Iron fences just aren’t for everyone

News item: U.S. census data show that the income gap between the richest and poorest Americans grew last year to the largest margin ever.

– Associated Press

Lately, we’ve been hearing a lot about the growing gap between rich and poor. But is this really such a bad thing?

All depends on which side of the gap you’re on. For the poor, granted, it’s not so hot.

Not only are the poor bound to become even poorer, they also have to stare through the iron fence into the gated community and watch the rich install new heliports for the daily commute.

It’s also not so hot for the middle class, or what’s left of it, since the middle class ends up drifting to one side of the gap or the other. That’s almost always the poor side, because the rich side is simply much harder to drift into, what with the iron fences and all.

But how does this look from the rich side of the gap? Pretty darn nice.

That’s what people forget when moaning about the growing gap between rich and poor. They go on and on about the unfairness of it all, but if you are in the top 1 percent, there is no downside.

Look at it from their standpoint. One of the great things about being on the rich side of the gap is that it’s like an exclusive club. If the gap were smaller, the club wouldn’t be so exclusive. Standards would decline, the club would get crowded, you’d have to hobnob with people you don’t like and it would be harder to get a tee time.

Even if you are only in the top 20 percent of earners, you may have trouble finding a downside. The top 20 percent – those making more than $100,000 – made almost 50 percent of all U.S. income in 2009. Many are actually making more money than ever, even during the Great Recession. Those making $180,000 per year saw their incomes go up.

Meanwhile, those in the lower 50 percent – households earning about $50,000 and below – were headed, unfortunately, in the other direction.

But in wealth-gap terms, even $100,000 a year is chump change. The only folks really enjoying this gap are those in the top 1 percent or even the top 0.1 percent.

Here’s a statistic that’ll blow your mind (courtesy of the Institute for Policy Studies): The 400 richest people in America have a combined net worth that is almost as high as the combined net worth of the lower-earning 50 percent of Americans combined. That’s more than 150 million Americans.

So there’s your rich-poor gap in a nutshell. I’m sure this bothers those 150 million Americans way more than it bothers those 400.

It is, after all, the natural order of things. All we have to do is look at the historical record to see plenty of precedent. Lots of societies have had large gaps between rich and poor.

For instance, there was France in the 1780s. There was a huge gap between the aristocratic rich and the unwashed poor. But did that mean the rich had a problem? Absolutely not. It just meant the aristocrats could buy nicer snuff-boxes and whiter powder for their wigs.

Around 1789, I will admit, this gap began to create a few small problems for the rich. There were some uncomfortable moments, several uprisings, a few guillotines.

Yet these problems have a way of solving themselves. By the 1790s, the gap between rich and poor began to narrow, partly because there were fewer rich (see “guillotines,” above).

But let’s not dwell on the 1790s. There was nothing but fun over on the rich side of the gap in the 1770s and 1780s.

And isn’t that a better analogy for today?