An accounting of net worth that doesn’t have any special treatment of debt will be misleading. As explained in the article xccf links, America has 7.5% of the world’s poorest decile but only 0.2% of the second decile. That’s because those Americans have negative net worth. But it’s definitely not true that a middle-class American with $50K of student loan debt has a lower standard of living than a villager in Kenya who lives in a thatched hut and earns $1 a day, so looking at net worth alone is misleading.
But my figure is not drawing a comparison with the bottom group (a huge fraction of which is in debt and so produces inflated figures). It is making a comparison with the total level of wealth owned (net of debts), including that owned by the rich.
That is, all the assets owned by Americans, minus all the liabilities they owe. That turns out to be a big positive number.
At the moment someone lends money to someone else, it changes none of the results here.
There is nothing misleading about it as an indication of who is earning returns on capital that can be taxed, which is where I then take it.
An accounting of net worth that doesn’t have any special treatment of debt will be misleading. As explained in the article xccf links, America has 7.5% of the world’s poorest decile but only 0.2% of the second decile. That’s because those Americans have negative net worth. But it’s definitely not true that a middle-class American with $50K of student loan debt has a lower standard of living than a villager in Kenya who lives in a thatched hut and earns $1 a day, so looking at net worth alone is misleading.
I understand the issue perfectly and have linked to that same article every year Oxfam releases their comparison of the top 1% to the bottom X% (e.g. https://www.facebook.com/robert.wiblin/posts/666590242695, https://www.facebook.com/robert.wiblin/posts/628116514355).
But my figure is not drawing a comparison with the bottom group (a huge fraction of which is in debt and so produces inflated figures). It is making a comparison with the total level of wealth owned (net of debts), including that owned by the rich.
That is, all the assets owned by Americans, minus all the liabilities they owe. That turns out to be a big positive number.
At the moment someone lends money to someone else, it changes none of the results here.
There is nothing misleading about it as an indication of who is earning returns on capital that can be taxed, which is where I then take it.
Yes, consumption (ideally including the value of public services in the relevant locale) is normally a much more appropriate metric than net worth.
Net worth might be reasonable to use if we could properly account for the value of human capital, but that seems very difficult.
Appropriate metric of what? It is a measure of how many resources can be taken away from someone that year.
But it is not of where the 1/3rd of GDP that goes as returns to capital is being paid, which is the topic of this post.
Agree with that. I should have been clear that I think your post is one of the cases where looking at wealth works pretty well.