Rich and Poor

Ain't We Got Fun

The rich get rich and the poor get poorer        

In the meantime, in between time       

Ain't we got fun?

The richer are getting richer.  But are they getting so rich that it has become a problem?

Nature hates extremes.  It finds a way to return to an equilibrium and a statistically normal distribution.  It is our choice whether that is a gradual or catastrophic return.  A gap between rich and poor is part of society.  Going back to ancient times, Jesus said, “The poor you will always have with you” (Matthew 26:11)  While the poor may always be with us, it is not a Christian thing to create more poor by transferring wealth to the rich.

The US Census reports annually on income, but it reports irregularly on household wealth, based on a statistically chosen panel.  Those results are reported in current year dollars.  To adjust for inflation, the reported values have been adjusted by the Bureau of Labor Statistics Consumer Price Index to 1993 USD.  

Figure 1 includes both the mean and median adjusted for inflation.  The mean is easier to compute from totals of data, while the median requires access to the all of the data.  However, the median corresponds more to what people think of as the “average”, the value at which 50% are higher and 50% are lower.  When the distribution follows a normal statistical distribution, the traditional “bell shaped” curve, the mean and the median are identical.  However, when the distribution that is being measured is skewed, there can be a difference between the median and the mean.  The mean inflation adjusted wealth is growing at a Compound Annual Growth Rate, CAGR of 2.6% , while the median CAGR is only 1.4%.  This difference between the mean and the median, demonstrates at least that the richer are getting richer and the gap between the mean and the median is getting larger.  Hopefully we will do something to address this inequity before there is a catastrophic response.