Waffles, Beer, and the Penalty We Pay for Tolerating Inequality

If we want a more meaningful sense of how ordinary Americans and Belgians compare in real life, we need to move off of average and onto another metric, and the Credit Suisse researchers do just that. They tell us, for each nation, how much wealth typical adults are holding.

The Credit Suisse researchers identify these typical figures by determining the wealth midpoint — the median wealth per adult — in each nation, that level of net worth that would leave half the nation with more and half the nation with less.

In the United States, the median — most typical — American holds just $61,667 in wealth, far below the nation’s average wealth of $403,974.

In Belgium, a land of far fewer super rich, the typical adult has a net worth of $163,429, over $100,000 more than the typical American.

To complete our story, we need to make one more imaginative leap: How much wealth would the typical American adult have if the United States had as equal a distribution of wealth as Belgium? Credit Suisse doesn’t calculate this number, but we can — by using the Credit Suisse national averages and medians.

Credit Suisse puts the total wealth of the United States at $98.2 trillion. If we divvied up that wealth as equally as Belgium divvies up its wealth, the typical American would have a net worth of $210,900, more than triple the $61,667 in net worth the typical American actually has.

In other words, Americans are paying an inequality penalty of almost $150,000.

Some might dismiss the significance of any comparison between Belgium and the United States. The two nations, after all, operate on totally different scales. Belgium has only 8.9 million adults in the entire country. The United States has 243 million.

Fine. Let’s compare the deeply unequal United States to a much more equal nation closer to America’s size. Let’s try Japan.

Like Belgium, Japan also has a lower average wealth per adult than the United States. In fact, the U.S. average wealth — $403,974 — nearly doubles the $227,235 average in Japan.

But Japan, also like Belgium, has far fewer super rich than the United States. Japan hosts only 71 individuals worth over $500 million. To reach the U.S. total of $500-million fortunes, Japan would have to double its super-rich population, double it again, and then quadruple it.

Japan’s modest number of grand personal fortunes means more wealth for typical Japanese adults. The median net worth of Japanese adults now stands at $103,861, well above the typical American net worth of $61,667.

And what would the typical American be worth if the United States had as equal a distribution of wealth as Japan? The typical American would have a net worth of $184,642, over $120,000 more than the current actual net worth of the typical American.

More waffles — or sushi — anyone?

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Reposted from Inequality.org