A week and a half ago I posted about the distribution of wealth in a controlled population of people that were EXACTLY like one another. Exactly. They contributed to 401ks the same, they saved for houses the same, they worked at the same wages and got raises the same. The result, after just 15 years of life?
…the poorest third of people control less than 20% of the net wealth while the richest 14% control more than 20% of the net wealth.
6/15th’s of the poorest control less money than the top 2/15ths.
I have expanded my model to include home ownership. Again, this is done with the assumption that ALL people do the EXACT same thing in the same way. They buy a house at the same time, in the same housing market and the home they buy is worth the same.
Here’s what we get:
The control of wealth explodes after year 15. That’s when my peeps buy a house. What was a net worth growing by about 30k a year now grows much quicker; near 40 or 50k a year. And this is just by buying a home.
So, after 30 years, where is the wealth?
The total wealth is $14,112,947 with a quintile at $2,822,589.
The lowest quintile. That group of people that control the bottom 20% of the wealth in this equal society, defined equal society, compromises fully HALF the people in that society. The bottom HALF of our population controls just 20% of the wealth. The top 3/30, or 1/10th or 10% control 20% of the wealth as well. In fact, the top 3% controls as much wealth as the bottom 33%.
And we’re just 30 years into the life of the exactly average 18 year old. We’re just at 48 years of age. We haven’t even begun to take into account poor choices or good choices. This model is assuming that all kids make the exact same choices with their money, career and finances.
And we STILL have “wealth distribution” issues.