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Income & Wealth Inequality

Nick Name
Income Inequality
Income Equality measure the difference in incomes between the rich and poor.

  • There are multiple ways do measure it
    • A common way to measure it is using the Gini Coefficient
      • The Gini coefficeficient ranges from 0 to 1.  
      • The higher the coefficient, the more unequal things are
    • There is no set definition for who is rich and who is poor
    • Looking at the top 1%  is a common metric for those who are "rich"
    • Looking at average incomes for entry level employees or minimum wage is a way to analyze those who are "poor"
  • Also referred to as "The Wealth Gap"

Contributors Vs. Leaches
  • One theory is that people/firms who leach on the financial system increase inequality:
    • Example:  JP Morgan Chase & Jamie Dimon
      • Jamie Dimon did not create the firm, but is a billionaire from it
      • JP Morgan pays it's CEO and Executives huge compensation packages, but barely pays deposit holders anything
  • This is in contract to people/firms that create value by making or improving the way we live:
    • Examples:  Henry Ford and the assembly line;  Edison and the light bulb

Concerns As of 2018
  • Inequality is growing in the US
  • Also growing in rest of world:  China, Europe, Japan, etc.

Inequality Throughout History
  • Recent inequality is nothing new
  • Almost every civilization has experience it - it's natural to humans
  • Typically ends with
    • Revolution: the people revolt and redistribute wealth
    • war/sickness/famine/natural disasters: many people die
      • With reduced numbers, there is more demand for laborer 
      • With more demand, they can negotiate better wages and a larger share of the pie

Warnings and Disclaimers

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