The US isn't the only country that has a problem with income inequality. In fact, throughout history it is typical for 80% of all wealth to accumulate within the hands of 20% of the people in any society. Why is that? Does four-fifths of all talent and motivation reside within a mere one-fifth of the people? Two Italian physicists, Alessandro Pluchino and Andrea Rapisarda, and the economist, A. E. Biondo, set out to find an answer for this vexing question. They created a computer simulation of a hypothetical economy and created a virtual population to inhabit it. Each simulated person had a certain amount of valuable skills, with typical proportions of highly skilled to low skilled persons. And,to account for the effect of blind luck, each person would randomly experience good and bad luck events over the course of his/her simulated 40-year career. The computer program was run numerous times, and again and again the same result occurred: those persons who wound up with the most money were not the most talented but rather the most lucky. It was those who had enjoyed the most good and the least bad luck who did best. “The maximum success never coincides with the maximum talent, and vice-versa” the researchers concluded. What factor, then, is responsible for the 80/20 rule? “Our simulation clearly shows that such a factor is just pure luck,” said Pluchino and company.
Stop and think for a moment about the implications of this study. For Americans it is an unwritten, unspoken article of faith that we live in a functioning meritocracy in which people are rightfully rewarded for their talent,intelligence, motivation, etc. We tend to believe that there is an inherent 'fairness' to life—everyone starts off equal, and success or failure is mainly the result of their qualities. He who 'works hard' will do well, because he deserves it. We believe that for the most part a person's fortunes are directly proportional to the person's virtues. And that while good luck never hurts, it is surely a secondary factor at best. But that is not what this experiment showed. Blind luck, not talent or anything else, is the single most important factor in getting rich. Some people simply guess right, or stumble upon opportunities, while most do not. By implication, one would need to be born in the right place, the right family, the right class, and the right race in order to have a maximum chance at success. But a person does not get to choose where he or she will be born—that is a matter of luck.
We are basically a society which rewards lucky people for being lucky and punishes unlucky ones for being unlucky, all based on the mistaken belief that surely good people will be rewarded for being good and anyone else has only themself to blame for their ill-fortune. How did such a belief come about? I suspect that we Americans mistook our good luck at essentially being presented with an unspoiled continent to do with as we chose as a sign of divine approval of our beliefs and values. Who wouldn't want to interpret personal success as not just good luck (you don't get credit for being lucky) but as also a sign of personal virtue? But the end result has been that we have the most unequal distribution of wealth of any country in the developed world, and it is steadily getting worse. We have overestimated the degree of control which a person has over his or her fortunes, and underestimated the effect of forces beyond our control. We believe that wealth is being distributed in a fair and reasonable manner, when in fact it is largely a matter of chance. And while those who have gotten lucky think more highly of themselves than they should, those who do poorly often mistakenly believe that they they are getting what they deserve and blame themselves. That, I suspect, is one reason why depression and anxiety are so commonplace in modern-day America.
There are, however, signs that cracks are beginning to form in our long held belief that wealth is automatically distributed fairly and appropriately. Forty years of stagnant wages, and a sinking standard of living have shaken the belief of many Americans that hard work necessarily leads to success. One cannot help noticing that those who work the hardest often languish in poverty while those who do little work at all often enjoy untold wealth. To young Americans, socialism often seems more attractive than capitalism, because they have never enjoyed the bounty of 'The American Way' and there is little reason to believe that they ever will. If wealth is being distributed largely by chance, shouldn't something be done to make the distribution more equitable and fair? Nothing will change until we realize that our assumptions regarding wealth distribution are based on little more than a myth.
