WEALTH INEQUALITY AND SKIN IN THE GAME
A well functioning society isn’t one in which people are equal but one in which people have equal *probability*. So measuring static inequality is severely flawed.
Take the United States. Less than 10% of the people in the 1982 list of richest 500 were there in 2012. Compare to France where 60% on the rich list today have inherited their wealth. And there are other more robust metrics: 56% of Americans will spent at least a year in the top 10% (in income not wealth). Not in Europe.
So a good society is one in which people at the top have *skin in the game* hence can lose their money. Wealth generation should not lead to protected position at the top. Social mobility isn’t in elevating people, it requires the top to open a position.
So in Europe a civil servant from the “mandarin class” is safe for life as they extract rent from the system, while a good entrepreneur will run a chance of getting poor, leaving room for others.
PS- Let me explain to those who don’t get it. SITG means the rich needs to remain exposed to losing back his money rather than shielded.
PPS- 39% of Americans will spend a year in the top 5 % of the income distribution, 56 % will find themselves in the top 10%, and 73% percent will spend a year in the top 20 %. Ref http://www.nytimes.com/…/…/from-rags-to-riches-to-rags.html…

via: Facebook