A Reasonable Wealth Distribution

What follows is a hand wavy articulation, with approximations and assumptions, to arrive at an idealistic wealth distribution. I hope you will bear with me.

How Much Money to Go Around?

Let’s begin by assuming there is a finite amount of money in the US, right now. After subtracting debts from assets, we’ll go with it being around $100 trillion [1]. There also is some number of people about 300 million [3]. Therefore, the average amount of wealth per person is: $300 thousand. With total equality, or socialism, this is how much each person would get. I don’t have that much This is the United States though, where we believe in incentives and opportunity for growth.

Positing a Trajectory

Let’s start with a premise that a person is born with essentially no money. Some people will object to this, since one might inherit from a wealthy parent or two, but maybe at birth they are at zero, without clothes on their back or a dollar in their piggy bank. This goes with the quote “time is money”. Over time, their parents give them some. Later, maybe other family and friends give some. The person eventually works and learns how to earn. It creates an appealing sense of progress for a person to accumulate money as age increases. For an old person, they could achieve a dream of obtaining wealth.

Age Distribution of our Population

Another distribution we can think about is how many people are each age. Using the plot below, provided on Calculated Risk blog, and based on a forecast using US Census data, we see about 6 or 7 percent of the population in each 5 year long age group up to age 65, and then they are around 5, 4, 3, 2, 1, .5, .3, and .1 for the remaining age groups in order.

Age distribution on year

What Would a Linear Increase be Like?

Theoretically, if a majority agree on it, we could choose a linear increase with age, so that the additional amount of money acquired every five years is constant. This would mean those with extra donating and those with too little getting blessed. For this assumption to be comfortable, it helps to consider each person an individual who is initially dependent on others and gains independence with age, becoming self sufficient and able to provide. I have written code to simulate distributing wealth to all ~300 million people, according to this linear increase, using an approximation of the population distribution above, until reaching ~$100 trillion. This is shown in the rainbow colored plot.

Reasonable Wealth by Age Group

My Money Situation

A little about me, I am 28 and have survived on around $24,000/year for the last few years with an additional few thousand of support from family. This is in the cities of Durham, NC and Richmond, VA, each with around 250,000 people and a livable balance of urban and rural environment. Being in school during this time was enjoyable, and I worked hard on answering questions from professors. In my bank account there are around $2,000, with around $6,000 in retirement and about $2,000 in an HSA. I’d have close to the $25,000 or so associated with my age group above if not for having been paying off my student loans.

How Far Off Are We?

The purpose of this post is providing a theoretically reasonable wealth distribution – maybe one to gradually aim for. The actual wealth distribution is given below [3], and it appalls me. The top 1% have more than the bottom 80%. If you’re in the top 1%, please share your money. An accompanying video is available in the citation, and it deserves resurfacing.

Actual Distribution of Wealth in the United States

One criticism is that people who live in cities, who have disabilities, and who support children have more expensive lifestyles and therefore need more money. This is understandable. Based on average rent prices for one bedroom apartment rentals in 50 major US cities, the median city costs about $1000/month. However, in San Francisco,  the cost of living in highest, approximately $4000/month or $36,000/year, but that is only four times the number quoted above, not 40.

Let’s Get Back on Course!

How do we make this theoretically appealing wealth distribution more realistic? I believe a hundred-millionaire tax would greatly improve the lives of the vast majority, well over 99% of those living in the United States. I eventually think a millionaire tax may help, but considering many politicians have at least a million dollars, we better start with something that would monetarily benefit almost all of us, including law makers. Thanks for reading this.

 

My well being partly depends on g1fts from generous supporters. Please send a friend whatever you can to help by P@yPal at dmoo2009@gmail.com. Thanks for any help!

 

Citation Nation:

[1] Andrew Lasane. The Average Cost of One Bedroom Apartments in 50 Major U.S. Cities. https://mentalfloss.com/article/81296/average-cost-one-bedroom-apartments-50-major-us-cities. June 8, 2016.

[2] Bill McBride. Calculated Risk. Wednesday, August, 14, 2013. By Request: U.S. Population by Age (earlier was by distribution), 1900 through 2060. https://www.calculatedriskblog.com/2013/08/by-request-us-population-by-age-earlier.html.

[3] Moore, Madison. February 24, 2014. Watch: The Absolutely Shocking Truth Most People Don’t Know About Wealth Inequality In America. https://thoughtcatalog.com/madison-moore/2014/02/heres-the-shocking-truth-about-wealth-inequality-in-america/#3cdE8fys1Jmw5UOE.32

[4] US Census. U.S. and World Population Clock. August 26, 2019. https://www.census.gov/popclock/

[5] Wikipedia – Financial Position of the US. August 26, 2019.