TCS Daily


The Top One Percent Includes You

By David R. Henderson & Charles L. Hooper - May 20, 2004 12:00 AM

Presidential aspirant John Kerry likes to discuss "the wealthiest one percent". In this he is following in the footsteps of Al Gore who, when running for president, excoriated the one percenters to drive a wedge between them and the rest of us, hoping that enough of the rest of us would vote for him. Fellow demagogue Paul Krugman also often attacks the top 1 percent.

Whom do you picture as the wealthiest one percent? Many of us think of the famous athletes and entertainers earning $10 million a year, trial lawyers wearing expensive suits, and heads of multinational corporations making important decisions in exquisite wood-paneled boardrooms. To be in the top one percent in 2001, the most recent year for which the Internal Revenue Service has released statistics, you had to have an adjusted gross income of $292,913 or more.

But if you take a wider and longer view, you reach a striking conclusion: virtually every American who has heard John Kerry or Al Gore speeches is in the top one percent. This includes the middle-class family from Indiana, the barber in Florida, the K-mart clerk in Oregon, and the Virginia junkyard worker.

Here's why. Carl Haub, senior demographer at the Population Reference Bureau in Washington, D.C., has estimated that 106 billion humans have been born since Homo sapiens appeared about 50,000 years ago. That means that the richest one percent in history includes 1.06 billion people. There are currently 6.2 billion humans alive, leaving approximately 100 billion who have died. Who among the dead was rich by today's standards? Not many. Royalty, popes, presidents, dictators, large landholders, and the occasional wealthy industrialist, such as Andrew Carnegie and Leland Stanford, were certainly rich. All told, it is difficult to imagine more than 20 million of these people since ancient Egyptian times. This leaves 1.04 billion wealthy alive today, or 17% of the world's population.

The World Bank counts 900 million people living in 28 "high-income countries," like the United States, Japan, Canada, and much of Europe, where the annual gross national product per capita is $9,361 or greater. If we include the 140 million richest people from all the remaining countries, we have 1.04 billion rich people. On the other end today are 3.5 billion of the world's 6.1 billion who live in countries whose per capita GNP is less than $760. The poorest of the poor, more than 1.2 billion, live on less than $1 a day. Now that's poverty.

The poor in the United States, by contrast, live on up to $23.50 a day. Except for the few hundred thousand who are homeless, the Americans whom the U.S. government defines as poor live exceptionally rich lives. In most ways, their lives are better than those of kings and queens just 200 years ago. Consider the quality and quantity of our food, clothing, refrigerators, televisions, washing machines, stereo systems, and automobiles. King Louis XIV of France had a greenhouse so he could eat oranges. The poor in this country can eat an orange every day, regardless of season. King Edward III of England could summon the royal musicians to play music. The poor in this country have a wide variety of music at their command, 24 hours a day, played note-perfect every time. Edward III lived in a dark, smelly, cold castle. Even the worst houses in this country are more comfortable and have electric lights, too. Care to live without showers and flush toilets? The kings of England and France had to. Next time you see a Shakespeare play in which kings and princes cavort, remember that royalty in Shakespeare's day had rotten teeth, terrible breath, and body odor that would make you keel over.


Finally, who can ignore the dramatic increase in lifespan that we enjoy? This is due to better food, clean water, and sewage systems that work. It is also due to technologically advanced drugs and surgeries that are available today even to poor people, medical treatments that even a king 60 years ago would have envied. Even what we casually throw away is better than the objects that most humans treasured throughout history: plastic utensils; resealable, leakproof glass drink containers; resealable plastic bags; jeans with a hole in the knee; leftover lasagna and week-old bagels; newspapers for insulation and starting fires. Many magazines have photographs and artwork better than the average human could ever hope to own just centuries ago. The poor in today's society throw them away without a thought.

Count yourself as one of the luckiest and most successful humans ever. Celebrate your wealth and ignore politicians who preach the gospel of the haves and the have nots. They try to divide us when in fact what we have in common exceeds our differences. While you're counting your blessings, take a minute to honor the system that created it: the system of property rights, free markets, low taxes, and the rule of law. And if you want to help people who are in the bottom, then urge your politicians to stop blocking imports from India, Kenya, Peru, Cuba, Bulgaria, and other poor countries around the world. While charity has its place, few of the wealthiest one percent got rich from charity, and neither will today's poor. We moved from poverty to wealth through economic growth. Let's allow the rest of the world's poor to do so also.

David R. Henderson drhend@mbay.net, a research fellow with the Hoover Institution and an economics professor at the Naval Postgraduate School, is author of The Joy of Freedom: An Economist's Odyssey (Prentice Hall 2002). Charley Hooper hooper@objectiveinsights.com is president of Objective Insights, a company that consults for pharmaceutical and biotech companies. Hooper is also a visiting fellow with the Hoover Institution.


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