People keep telling me that the top 1% own some large chunk of the wealth – and that this is obviously unfair. And hey, it might be. But I think the conception of wealth that is being used here isn’t really appropriate.
The wealth that is being looked at is the asset value of these people – so this tells us the expected discounted sum of profits from this physical capital. Fair enough.
However, what we are missing is human capital – we can’t really compare “wealth” levels unless we look at all forms of capital. As a result, we need to add in the expected discounted sum of labour income into peoples measured “wealth” before we can start to make any sort of comparison. I suspect that this may change the story somewhat …
The thing here is that, we may feel that a lot of physical capital is “owned” by too few people – but the requirement of labour in this case implies that the surplus created by the physical capital will be shared between workers and capital owners through profits and labour income. We can’t just look at one side of this and bemoan it – we would need to show that there is some type of issue in the wage bargain between workers and capital owners AND we would need to use a measure including human capital to get an idea of the true distibution of capital. Once we have done that we can start throwing around our value judgments – but the current case is merely being cherry picked to fill a narrative that wealth is too concentrated (which is may be), without fully putting together the case.