This seemingly fancy term is misconstrued often these days. Not to be confused with distribution of wealth. The distribution of income is just this: Some people earn a higher salary than others who make less. When you hear distribution of income it is usually involved in some discussion about how the rich make “so much more money” than the rest of us. It sounds intelligent and is used to persuade those who don’t know the ins and outs of the term. It is part of the argument that makes Americans feel entitled to that money the rich have.
The economic Truth is this; the difference in the distribution of income is not the rich vs. the poor. Instead it is the older vs. the younger Americans. An example is this a person working in his/her 40’s has had at least 20 years more experience, education, or training than a 20 year old. With this experience, education, or training they are more skilled laborers, and should be compensated thusly. This same worker in their 40’s has had years to develop clientele, gain understanding of their field, and develop a network.
The “rich” and the “poor” are very often referred to, as they are different people. This is true for some, but the majority of Americans in the bottom 20% of the income bracket are the same to be in the very top bracket within the next 16 years. This is accounted for largely by students, and those developing skills as previously mentioned. It is not uncommon for most Americans in the top 5% to be 
45 years old and up. It the year 2000 those households in the top 20% worked twice as much as those in the bottom 20%, which primarily indicates both mom and dad work among those in the top 20%. (information from the U.S. census)
What this means for being Economically Sound
Do not be deceived by the media or politicians who talk about the distribution of income to be an emotionally charged argument against a class system. This is America; the difference in income is actually the young and the old. So when they talk about taking all that extra money away from the rich and giving it to the poor. They are talking about your retirement, taking money away from mom and dad and giving it to their college kid. Weird when put in context, like lies usually are. This economic fallacy has been exposed and brought into the light, the hip-hop light. Therefore be economically sound, and don’t be persuaded by this distribution of income argument.
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Right on, Arch! This is a very insightful approach, that I have never heard before. Excellent! Now, take the case of a middle-aged person that has undergone some mid-life financial crisis, like divorce or a health issue. It may require them to use up funds that have made them an older "welathy person."
ReplyDeleteOr in this economy, they end up with an "underwater mortgage," or their 401k loses half its value.
People may point this out as a fallacy in your argument.
Yet I would point out that the model still holds. Older people may receive some inheritance. They may have taken care of their needs in other ways: hopefully through the strong network you described. It is the presence of so many healthy middle-aged people, that provides the very resources needed by others going through hard times.
I know of an uninsured construction worker, who suffered a terribly accident that crushed both of his ankles. Some local churches raised funds instantly, that covered all of his bills. The hip-hop model held.
Good stuff!
Good point Gordon, there are always exceptions. That is why i said the Majority of Americans in the bottom 20%, are the ones that 16 years later are in the top 20%.
ReplyDeleteThe important thing is that the distribution of income, is a natural process. That process should be left alone, and Americans should be content with where they are, and have hope that with hard work they can rise. We have to get away from the feeling of entitlement. We are not entitled to other people's wealth, which is hard for some to grasp. $ that comes from the govt, is from my neighbors and myself. Not some random piggy bank.