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Thursday, November 3, 2011

THE "99%" IS ONLY 65%

The people currently protesting under the banner of "Occupy Wall Street" contend they represent 99% of the people being ruled by the 1% super rich who somehow manipulates the government and the economy. This of course is a gross oversimplification of the class structure in our society. Back in 1897, Italian economist Vilfredo Pareto observed that 80% of the land in Italy was owned by 20% of the population. "Pareto's Principle," as it came to be known, or the "80/20 Rule" relates to the ratio of input to output; e.g. 20% of the people are normally responsible for producing 80% of the work, and from an economic perspective, 80% of the wealth is generated by only 20% of the people. This number has remained reliable over the years, which means under a capitalistic society there will always be a 20% group representing entrepreneurs and business leaders. Of the remaining 80%, there will always be approximately 15% who will remain poor. Despite the billions of dollars the country has spent on the war on poverty, this number has varied ever so slightly over the years. This leaves a middle class of approximately 65% of the populace.

Under capitalism a person is allowed to earn and spend money as he/she sees fit, which includes all classes, not just one. The only exception to this is when we pay taxes where the rules are established by the government. In a republic, which is what we have in this country and not a pure democracy, the people elect officials to represent their interests and make such decisions. From this perspective, the only control the people have over taxation is by electing effective representatives. As part of the 53% of the populace who pays taxes (47% do not), I make it a point to exercise my right to vote. Following the capitalist concept of what you spend, you own, it seems to me only true taxpayers should have the right to vote. After all, we're paying for the government aren't we?

The danger in establishing a country of "haves" and "have nots", of course, is that you establish an adversarial relationship which naturally leads to class warfare, a dangerous reality we currently face. Under capitalism, the one reality we must recognize is there will always be the rich (20%), there will always be the poor (15%), and everyone else represents the middle class (65%). As I have written, the problem is not with capitalism, but rather with government policies inhibiting capitalism to correctly function.

I am reminded of this quote attributed to Abraham Lincoln who said in this regard:

"You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away people's initiative and independence.
You cannot help people permanently by doing for them, what they could and should do for themselves."

I may not be among the elite, but I do consider myself part of the 65% of the middle class who pays his taxes (you remember, the 53% group). Like the Occupy Wall Street protesters, I'm mad as hell as to what is going on economically in this country. The difference is, my anger is aimed at the government, not Wall Street, and those who are trying to undermine capitalism in this country. Make no mistake, I am an ant, not a grasshopper.

Keep the Faith!

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Tim Bryce is a writer and the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For Tim's columns, see:
http://www.phmainstreet.com/timbryce.htm

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