re: On Ginis and 1947-1998 US Ginis

Dear people,
Thanks for your varied reactions. I have received so many emails from so 
many parts of the world that it is scaring. This has opened a debate not 
intended by me, but that I can face. Give me time to order my mind to 
answer, but first:
1. I copy here the article by Michael Parenti for your information. I do 
not 
remember where I read it in the web.
2. A favor from Chris Dunn-Chase: Please, I need urgently that you publish 
in the WS web a mathematical Appendix called "Pareto and Income 
Distribution" of mine, from 1996, because it contains the basic ideas about 
the Pareto-Gini exponential correlation, and I need to refer the people to 
that piece. I will send it soon.
3. I believe in the power of good statistics, so the quintils data may be 
trusted even if Bill Gates is not there. The problem is not with quintils 
data, but with the method to get gini from them.
Regards, Emilio
********************
The Super Rich Are Out of Sight
          by Michael Parenti

Author of 'Make Believe Media', 'History as Mystery', 'Democracy for the 
Few', 'Land of Idols : Political Mythology in America', and others, argues 
that statisticians systematically disregard the burgeoning wealth of the 
richest americans. Mainstream estimates common to affecting socio-political 
analyses, as growth of income inequality and ease in economic mobility, are 
largely skewed and misleading, because the wealth of the 'few in number' is 
so extraordinary.

anthony

The super rich, the less than 1 percent of the population who
own the lion's share of the nation's wealth, go uncounted in
most income distribution reports. Even those who purport to
study the question regularly overlook the very wealthiest
among us. For instance, the Center on Budget and Policy
Priorities, relying on the latest U.S. Census Bureau data, released a 
report 
in December 1997 showing that in the last two decades "incomes of the 
richest fifth increased by 30 percent or nearly $27,000 after adjusting for 
inflation." The average income of the top 20 percent was $117,500, or 
almost 
13 times larger than the $9,250 average income of the poorest 20 percent.

But where are the super rich? An average of $117,500 is an
upper-middle income, not at all representative of a rich cohort, let alone 
a 
super rich one. All such reports about income distribution are based on 
U.S. 
Census Bureau surveys that regularly leave Big Money out of the picture. A 
few phone calls to the Census Bureau in Washington D.C. revealed that for 
years the bureau never interviewed anyone who had an income higher than 
$300,000. Or if interviewed, they were never recorded as above the 
"reportable upper limit" of $300,000, the top figure allowed by the 
bureau's 
computer program. In 1994, the bureau lifted the upper limit to $1 million. 
This still excludes the very richest who own the lionŐs share of the 
wealth, 
the hundreds of billionaires and thousands of multimillionaires who make 
many times more than $1 million a year. The super rich simply have been 
computerized out of the picture.

When asked why this procedure was used, an official said that
the Census Bureau's computers could not handle higher amounts. A most 
improbable excuse, since once the bureau decided to raise the upper limit 
from $300,000 to $1 million it did so without any difficulty, and it could 
do so again. Another reason the official gave was "confidentiality." Given 
place coordinates, someone with a very high income might be
identified.
Furthermore, he said, high-income respondents usually understate their 
investment returns by about 40 to 50 percent.
Finally, the official argued that since the super rich are so
few, they are not likely to show up in a national sample.

But by designating the (decapitated) top 20 percent of the
entire nation as the "richest" quintile, the Census Bureau is
including millions of people who make as little as $70,000. If you make 
over 
$100,000, you are in the top 4 percent. Now
$100,000 is a tidy sum indeed, but it's not super rich--as in
Mellon, Morgan, or Murdock. The difference between Michael
Eisner, Disney CEO who pocketed $565 million in 1996, and the
individuals who average $9,250 is not 13 to 1--the reported
spread between highest and lowest quintiles--but over 61,000 to 1.

Speaking of CEOs, much attention has been given to the top
corporate managers who rake in tens of millions of dollars
annually in salaries and perks. But little is said about the
tens of billions that these same corporations distribute to the top 
investor 
class each year, again that invisible fraction of 1 percent of the 
population. Media publicity that focuses exclusively on a handful of greedy 
top executives conveniently avoids any exposure of the super rich as a 
class. In fact, reining in the CEOs who cut into the corporate take would 
well serve the big shareholder's interests.

                                              *     *     *

Two studies that do their best to muddy our understanding of
wealth, conducted respectively by the Rand Corporation and
the Brookings Institution and widely reported in the major
media, found that individuals typically become rich not from
inheritance but by maintaining their health and working hard.
Most of their savings comes from their earnings and has
nothing to do with inherited family wealth, the researchers
would have us believe. In typical social-science fashion, they prefigured 
their findings by limiting the scope of their data.
Both studies failed to note that achieving a high income is itself in large 
part due to inherited advantages. Those coming from upper-strata households 
have a far better opportunity to maintain their health and develop their 
performance, attend superior schools, and achieve the advanced professional 
training, contacts, and influence needed to land the higher paying 
positions.

More importantly, both the Rand and Brookings studies fail to
include the super rich, those who sit on immense and largely
inherited fortunes. Instead, the investigators concentrate on
upper-middle-class professionals and managers, most of whom
earn in the $100,000 to $300,000 range--which indicates that the 
researchers 
have no idea how rich the very rich really are.

When pressed on this point, they explain that there is a
shortage of data on the very rich. Being such a tiny percentage, "they're 
an 
extremely difficult part of the population to survey," pleads Rand 
economist 
James P. Smith, offering the same excuse given by the Census Bureau 
Officials. That Smith finds the super rich difficult to survey should not 
cause us to overlook the fact that their existence refutes his findings 
about self-earned wealth. He seems to admit as much when he says, "This 
[study] shouldn't be taken as a statement that the Rockefellers didn't give 
to their kids and the Kennedys didn't give to their kids." (New York Times, 
July 7, 1995) Indeed, most of the really big money is inherited--and by a 
portion of the population that is so minuscule as to be judged 
statistically 
inaccessible.

                                              *     *     *

The higher one goes up the income scale, the greater the rate of capital 
accumulation. Economist Paul Krugman notes that
not only have the top 20 percent grown more affluent compared
with everyone below, the top 5 percent have grown richer compared with the 
next 15 percent. The top one percent have
become richer compared with the next 4 percent. And the top
0.25 percent have grown richer than the next 0.75 percent. That top 0.25 
owns more wealth than the other 99 percent
combined. It has been estimated that if children's play blocks represented 
$1,000 each, over 98 percent of us would have incomes represented by piles 
of blocks that went not more than a few yards off the ground, while the top 
one percent would stack many times higher than the Eiffel Tower.

Marx's prediction about the growing gap between rich and poor
still haunts the land--and the entire planet. The growing
concentration of wealth creates still more poverty. As some few get ever 
richer, more people fall deeper into  destitution, finding it increasingly 
difficult to emerge from it. The same pattern holds throughout much of the 
world. For years now, as the wealth of the few has been growing, the number 
of poor has been increasing at a faster rate than the earth's population.
A rising tide sinks many boats. To grasp the true extent of wealth and 
income inequality in the United States, we should stop treating the "top 
quintile"--the upper-middle class--as the "richest" cohort in the country. 
But to do that, we need to look beyond the Census Bureau's cooked 
statistics. We need to catch sight of that tiny, stratospheric apex that 
owns most of the world.
End of article.


______________________________________________________
Get Your Private, Free Email at http://www.hotmail.com