Chance Favors the Concentration of Wealth, Study Shows; New Model Isolates the Effects of Chance in

[steven johnson]

The top 10% of the population in the us own 70% of everything that can be owned. Here is a model explaining how this could occur.

http://www.dailypaul.com/111232/us-wealth-distribution-10-of-us-citizens-own-709-of-all-us-assets

Three University of Minnesota researchers have built a simplified model that isolates the effects of chance and found that it consistently pushes wealth into the hands of a few, ever-richer people.

The researchers simulated the performance of a large number of investors who started out with equal amounts of capital and who realized returns annually over a number of years. But wealth did not remain equal, because each year an entrepreneur's return was a random draw taken from a pool of possible return rates. Thus, a high return did not guarantee continuing high returns, nor did early low returns mean continuing bad luck.

Even though all investors had an equal chance of success, the simulations consistently resulted in dramatic concentration of wealth over time. The reason: With compounding capital returns, some individuals will have a string of high returns and, given enough time, will accumulate an overwhelming share of the wealth.

The model predicts that the rate at which wealth concentrates depends on the variation among individual return rates. For example, when variation is high, it would take only 100 years for the top 1 percent to increase their share of total wealth from 40 percent -- a recent level in the United States -- to 90 percent.



Chance Favors the Concentration of Wealth, Study Shows; New Model Isolates the Effects of Chance in an Investment-Based Economy

[damntexdem]

1. That's why it shouldn't be left to chance.

Regs and redistribution work.

[jtuck004]

2. I am having trouble finding (in the report) where the wealthy joined the government

as advisers and created laws that favored the wealthy, deliberately removed and tried to remove laws that protected the finances, health, and welfare of large groups of people - sometimes based on skin color, sometimes rejoining their firms and profiting from what they have done. Or where they deliberately kept whole classes of people from jobs, based on anything but qualifications. Or screwed people in housing based on skin color. And...

Because all of those things happen, and they are very deliberate, not conincidence or chance.

It's interesting, but all based on a handful of investors, which they then extrapolate to the larger economy as if it explains all the other forces. Then again, I'm tired and may be reading too much into it.

After reading through it, it looks like chance would increase the amount of money moved to the wealthy, in addition to all the ways the wealthy can use law and governance to benefit themselves. So if you can position yourself into that 1%, there are several forces that will work to keep you there.

On the other hand they did point out that the model says a tax can ameliorate the "chance" effect.

Thank you for this.

[pscot]

5. Not many poor or working class folks

in the Congress or the Media.

[progree]

3. We should cut taxes on the lucky so they will be able to create more jobs for us goobers {g}

(Sarcasm of course. But if lowering taxes on the wealthy (the job creators) creates jobs, according to Druggie Limbaugh and Sean Inanity, then it logically follows that lowering taxes on the lucky investors (who are also wealthy if they keep at it) should also create jobs.

Come to think of it, we shouldn't tax the lucky at all. Maybe even give them money, so they can create lots and lots of jobs for us goobers.

Seriously, a lot of CONNEDtards really think that way, after listening to right-wing hate radio, and totally unable to think for themselves.

-Progree

[snot]

4. K&R'd.

& bookmarked.

[eridani]

6. Anyone who as ever played Monopoly knows that.

I guess that's sort of like generations of schoolkids noticing how South America and Africa fit together. Nice to have theoretical grounding for it with continental drift, though.