Concentration

Washington Trust helpfully tells us: "Effective financial coordination and management is the ultimate work product of a successful family office. Planning and follow through—short-term and long-term—can improve a family's overall financial legacy and maximize the advantages of its assets." What they are really saying is don't pay taxes.

Fair is fair but unfortunately in the United States it is not: according to the Survey of Consumer Finances (sponsored by the Federal Reserve), wealth is concentrated in the hands of a small number of families. The wealthiest 1 percent of families owns roughly 34.3% of the nation's net worth, the top 10% of families owns over 71%, and the bottom 40% of the population owns way less than 1%.

The distribution of wealth is much more unequal than the distribution of income, especially when focusing on the bottom 60% of all households. The bottom 60% of households possess only 4% of the nation's wealth while it earns 26.8% of all income (Data for 2004). Lest you think it is mobility that counts, this debunked by Stanford and other research which shows movement between quintiles more or less static : where you are born is mostly where you will stay in America.

And so I wonder: which is a better measure of societal inequality - wealth or income? Here is what (the discredited) Alan Greenspan said: "Ultimately, we are interested in the question of relative standards of living and economic well-being. We need to examine trends in the distribution of wealth, which, more fundamentally than earnings or income, represents a measure of the ability of households to consume."