Topic 1 Post


Grasping the true scale of inequality

There's a problem with understanding inequality at the modern scale.

Our minds struggle to make sense of a "billion" things. Much less tens or hundreds of billions of things. Our minds further struggle to compare how a billion of this might compare to a million of that.

As a result, the everyday person has no idea just how much more money the wealthy have:

The average American believes that the richest fifth own 59% of the wealth and that the bottom 40% own 9%. The reality is strikingly different. The top 20% of US households own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%. The Walton family, for example, has more wealth than 42% of American families combined.

This viral video tries to visualize the drama:

There have been more attempts to make the differences tangible. For example, you've probably seen the viral TikTokker who quantified extreme wealth with grains of rice. For example, if a single grain is worth $100,000, Jeff Bezos has 58 pounds of the stuff.

I'd like to offer an alternative to these laudable approaches to solve this difficult problem.

Inequality is foremost a matter of time

Work is a trade: time and energy for some amount of money. We give up irreplaceable time in our lives to pursue the goals of someone else. In exchange, we get enough money to, we hope, pay for our basic necessities: food, shelter, clothing, medical care. If we're very lucky, we make more than we need, and can use the rest for comforts and saving.

In the United States, one year of work yields $70,784 in the median case.

Aside: median vs average

As a refresher, the median value in a set of numbers describes where the middle is. In other words, there are as many values that come before as after. Medians can be helpful in statistics around inequality because they prevent extreme values at either edge from disorting the picture.

Median annual income as the unit of time-for-work

So at the middle of the pack, $71k isn't quite prosperous, but it is enough to rent a one bedroom apartment in every US state.

Like grains of rice, we can use this number to slice up inequality into numerical scales we can actually understand. So for every $71k you have stored up, that's a year of self-determination or leisure time available to you. A year buffering you from poverty and desperation.

Time leverage by annual compensation

To start, let's look at annual compensation as it yields a unit of median US income. In other words, how much does a year of work buy you in terms of the power not to work if you don't want to?

Elon Musk is doing pretty well: in just a year he was paid 142 millennia of median income. In other words, Elon made enough leisure money for 23x the duration of all human civilization.

Musk is an outlier, certainly, but you can find plenty of other dramatic examples.

Tim Cook made enough in a year for 12 millennia of leisure, and Sundar Pichai got enough for 40. Dave Clark has 800 years of leisure time at his disposal, while Satya Nadella gets 700.

Parasitizing the American healthcare system isn't a bad gig, either. CVS CEO Karen Lynch has almost three centuries of leisure coming her way, as does UnitedHealth CEO Andrew Witty. This makes sense: people will do anything to keep themselves and their loved ones alive. It's a profitable protection racket.

Everyday workers, meanwhile, earn less. Walmart, Amazon and McDonald's workers' median incomes are less than half of the national median, while Apple's is 80%.

As Starbucks workers fight, often successfully, to build a union, it's worth noting that the CEO there gets almost three centuries of leisure, while the typical barista scrapes by with only half the national median income.

Dave Clark gets eight centuries of leisure in a year while half his workers don't even get a single year. In fact, it's worse than that, because working in an Amazon warehouse can cost future earnings, due to injuries and fatalities.

I'm comfortable with the argument that being an executive of a public company takes certain specialized skills not everyone has, and therefore is due certain additional rewards. But centuries of leisure potential every year? While the typical worker doesn't even hit the median income, much less stack up any extra? That's taking so much and leaving so little.

Time leverage by wealth

But annual compensation inequality is nothing compared to wealth inequality.

During the 2016 campaign, Trump argued that he received a "small loan" of $1 million from his father, and that he'd worked hard for his wealth. Let's take the claim at face value, ignoring all his other generational advantages. That's 65 years of income, or more than an entire lifetime. Imagine what you could build with an entire lifetime of income loaned to you at the beginning of your career.

Meanwhile, back to Musk. He has 2.7 million years of buffer time stored up. That's more time than has passed since the first humans evolved. Bezos, Buffet and Gates each have around 1.5 million years.

If it sometimes seems as though Nancy Pelosi—disdainful as she is of progressive policy goals—is out of touch with the typical American, it's worth noting she has as much as 15 centuries of cash. That's enough money to last from the fall of Rome until today. McConnell isn't doing too badly, either, with 500 years stashed away. Joe Biden could retire, meanwhile, for over a century on his current haul.

AOC, it should be noted, may still be in the red thanks to student loans. She's much closer, therefore, to the typical American, which has just two years of cash buffer. It's harder for those who didn't attend high school: they have almost no buffer, at median net worth of $20k. Having a college degree, meanwhile, brings the median to four years of buffer.

This doesn't even touch the mechanics of financialization, like stock buybacks. Apple has transferred 132,000 lifetimes of wealth in this form, or 5.9 million years of the median US income.

Inhuman leverage

So we have some people, in American society, with almost no buffer at all.

Meanwhile, some among us have so much excess power in the form of time that they'll die centuries before they could come anywhere close to using all of it. This is disorting our world in dramatic ways, between the chaos of the Twitter acquisition to the fallout of Citizens United, to the ongoing consolidation of essential services.

As a whole, we're able to produce so much wealth. Does it really make sense for the most powerful among us to be so gluttinous with the rewards? Does Elon need 61,000 lifetimes of wealth? Do Bezos, Buffet and Gates need 30,000 lifetimes of wealth?

What would happen if they shared the pie a little more? How would the resulting tax revenues improve our communities through infrastructure and education spending? How would everyday lives improve with less stress, more leisure time, more time with our loved ones?

It's helpful for the wealthy that the numbers are so incomprehensibly big it takes a whole spreadsheet just to begin the conversation.