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All posts by Dan Whalen,
Providence, RI (resume)

Friday, May 11, 2012

One percent of what? (part 1)

           “I am the 99%” was one of the most iconic catch phrases of 2011 - 12.  We’ve heard condemnations of the 1% over and over for months now.  But in all the fervor, I still have one question about the villains du jour:

The 1%...of what?

I’ve asked some of my friends this question, and everyone gives the same response: “The one percent richest people in the country.  Duh!”

Ok, but what exactly do we mean by “richest?  What type of “wealth” are we talking about?

Is it the one percent “highest incomes?”  As in the largest paychecks handed out in the country? 

If that were the case, then imagine for a second two guys, A and B.  In 2012, both of them received a billion dollars in paychecks.  But A has been flat broke his entire life.  B has made a billion dollars every year of his life.

Would you consider both A and B to be equally “rich”?  Of course not.  B is clearly “richer” than A, in the colloquial sense of the term.  

Ok, so it’s not just “income,” then.  How about net worth?  Your net worth is the sum total value of everything that’s in your name, minus the sum total value of your debts.  Your car, your savings, your investments, your house, MINUS your student loans, your credit card debt…that’s your net worth.

Problem is, there’s no government survey, or national accountant who keeps track of each American’s net worth.  I mean, do you know what your net worth is off the top of your head?  Of course not.  So how could anyone else? 

We have some rough estimates here and there (usually drummed up by private companies) as to how many dollars TOTAL in bank savings there are in the US right now.  You might see a survey to find the AVERAGE value of an American house.  Or an ESTIMATE of the sum value of all the cars on the road.  But an official census on the value of ALL personal holdings by citizens in the country…just doesn’t exist.

So say that you sit down and do the math and find that your net worth is $50,000 dollars even.  Does that make you part of the wealthiest 1%?  Or 5%?  Or 25.628%?  No one would know for sure, since we don’t know the net worth of the rest of us.

In reality, “the 1% percent” is a purely conceptual group.  The title doesn’t actually signify any definable portion of the population.  There’s no way you could make a list, name-by-name, of the 1% wealthiest people in the US.    

Heck, there’s really no way you could know what wealth level even constitutes being the top 1%, even if you could collect all the data.  Yes, a $5,000 savings account is worth $5,000.  But what about your car?  Or your property?  An appraiser could estimate it’s value for you, but you don’t truly know what it’s worth until you sell it.  A persons net worth, to some degree, is a subjective value. 

The IRS keeps track of the income of every US citizen year to year, so that data does exist.  But looking at income alone ignores the total accumulated wealth of an individual (net worth) - which is what we really need to find the true set of "the 1% richest Americans."

Anyway, let’s just go with income for now, just for the sake of argument.  Who earns the 1% biggest paychecks?

Lucky for us, the govt is pretty cool about making data public (they’d better be, it’s our data, right!?  We paid for it!).  I looked up what income level you need to hit to become a member of "The 1%."

Ready for it!?  According to IRS’s Taxstat database, the 1% highest paid Americans had a pretax income of at least:


Skip the fact that that’s not a wildly huge high number for now (in some states, doctors make more than this), I just want to point out that it’s not a particularly round one.  The “richest 1%” are not those with “$1 million dollar incomes” or “$1 billion dollar in holding.”  They were paid $343,927 and upwards.

Obviously, the OWS folks selected a percentage they thought represents “too much wealth,” not a dollar amount.  There’s no way that this random looking number represents any meaningful threshold. 

We hate the 1% because they are the 1%.  They’re the villains by virtue of who they are.  How rich they – the actual dollar value of their incomes – obviously is inconsequential.  I don't know about you, but to me, this seems pretty low-brow.  It's holding someone responsible for who they are, not what they've done.

OWS clearly is rallying up behind an ephemeral idea, not an actionable agenda.  Trouble is guys, there has always been a 1%.  There will always be a 1%.  Unless every single person has exactly the same income, someone will be "the 1%" best paid!

Is a $343,926 income ok?  Is a $343,927,000 income as much of a sin as a $343,928 one?  And how did we arrive to the consensus about what income level triggers a public shaming (cuz $343,927 seems like a pretty arbitrary one, I’d love to know what the thinking was behind it – if there was any).   

I'm still waiting for the Occupy crowd to give us something to bite into, and more than just fun slogans.

For your reference.  The numbers are the minimum income you'd need to make to be part of that percentile.

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