A few weeks ago, I asked my colleagues here at UNC a question: What outcome of human endeavor results in such a skewed distribution as the distribution of wealth? I told them that the answer can’t be denominated in dollars (which would mean it was pretty much just wealth).
Humans accomplish many amazing things. Some are very fast, can jump very high, or can sing very well. But, the fastest person, or the highest jumper, or the best singer is, can only be so much better than a normal person (say me). I may have a standing vertical jump of 8 inches, and the best jumper 46 inches. But, that is only less than six times as high, compared to wealth (where the wealthiest person might have a more than a million times as much as a normal person).
Most things humans do are like jumping, running, or singing. The best can be a lot better than a normal person, but, not a million times better. Thus, my question: what else that we humans do is like wealth. So what examples did my UNC colleagues come up with? I had a few good responses. My favorite was total YouTube downloads.* Rounding, the wealthiest individual in the world has about $100 billion. The most downloaded video has over 6 billion downloads. What do these two things have in common?
Both initial capital, and a viral video, may take a lot of effort to create (sometimes not, but let’s say they do). But, once created, they take on a life of their own—capital, once deployed, earns a return without the capitalist doing anything. While the deployer of capital has to be careful to make sure it is invested in the smartest way possible, and many owners of capital continue on creating more and more capital with their labor so their available capital is even greater, once invested, the money just flows in. With that money, you can hire others to invest it in new and different ways. The abundance of cash allows you to expand your scope in ways that most human endeavors don’t allow (jumping high does not make your legs longer, producing higher jumps, which lengthens legs, etc.).
Youtube downloads are similar. After a video is posted, it may take no work to garner many, many downloads, and as more people watch it, it comes up more easily in a search, it is shared, etc., and the success builds on itself.
After thinking about this comparison, I saw these two videos. First is a video of the top ten richest people in the world, and how they change over time. The second is the top ten most downloaded YouTube videos. The style of the videos is identical. And, the movement is pretty interesting. You will have a person (video) at the top for a long time. For example, Gates and Buffett go back and forth at the top for many years. Then, very, very quickly, Bezos overtakes them both. Similarly, Gangnam Style was at the top of the YouTube download list for some time, until it was very, very quickly overtaken by Despacito, which is still there today.
The comparison is instructive about how wealth accumulates and builds on itself. But, also about how things can change rapidly. More importantly, it is useful to think about how wealth accumulation is very much unlike most things people do, and why, as a result, we may feel very uncomfortable when we think about the distribution of wealth—most things are simply not distributed that way, and as a result, when we see something that is, it feels wrong to many.
And, what does this have to do with taxes? As people feel uncomfortable about the distribution of wealth, politicians can feed that discomfort, and propose tax policies with the explicit goal of making the wealthy less wealthy.
* A good second place was “total maximum distance traveled from sea level”
