2014 November 15 Saturday
Only The Biggest Private Jets Are Selling

The classes are diverging from each other in lifestyles, work ethic, and economic relevance. Is the top 0.001% leaving behind the top 0.01%? Only the very biggest private jets are selling. Tough times for the small jet buyers.

My biggest concern with the concentration of so much wealth into so few hands: Will it cause financial instability and panic? People who spend most all that they make won't cause much of a financial stampede. If they have mortgage, utilities, food, insurance, and other bills they won't vary their spending much unless they lose their jobs. But rich folks can slash their consumption 90% and still have good lifestyles. So the very upper classes seem like a much more variable source of demand.

This jet story is a symptom of a larger phenomenon. Tax revenue numbers by earning level say a lot about how little most people pay in to financing America's system of government. The top 20% pay over 2/3rds of US federal taxes.

The top 1 percent, for instance, earned almost 15 percent of income and paid 24 percent of federal taxes. The top 20 percent earned 51.9 percent of income and paid 69 percent of taxes.

But it isn't the top earners, but rather the top wealth holders who are buying the upper end airplanes. A recent study on wealth distribution in America show the top 0.01% have an average net worth of $371 million. I do not think $371 million net worth is enough for a $100 million jet. So the top 0.001% are probably the ones buying the big jets.

On the other side of the spectrum, the fortunes of the wealthy have grown, especially at the very top. The 16,000 families making up the richest 0.01%, with an average net worth of $371m, now control 11.2% of total wealth—back to the 1916 share, which is the highest on record.

What's also interesting from that article: the bottom 50% have so little net worth that they do not figure in net worth calculations. What I'd like to see: a graph showing the income percentile at which a resident of the United States becomes a net taxpayer (paying in more than they get in benefits). My guess is that percentile has risen with time and will continue to do so.

A substantial fraction of the population pays little in taxes. Some of them also do not want to look for work, A new Pew Research study finds that a growing fraction of the American population do not work and do not want to work.

more than 92 million Americans — 37% of the civilian population aged 16 and over — are neither employed nor unemployed, but fall in the category of “not in the labor force.”

You might put this down to an aging populate. But no. A rising fraction of the young are not seeing work as relevant to their lives.

But let’s look in particular at the youngest part of the eligible workforce. The share of 16- to 24-year-olds saying they didn’t want a job rose from an average 29.5% in 2000 to an average 39.4% over the first 10 months of this year. There was a much smaller increase among prime working-age adults (ages 25 to 54) over that period. And among people aged 55 and up, the share saying they didn’t want a job actually fell, to an average 58.2% this year.

How are they getting the money to live? Parents? Girlfriends and boyfriiends? Spouses? Scams on the government? Workers compensation fraud is pretty prevalent.

These people are ready for a life of leisure served by robots. I wonder if they'll get it. Why they might not: full automation cuts the need to put factories in large population countries. The capitalists might move their robotic factories to Iceland and similar islands.

Share |      By Randall Parker at 2014 November 15 10:05 PM 


Comments
Wolf-Dog said at November 16, 2014 1:25 AM:

Historically, it seems to take 2 or 3 generations for the distance between the upper and lower classes to grow to totally unstable levels. This used to be the archaic theory of Kondratiev cycle that was popularized by the Harvard economist Schumpeter.
http://en.wikipedia.org/wiki/Joseph_Schumpeter
http://en.wikipedia.org/wiki/Nikolai_Kondratiev
http://www.generationaldynamics.com/pg/ww2010.book2.cycles.htm

After this stage, economic depressions and big wars seem to follow. But this time the situation is more intensified because technology is not only accelerating the creation of capital, but also its accumulation in the upper classes. However, one of the complications is that Islamists are benefiting from the disgruntled groups who complain about the relative poverty and the stratification. The separation between the classes is certainly contributing to the new Islamist agenda, contributing to a possible worldwide escalation.

James Bowery said at November 16, 2014 5:33 AM:

Unconditional basic income would go a long way toward defusing threats from Islamics such as ISIS. That means removing all tests, except citizenship, from delivery of social goods. Citizenship is a fundamentally different kind of "test" due to the relationship between citizenship and territory. If you have people crossing the border without permission, it isn't, as many neo-libertarians claim, a "natural" right because in nature an individual male will challenge an interloper as a challenge to critical territorial resources. In all sexual species that includes access to food and mates and in humans includes the moral authority aka "moral territory" aka "honor". The instant the state arrogates to itself the power to enforce borders, it must accept a category called "citizen" from whom that natural power is usurped and offer something in exchange for such a fundamental breach of natural rights. I've attempted to define the _minimum_ that the state must offer in terms of "natural territory" and consequent rent streams due individual males -- as it is objectively verifiable that the geography of the Y-Chromosome is associated with limiting free mobility between ecologies in _all_ land-bound sexual species. This is a foundational demand on the State made by Nature. People are oblivious to the fact that organizations like ISIS are experiencing explosive growth due precisely to the failure of existing polities to recognize the inherently "sexist" nature of the relationship between individual and State. I don't hold out much hope for political solutions to this -- it is fiddling while Rome burns.

This problem of denying sex differences and their relation to sovereignty is world-wide. The de facto immigration policy of European derived nations increasingly looks like it was implemented by pre-menopausal women with degrees in sociology -- women who have sublimated "lets you and him fight" tests of genetic quality of potential sires of their offspring, into abstract social principles without recognizing any side, let alone long-term, effects. For all practical purposes such creatures didn't exist before the 20th century. Such women simply aren't capable of understanding what they are _really_ doing or _really_ why they are doing it -- at least not under the current power structure that coddles their delusions while turning them into de facto Temple Whores of Mammon in the urban areas. This kind of quasi religious use of women is what ISIS offers a "cure" for.

However, UBI entails removing authority from such women -- primarily those who have discretion in the current welfare state's aparatus of "testing" who does and who doesn't get social goods. Admonishing some entity like the Federal government to remove discretion from such women in their positions of coddled authority over who gets delivery of social goods is unlikely to be successful. That means "community organizers", such as Obama was, in combination with these women will continue to route taxes to constituencies other than the white working class men. I predict these white working class men will increasingly join ISIS. If that happens they are likely to take down the US federal government if some organizing principle based on Constitutional values doesn't answer with a similarly "sexist" acquisition of those men with the goal of devolving to the States the primary powers of tax collection and social goods delivery so that "conservative" dupes of the Koch brothers can have their "tax havens" where the wealthy collect the increased value of society and those of us who have some sense of reality can have something approximating rational social policy. When I say a "answer" I mean a counter-organization to ISIS that has as its "holy war" the reinstatement of the Constitution along the lines of "The One Alternative to Bloody Revolution".

Dan said at November 17, 2014 5:20 AM:

Basic income is a radically left-wing notion that reflects libertarians' desire to kiss up to liberals by showing that they care about the poor. It is not good policy because a big reason people are poor is low future time orientation. You need programs for housing, food, diapers, utilities and cell phones because poor people blow no-strings-attached checks on alcohol and drugs. Urban political leaders found this out long ago.

Basic income would radically inflate the welfare state while not removing the need for all the existing programs.

Jim said at November 17, 2014 5:51 AM:

The most important cause of internal conflict is the struggle for status. This cannot be alleviated by any welfare system no matter how generous. Status is a good whose supply is completely fixed.

James Bowery said at November 17, 2014 6:27 AM:

Charles Murray dealt with Dan's primary objections in "In our Hands: A Plan to Replace the Welfare State" through a combination of organically grown local support societies, made possible by the UBI, confiscation for payment of a father's income to pay child support and earmarking a percent of the income for health insurance in a deregulated marketplace. There will be individuals who still not only blow everything and refuse the not only the admonitions but help of their neighbors, friends and relatives that end up homeless and dying -- just as there are today -- so that should keep Dan happy.

In the worst case, the UBI can be subject to local taxes, and the welfare state can be funded and run locally.

Lot said at November 19, 2014 3:39 PM:

We already have UBI: it's just called disability. If you've never worked a day on the books in your life, which is pretty common for multi-generation families all on disability, you get about $650 a month from Uncle Sugar for life.

If you've paid into the system by working on the books for decades, that amount maxes out at about $2,400 a month. More commonly, someone who sporadically worked in their teens and 20's and goes on around age 30 gets about $800 to $1000.

Mental disabilities count and can be faked, and a huge share of the under class have bad backs, asthma, chronic bronchitis, extreme obesity, bad hips, uncontrolled diabetes, etc.

It pays for life, and much more than AFDC.

let it burn said at November 19, 2014 3:55 PM:

@What I'd like to see: a graph showing the income percentile at which a resident of the United States becomes a net taxpayer (paying in more than they get in benefits)

awhile back karl denninger had data on this, iirc, $55k/yr for a family, $30k/yr for a single individual. above that you're a net payer, below that your a net taker.

let it burn said at November 19, 2014 4:02 PM:

i found the karl denninger piece i was talking about: Musing On Your Views...
nb: second "your" in my above entry should read "you're". doh.

WJ said at December 14, 2014 8:33 PM:

As the price of oil goes down, watch as the number of used private jets for sale goes up - most of them coming from the Arab world and other regions whose main export is petroleum.


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