We all know about the 1% of people who hog the majority of the world’s wealth. We all know that across the political spectrum, people are worried about rising inequality. Much of it is explained by an era of tax reductions, increasing returns to specialised skills and a fall in the fortunes of manual labour.However something else is going on which can’t be explained well enough by economists so the physicists have had to step in.Physicists are the go to when it come to solving really big problems about our existence. From Newton's calculating the trajectory of the planets and quantifying gravity down to the Higgs boson which allows us to account for mass or something like that.BTW if you want an accessible introduction to physics and other big science check out the Comedian Ben Milers book “It's Not Rocket Science”. That’s the other half of Armstrong who abandoned a PhD in particle physics to make us laugh. However, physicists generally make us think and a recent new science feature on inequality made me think more.1. The 1% percent is a bit of a diversion it’s better to think of the 5-10 %. That corresponds to a lot of the better paid and though the gap between someone earning £60,000 and someone earning 20,000 is significant it’s not as skewed.
2. 100 years ago physicists showed that the broad income curve for that 5-10% is different for the rest of the population. Most people’s incomes behaves like a gas in (where they are so close together they bump into each other often enough for them to lose some of their income). The richest 5 to 10%. Have always separated off like a separate cluster since the dawn of civilisation.
3. The surprising explanation is that the richest 10% are those most likely to save. That is they don’t merge their wealth in with others but preserve it. An interesting finding but not the whole story.However if a whole cluster of people can “preserve” their wealth because it isn’t dissipated by taxation, then no wonder they can save.(New Scientist 4th Aug 2012)Next post on Thursday: Soft Skills, Stop the Soft soap
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