Sweeping Wealth Under The Mat

I wish I had the answer to correct the wealth imbalance between the average Joe and the ultra-rich. Personally I see no evidence that taxing the crap out of the rich to gift the poor will do anything to correct the imbalance.

The rich have the wherewithal to avoid, recoup, reorganize …. any solution to create better economic balance must provide profitable avenues for the poor to gain ground – not sock it to the rich who have the resources to defeat taxation and regulation. This is part of trickle up schemes which are as ineffective as trickle down. This week we were reminded again of the power of the rich with the ongoing release of the Panama Papers. From the National Observer:

The numbers are staggering. The OECD claims that offshore banks globally hide some (US) $5-trillion to (US) $7-trillion from tax authorities, or up to 8% of the world’s assets under management. Moreover, an estimated (US) $11.5-trillion is being stashed in offshore accounts worldwide for one reason or another.

How does one know there is an imbalance? – it is the difference between the average and median income and wealth. As a reminder:

Generally speaking, if the average and the mean are close to each other, there is balance. In the case of personal income, proof of the imbalance is easy to visualize. The average disposable personal income per capita is up over 22% since 2000.

While median household income is still slightly negative (down 0.3% since 2000).

According to my back-of-an-envelope calculations, it seems that there was roughly a 20% growth differential between median and average income in the previous 20 year period.

It is hard to be exact as median income data sets are based on household income whilst average income data sets are per capita. I find it interesting that the government is doing little to help track economic balance – simply the data is not being collected to facilitate accurate analysis.