November 18, 2011 · 2 min
The mathematical law that shows why wealth flows to the 1%
This is not the first time I’ve commented on suggestions that the Pareto principle tells us that extreme inequality just can’t be avoided. See http://lvtfan.typepad.com/lvtfans_blog/2008/03/the-8020-rule-.html
I alternately find it amusing and very sad that commentators reason from such observations to “gee, there’s nothing wrong with our structures! It is just a law of nature!”
No! We’ve set things up so that a relative few benefit greatly from the value of natural resources, and another (likely overlapping) group* benefit greatly from the results of federal, state and local spending on infrastructure and services, and then we consider it a “mathematical law” that 1% of us get such a large share of the pie!
*I refer to the owners of urban and suburban land, well-served by infrastructure and a myriad of services, many of whom make more from land value increases than they do from their labor. An acre of Manhattan land can be worth 50,000 times what an acre of ordinary agricultural land is worth – and its owner didn’t contribute any more than anyone else to that value! Great fortunes are based on such “activity.”
And rich people’s useful idiots bless such analyses and give them a gloss of “scholarship.”