80-20 Rule

Most people have heard of or familiar with the 80-20 Rule. According to Wikipedia, the 80-20 Rule, also known as the Pareto principle, the law of the vital few, and the principle of factor sparsity, states that for many events, roughly 80% of the effects come from 20% of the causes. Business management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population. He then carried out surveys on a variety of other countries and found to his surprise that a similar distribution applied.

In his article “Who Rules America: Wealth, Income and Power, posted September 2005 and updated March 2012, G. William Domhoff observed that as of 2007, the top 1% of the households in the United States owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5% which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). These numbers are similar world wide. In terms of Business Equities (ownership), in 2007, the top 1% hold 62.4% and the next 9% hold 30.9% which means that the bottom 90% own only 6.7% of businesses. It is really startling to compare actual rates of increases of the salaries of CEOs and ordinary workers; from 1990 to 2005, CEOs pay increased almost 300% (adjusted for inflation), while production workers gained a scant 4.3%.

So what does all this mean? Of the approximately 313 million people in the United States and of the approximately 7 billion people in the world, 250 million people in the US and 5.6 billion people world-wide “have something in common,” we are a group of people that collectively own only approximately 15% of the worlds wealth. These numbers are 100% diverse. It makes no difference what country you are in, the type of government you are under, your age, your gender, your color, your race, your ethnicity, your culture, your intelligence, your health, your education, your religion, or your politics, we are all tied together with “that fact.” You can’t blame the wealthy, the top 15% to 20% from wanting to keep what they have and get more, but you also can’t blame the 80% on the bottom side from wanting to get a bigger piece of that huge pie that is controlled by a few.

What would happen to people world-wide if we didn’t have the big disparity between the haves and the have-nots? What would happen if the gap was say 65% – 35% instead of 80% – 20%? Would we have the same kinds of problems that we have right now if that were the case? Would people have a different perspective on issues like war, poverty, immigration, hunger, health care, disease, homelessness, and starvation if the wealth was more balanced? Would we approach these issues the same way that we do now? Would we operate the government the way we currently are now? Would we be politically polarized as we are in the US are right now with our two choices operating from ideologies? Is it worth looking for ways to change that balance of wealth? Could we really do anything about it? If we consider only “the facts,” the have-not’s (80% of the population) outnumber the haves 250 million to 63 million in terms of people. That seems like a lot of horsepower if people were converted to votes. If the people decided to design a system that worked better for more of us than the current one does, it’s possible we could change some things. “If it is possible, we can make it happen!”

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