO did not change. The culture
and government policy changed to make the MAJ25 distribution possible.
Lest you forget, there were 60,000 workers in his company. Let’s see how one of them near the middle might have
fared. There would have been 30,000 people receiving lower pay; and 30,000 people receiving higher pay. At this
50 percentile point, we see that at MAJ33 the worker received almost 80% of the average income, but at MAJ25 the
worker received barely 63% of the average income.
[6:22]
Translated into dollars, that means the worker got an income of about a $30,200 instead of the $37,800 received at
MAJ33. The cost of production was no different in either the MAJ33 or the MAJ25 case. The total compensation
going to workers and management did not change. The business under either scenario would have been equally
competitive and equally profitable. The difference was the income share that those at the top received.
Throughout the 1950s, the 1960s, and the 1970s the USA had equitable income distributions.
[7:01]]
Those at the top now cry that a high minimum wage and a high worker pay destroy companies. Those arguments are
wrong. They are wrong for numerous reasons. The most obvious you see in front of you. It is not compensation at
the low end that kills industry. It is disproportionate compensation at the high end that kills industry. Maldistribution
distorts relationships between sectors, between people, and between labor and management. Reducing worker pay
reduces consumer demand. And it is consumer demand that drives the economy and makes life wholesome at the
MAJ.
[7:41]
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By clicking on the blue “GraphTopEnd” tab at the bottom of the page, the same numbers that we saw in the
spreadsheet are transformed into graph curves. At the one-in-60,000 point we see the CEO data. $2 million income
at the equitable MAJ33 and the $10 million at the maldistributed MAJ25.
[8:04]
Those at the top benefit from maldistribution. We see the income-distribution curve relationships at a variety of
levels ranging from the 92nd percentile all the way up to an income at the 1-in-a-million level of scarcity. The curves
at the low end tend to be close together. The great divergence occurs at the high end.
[8:27]
All of the Dilives spreadsheets conform to this basic form, showing percentiles when the number is lower than 99 on
the Percentile-Scarcity Scale. Then at 100 and higher numbers, they indicate scarcity. For example, one-in-100, onein-4,000, one-in-15,000, one-in-60,000 (as in the case of the CEO we have discussed). All the way up to the one-in1,000,000 level of scarcity.
[9:03]
As seen by clicking on the yellow “Graph Low End” tab, the rise that we see at the Top is matched by a drop at the
bottom. Here we see the person at the median who got the $30,200 income at MAJ25, instead of the $37,800 income
that a MAJ33 would have delivered.
[9:22]
The harm-the-many-to benefit-the-few-philosophy stands in opposition to competent economic management and
lessons of USA economic history. A prerequisite to USA economic success is that the MAJ thrives. When the MAJ
is harmed by maldistribution, national per capita economic growth slows or nosedives. The numbers show it. One
only has to read them. Neither sophisticated monetary policy nor Keynesian economics alter this fundamental.
[9:54]
More specifically we see the harm done at MAJ25 in the brown tab marked “Low End_MAJ25_36.” Again, to
remind you, everyone at the 60th percentile or lower are in the MAJ. At MAJ25 in this graph we see everyone in the
MAJ received less than 81% percent of their former MAJ33 income. For many the income loss was far greater.
[10:22]
The MAJ36 shown in this graph is for purpose of comparison. MAJ36 is a highly equitable income distribution, but
typically it provides only modest benefit to those at the low end. And it usually provides entirely insufficient
compensation for highly able people at the top. Dilives makes three assertions. First, MAJ36 provides excessive
equality. Second. MAJ33 is the reliable workhorse. Third, MAJ25 is calamitously inappropriate and destructive.
[10:57]
For a democracy and an economy to be competently run, a fair income distribution is the central component on
which the whole enterprise depends.
[11:03]
By clicking on the brown tab “All_MAJ25_36” we see MAJ25 naked and fully exposed. Since the 1970s the United
States has approximately gone from a MAJ33 to MAJ25. The change in corporate and governmental culture since
the 1970s has disproportionately benefited the rich and disproportionately harmed the MAJ.
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[11:37]
Those at one-in-1,000 scarcity level get 2.7 times more; at the one-in-10,000 level, 4 times more; at one-in-120,000
level, 5 times more; at one-in-2,000,000, 8 times more; at one-in-30,000,000, 11 times more; and at one-in240,000,000, 15 times more. All of these increases relative to MAJ33 are inappropriate and harmful.
[12:08]
We have mentioned three income distributions … MAJ36, MAJ33, and MAJ25. The Dilives Lookup Table shows
more than 400 distributions. The range covers substantially all conceivable income and wealth distributions from
MAJ49 to MAJ1.6. You need not focus on the same income distributions shown in this video. You can compare any
of the hundreds of distributions in the Lookup-Table Spreadsheet to address your own particular concerns and
interests. These distributions represent median case estimates. Actual historical cases will vary from the represented
cases. While historical cases and the lookup table at various points on the curve may modestly differ, the thrust and
economic influence of maldistribution can be easily understood by examples you can develop from this database.
[13:07]
Additionally Dilives.com has other downloadable income-distribution databases which include:
“The USA — 1776 to the present”
And an income-distribution database for “The World”
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