I think this probably isn’t right—e.g. capital income is a minority for the top 1% of earners in the US today, and the situation is even starker for global inequality.
That’s surprising to me. Where does most of the income of rich people come from, then? Can you point me to some relevant resource?
One thing I would like to figure out is whether this can be explained by businesses restructuring so that some of the rich people who used to be owners getting dividends are now company executives getting salaries—but the salaries are still set mostly by themselves to benefit themselves, out of proportion to the value of their work to the company. Directors or board members often also get salaries, again for very little work in most cases.
These are things that might be colloquially called ‘capital’. Jeff Bezos has a total compensation of 1.6 million; that is indeed a tiny part of his net worth, but I still think of it as “Jeff Bezos is a capitalist who is making money from the successful business he owns”, not as “Jeff Bezos is being paid for his talents as a CEO”. I don’t care about the distinction from the income he gets from Amazon dividends, shares, or his salary as a CEO. But then I’m not an economist; perhaps these are really significant differences that I should care about.
That’s surprising to me. Where does most of the income of rich people come from, then? Can you point me to some relevant resource?
I think it’s mostly wages.
Might be misreading, but see table III here (h/t Howie Lempel for the source). Looks like even the top 0.01% is still <50% capital income.
[Edit: though in the past the capital shares were higher, in 1929 gets up to 50% of income for the top 0.1%.]
There are various ways this data isn’t exactly what you want, but I still think it’s very unlikely that it’s more than half capital income.
Thanks, that’s informative.
One thing I would like to figure out is whether this can be explained by businesses restructuring so that some of the rich people who used to be owners getting dividends are now company executives getting salaries—but the salaries are still set mostly by themselves to benefit themselves, out of proportion to the value of their work to the company. Directors or board members often also get salaries, again for very little work in most cases.
These are things that might be colloquially called ‘capital’. Jeff Bezos has a total compensation of 1.6 million; that is indeed a tiny part of his net worth, but I still think of it as “Jeff Bezos is a capitalist who is making money from the successful business he owns”, not as “Jeff Bezos is being paid for his talents as a CEO”. I don’t care about the distinction from the income he gets from Amazon dividends, shares, or his salary as a CEO. But then I’m not an economist; perhaps these are really significant differences that I should care about.