From Monthly
Review:
by
Originally published: Reports from the Economic Front (January 3, 2018)
People
tend to have a distorted picture of U.S. capitalism’s operation, believing that
the great majority of Americans are doing well, benefiting from the system’s
long-term growth and profit generation. Unfortunately, this is not true. Median
wealth has been declining, leaving growing numbers of working people
increasingly vulnerable to the ups and downs of economic activity and poorly
positioned to enjoy a secure retirement. Moreover, this general trend masks a
profound racial wealth divide, with people of color disproportionally suffering
from a loss of wealth and insecurity.
A distorted
picture of wealth inequality
In a 2011 article,
based on 2005 national survey data, Michael I. Norton and Dan Ariely
demonstrate how little Americans know about the extent of wealth inequality.
The figure below (labeled Fig. 2) shows the actual distribution of wealth in
that year compared to what survey respondents thought it was, as well as their
ideal wealth distribution. As the authors explain:
respondents
vastly underestimated the actual level of wealth inequality in the United
States, believing that the wealthiest quintile held about 59% of the wealth
when the actual number is closer to 84%. More interesting, respondents
constructed ideal wealth distributions that were far more equitable than even
their erroneously low estimates of the actual distribution, reporting a desire
for the top quintile to own just 32% of the wealth. These desires for more
equal distributions of wealth took the form of moving money from the top
quintile to the bottom three quintiles, while leaving the second quintile
unchanged, evincing a greater concern for the less fortunate than the more
fortunate.
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