The End of Welfare as We Don't Know It

Doug Henwood dhenwood at
Tue Oct 13 11:32:45 PDT 1998

Michael Cohen wrote:

>Suppose we took the income of the top 1% and capped it at $75,000 per year
>transferring all the income to the bottom of the socio-economic
>distribution so
>that the mean income below a certain point was flat, what would that
>income be?
>If possible ditto for wealth which is much harder.
>This speaks to the issue of the maximum which can be accomplished by direct
>wealth transfers at the current time and what a radical program might take
>as a

Quick & dirty calculations show that pretax income per household (just taking the national income accounts number for personal income and dividing it by the number of U.S. households) shows an average of almost $70,000 per HH. Actual median income is just over half that. If you took the top quintile (roughly the $75,000+ HH) and divided the excess of their share over 20% (their share is about 49% of the total, so the excess would be 29% of the total $7 trillion in personal income), there would be about $25,000 per household, These are electronic equivalents of cocktail napkin calculations, so I wouldn't base Congressional testimony on them, but they do give you an idea of the magnitudes involved.

>How long does extreme wealth stay around. Take the top 1/2 percentage of the
>population in wealth and income. Is it likely that their children,
>grandchildren, remain in an oligarchy of wealth. Or is it
>a fact that this oligarchy is recreated by new people each generation. Of
>course there is no hard and fast rule but what is this quantitatively. I
>guess that the US is much more egalitarian in this regard than say Japan or
>Germany but I really don't have the slightest idea.

No one really has a good picture of inheritance, but the studies I've read show that about 50-75% of existing wealth is the result of inheritance or the returns on inherited wealth. 50% is conservative, but 75% is far from outlandish.


More information about the lbo-talk mailing list