Improvement Insights Blog

This video suggests that 9 out of 10 Americans think that income should be more evenly distributed.

Unfortunately, Vilfredo Pareto found over a century ago that 20% of the people have 80% of the wealth. He felt that even if it was redistributed it would soon fall back to the 80/20 distribution.

Pareto’s Rule is a power law which means that 4% of Americans should hold 64% of the wealth and 1% of Americans should hold 50% of the wealth. According to this video, the top 1% only has 40%. They also pay 40% of the taxes. The bottom 40% of Americans pay no taxes.

One incorrect conclusion is that the poorest American’s can’t afford to save. I disagree. We don’t teach them how to save  (I didn’t learn until I was 35). Even if it’s a buck here and a buck there, it adds up. It will grow even if there are occasional setbacks.

Wealth will always be distributed according to Pareto’s Rule. The trick is to learn how to become part of the top tier…one dollar at a time.