Does Earning $34K a Year Really Place You Among the Top 1% of Income Earners in the World?

fake economic statistics, wealth inequality

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Does earning $34,000 a year really place you in the top 1% of income earners on planet Earth? I even heard this statistic when I was working in the financial industry and this statistic was marveled at, with wonder, by many people in my office that had graduated from top universities around the world, as “mind-blowing”, an observation that again proves my argument that top academic pedigree often has no relation to level of intellect. Here is why this statistic is so misleading and really has little weight as far as possessing any meaning whatsoever.

The implication of this statement is the following, and what caused my colleagues to be blown away by this statistic. Compared to everyone else in the world, if you make more than $34,000 per year, then you are earning the same rate as the top 1% of people on planet Earth, so shut up and stop complaining. But this interpretation is just not true, despite the numerous times this statistic has been reported by various organizations and published on dozens of internet sites, for a number of reasons. Number one, this stat never compares apples to apples and oranges to oranges. Most of the people that earn $34,000 a year or more live in modern western nations, with a great deal of people that earn $34,000 or more a year residents of nations like Australia, the United States, Germany, France, Italy, the UK and Canada.  However, if you earn $20,000 a year in Vietnam or Laos, your quality of life is likely going to be far better than an American that earns $34,000 that lives in Los Angeles or San Francisco. Therefore because purchasing power of money varies massively in different regions of the world, the figure of $34,000 is virtually meaningless. Would anyone think of a person that is among the top 1% income earners of all people on planet Earth as someone that is poor? Probably not. Yet if you earn $34,000 in Los Angeles, your quality of life is likely to be among the poor. On the other hand, if you earned $34,000 in Saigon, Vietnam, your quality of life is likely to be much better than someone earning the same amount in Los Angeles.

Secondly, rich people hide their income and much of their wealth, so the true data for the wealthiest segment of the world for these categories is really unknown. This is not speculation but a fact. In 2012, Reuters estimated that rich people had squirreled away $32 trillion of wealth in offshore tax-free havens. By 2020, given that the 1% of the world’s wealthiest have made the largest gains in wealth over any other socioeconomic demographic in the last 10 years, this figure should now be well over $40 trillion. Many have trouble understanding how much wealth $40 trillion constitutes, so let me explain it to you. Nearly half the world’s population earns $5.50 or less. Even if we took the upper tier of this population that earns the top amount of $5.50 a day, and this group saved half of the money they earned, which is an exorbitantly high percentage of savings per earnings, given roughly 253 working days that exist per year, guess how many days it would take for a million of these people to earn not the total wealth of the world’s richest, but only the portion of the wealth that the world’s richest have hidden from tax collectors? Would you guess 25 years, 50 years, or even 100 years?  Even if a million of the world’s poor people saved half their income every day for 10,000 years, they wouldn’t have the same wealth that the world’s wealthiest have squirreled away in tax havens. It would take a million of the world’s people that are in the bottom half of the annual income bracket, 57,492 years of continuous work, saving 50% of all of their earnings just to accumulate the wealth that the rich have hidden in offshore tax havens.

This should give you an idea of how much more wealth the 1% of the wealthiest people in the world have than the poor. Thus it is ludicrous to believe the nonsense statistic that earning just $34,000 a year places one in the top 1% of all income earners on planet Earth, due to the lack of context given this statement. Furthermore, to be among the top 1% of income earners in the United States, of which the majority of the $34,000+ a year earners reside, one would need to earn more than $718,766 a  year in 2017, according to US Social Security data, which speaks to the vast differences in purchasing power in different nations around the world, and the reason why stating a $34,000 annual income places someone in the top 1% of all income earners in the world is an empty calorie, meaningless statement. A second reason why this statistic is so meaningless is because the wealthy often hide their income too, as should be apparent from the likely $40 trillion of wealth they have hidden in tax-free shelters across the world. Thirdly, the fact that the US Census Bureau reported that a salary of $250,000 would place you in the top 1% of all US income earners in 2018, yet the data from the US Social Security administration stated that only a salary more than $718,000 a year would place you in the top 1% of all US income earners the prior year in 2107 illustrates how bogus many of these income statistics may be. The reason I chose the social security income over the US census bureau income level as the more accurate basis of being in the top 1% of all US income earners is because census bureau data reports on self-reporting of income which is far less accurate than data extracted from the social security agency.

Fourthly, the normal bell curve of income distribution that is a sign of a healthy economy has long- been destroyed in place of a hockey stick like income distribution in many developed nations across the world. This means in a healthy economy, which President Trump continually states America possesses, one would have the largest base of middle class income earners with more tapered ends and smaller groups of wealthy and poor, and finally very small groups of very wealthy people and very poor people. However, thanks to the misanthropic effects of fractional reserve fiat currency monetary system, every nation in the world, not just the US, has suffered from a backwards migration of the middle class into the poor that has yielded a growing poor class, a drastically reduced shrinking middle class, and a progression of the wealthy class into progressively wealthier classes and a progression of the uber wealthy into the obscenely wealthy class. This has produced a hockey like income distribution in many nations whereby it has produced a segment of the top 1% of income earners that spans an enormous level of income from highest to lowest. Therefore if one must earn $718,000 a year to qualify for the bottom end of the top 1% of income earners in America, if you are earning $34,000 per year and live in a developed nation, you most likely are struggling economically quite a bit, even though the purpose of reporting the statistic that you belong among the top 1% income earners in the world if you earn $34,000 or more, is to deceive you into thinking that you should not be questioning the global monetary system and to remain obedient to the money masters and bankers that run this world and entangle the world in endless needless wars that kill millions and create millions of more refugees.

According to the Internal Revenue Service, in 2016, the top 1% of US income earners reported more than a cumulative $2,003,000,000,000 of income, meaning that obviously there are literally more than a million Americans that were reporting more an average of $1M of annual income per year, which obviously means that there were then thousands if not tens of thousands of Americans earning upwards of $10M to $50M a year and beyond. Obviously, this means that the top 1% of income earners in the world must range from $34,000 a year at the bottom end to earning hundreds of millions of dollars a year. Consequently, it is insulting to state to someone that earns just $34,000 a year that you belong in this rarefied group of income earners around the world of the 1%ers. To understand that cumulatively the top 1% of American income earners cumulatively earned more than $2 trillion in 2016, consider the enormous difference between a million, a billion and a trillion seconds. A million seconds represents slightly less than 11.6 days, a billion seconds represents 31.7 years and a trillion seconds represents roughly 31,710 years. Another way to elucidate that someone that earns $34,000 a year should not be described as belonging to the top 1% of income earners in the world is to compare his or her earnings to someone that earns $50 million per year, of which there are many thousands around the world that qualify that also belong in the category of the top 1% of income earners in the world. Just to earn the equivalent amount of this other person in one year, that also is a member of the same top 1% income earners category, the person earning $34,000 would have to work 1,470 years and 6-months. Do you really believe it is intellectually honest to include people in the same category that would have to work more than 1,470 years to earn the same income that someone else makes in one year? Of course not.

This again, is due to the obscene inequality of wealth that now exists in the world and the hockey-stick like distribution of income and wealth in nearly every nation in the world. To leave you with one last analogy that clearly delineates the dishonesty of this reported statistic that is intended to deceive people that earn $34,000 a year in developed nations into feeling good about themselves, imagine if the same hockey like distribution existed in an Olympic event like the 100 meter sprint. Imagine if the majority of the world required 16 or more seconds to run the 100 meter sprint, but that only 1% of the entire world’s population could run 100 meters in less than 15 seconds. And you happened to run the 100 meters in 14.85 seconds so you were considered among the fastest 1% of people in the entire world. Do you really think you belong in the same class as Usain Bolt, who ran the 100 meters in 9.58 seconds? You could deceive yourself all you want by telling all your friends that you could run the 100 meters as fast as the top 1% of humans on planet Earth, but that statistic would essentially be meaningless without any context. And this is how we need to view many statistics about income, including the one that earning $34,000 or more a year places you in the top 1% of all income earners in the world.

J. Kim

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