Sometimes called the "normal distribution" or "Gaussian distribution", the bell curve is a mathematical way of representing a distribution of data, usually fairly symmetric around the mean, or average, value.
For example, the height of human males is represented well by a bell curve. There are roughly as many people taller than the average as shorter. And the further you get from the average height, the fewer people there are at that height. The example to the right shows one such sampling and even with limited data points, you can see the classic shape of the bell curve forming. The bell curve can be found everywhere in nature and seems to be a fundamental characteristic of our universe.
Now, what does this have to do with politics? These days, it seems to have quite a lot. The bell curve stubbornly opposes a fundamental ideal of today's liberal left: equality. Equality is not a natural consequence of the world. Some people are smarter than others. Some work harder. Some are more attractive, more athletic, more articulate. And each of these qualities affects a person's likelihood of succeeding in life.
My impression is that liberals spend most of their life fighting this fundamental truth, one that is woven deeply into the fabric of our world. Even with historic examples of countries like China, Cuba and the Soviet Union, countries that went to great length to fight the bell curve, liberals continue to believe that this dream is somehow achievable.
The particular bell curve that probably upsets liberals the most is one that plots individual wealth. In a free nation, the natural result of economic activity yields a few poor people, a few rich people and a lot of people somewhere in the middle. This is clearly the case in the US and other mostly-free nations. In nations where economic liberty is diminished, the distribution of wealth is quite different: a lot of poor people and a few very rich people with not much in the middle. Socio-economic mobility is also mostly absent without liberty ... if you weren't born with wealth, you likely will never experience it.
What is revealing and tragically amusing is that liberals talk about changing the shape of a free nation's bell curve by eliminating poverty, however most of their actions are aimed at the rich. As if destroying, confiscating or redistributing the wealth of the rich will redefine the bell curve to just a big lump in the middle. They fantasize about eliminating the wealthy and the poor in one swoop, leaving only a happy egalitarian society wearing sandals and driving hybrids.
Michael Moore recently proposed confiscating the wealth of the 600 richest Americans (a few hundred billion dollars) in order to pay for the deficit and allow more government programs for the poor. This is exactly what Fidel Castro did in 1959 and the result was the destruction of a people who have yet to recover. But history aside, what exactly would the government do with Microsoft? Most of Bill Gates' wealth is in the form of stock in the company he founded (sometimes I think liberals believe his money is just piled up in a vault somewhere, just sitting there being evil). What are the consequences of taking more and more money from the rich? Answer: they become less able to create the wealth that the middle and poor desperately need. Do it a little and you get the US. Do it a lot and you get Italy. Take it to the extreme and you get Cuba.
The bell curve is not a starting point for social engineering. It's not a dial you can turn from Washington. The enlightened, intelligent liberals with such wonderful intentions would be more effective if they applied their abundant energy elsewhere. Mentor an inner city child, donate to a scholarship fund, open a business in a poor neighborhood, become a foster parent, ignore Michael Moore ... the list is long.
Unfortunately, wealth doesn't follow a bell curve, it follows the L-shaped Power Law: http://en.wikipedia.org/wiki/Power_law.
ReplyDeleteI'm not sure if that comment was intended for humor or real argument. The bell curve and the power law are two very different ways of looking at similar phenomenon. Namely, there is a typical number around which a high frequency occurs while the farther you deviate from the norm, the less frequent the event.
ReplyDeleteThe Power Law when applied to wealth would say something like "20% of the people hold 80% of the total wealth". But if you are not looking at the total area under the curve but just the POPULATION along a curve of net worth, you would find something more like the bell curve.
The Wikipedia article specifically puts forth earthquake magnitude as an example of the Power Law. If wealth were the same way, 80% of the population would be "poor". This isn't the case in the US or any of the first world nations unless you radically change the definition of poor.
The real winning element in free market capitalism and free society generally is the measure of one's ability to move oneself along the wealth curve. Try to do this in Cuban society.
As GoIllini mentioned, the fact that a small percentage of people control a large percentage of wealth doesn't change the fact that it's still a bell curve. The studies I've seen do show the curve being somewhat asymmetric on the right side, and vary whether you're plotting wealth or income, but historically we've had more of a true bell curve in the US than in other countries, especially the ones that do not enjoy economic liberty.
ReplyDeleteThis is a key point: we're better than other countries. The less free a nation becomes, the less symmetric the bell curve. There are only very few, very isolated exceptions to that rule (possibly Norway or Sweden, homogenous nations with socialized natural resources).
Also, note that I said that in a free nation the natural result of free economic activity yields a bell curve. We are not fully free, therefore our bell curve exhibits asymmetry. For example, the doctor's union, the AMA, ensures that doctors are rich. There are many, many situations in the US where laws protect a well connected individual or group and thus skew the bell curve (a blog post on this topic is upcoming).
"Somewhat asymmetric" is an interesting way to describe it. If the x-axis is "Net Worth", the minimum would be zero, or some amount less than zero, say -$100k. The maximum would be approximately $59B. Since median net worth is around $86k, the center point of your bell curve should lie there. Now lets use a football field as an analogy. If -$100k is the goal-line at one end and $59B is the goal line at the other end, the median net worth and centerpoint of the curve would lie 5.27 one thousandths of an inch (.00527") from the first goal line. That does seem somewhat asymmetric.
ReplyDeleteIf including the maximum value seems too extreme, lets use the 90% percentile as our max instead ($833k) and zero as our minimum (we'll exclude the top 10% of the richest people and some percentage of the upside-downers). Again using our football field analogy, even excluding the top 10%, our median point is still only on the 10 yard line.
Without malice toward your point of view, you chose a lousy statistical framework for justifying it. -rj
RJ,
ReplyDeleteYour numbers are sound, but miss the point. Of course the tail to the right is going to be long ... the left is limited by zero and the right goes to infinity. The term "somewhat asymmetric" certainly applies when you look within 4 or 5 sigma deviation. That you focus on the far right hand tail containing a handful of ultra-rich outliers is somewhat related to the third to last paragraph of the article.
The fact that someone can get very rich by innovating and freely trading that innovation with other free people should be celebrated. The fact that our median household income is healthy (over $50,000 per year) and that there's a big crowd around that median (thus the bell curve shape) should be viewed as a sign of a great nation. The fact that the average American family can afford to go to DisneyWorld for vacation should be applauded. The fact that this is largely due to capitalism and the free market should be respected.
(should have included these points in the original article, darn it!)
Understanding why you and other smart people disagree is at the heart of my motivation to write these articles.
It comes down to class warfare attitudes. "That one guy over there is ridiculously wealthy. If I just a had a small percentage of what he has, then I'd be happy". Modern liberalism in America is the exercise of that urge. The fact is that there are Haves and Have Nots, regardless of the system of government. You cannot legislate this away as has been proven over and over again in many ways through history. I personally believe that every one of the Haves has a moral obligation to be generous with the spoils of their accomplishments. But, I am not willing to force them to at the point of a gun.
ReplyDeleteWhere you see a system broken is in the third world in which there are Haves and Have Nots, but the Haves stack the deck so that they are perpetually in the driver's seat. The Have Nots have no chance to improve their situation significantly. In these countries, which family you were born to matters more than your skill and competence. That is wrongly perceived as "capitalism". Aristocracy vs. Meritocracy.
Sam Walton and Bill Gates are two shining examples of our meritocracy that should be celebrated and not vilified as they seem to be. You CANNOT do what they did in 90% of the countries of this world because they are not truly free.