Americans don't understand capital wealth
The human mind was not made to grasp just how rich the rich are.
At a casual glance, the chart above probably looks like an ordinary graph of wealth inequality in the United States. It captures all kinds of crucial trends that define economic life in this country — for example, that the bottom quintile has negative wealth (they’re in debt), and that 45% of the country are making less than the national cost of living.
If you’re a socialist, meanwhile, you might wonder: where is the ruling class? Clearly wealth on this chart is extremely unequal, but it doesn’t seem like there is any intuitive place to draw a line. Liberals often criticize Marxists by pointing out that most people in the US own capital, and from this chart you can see that this is basically true; but the chart also shows us that most people aren’t making much on the stock market at all. Can we say that you’re the bourgeoisie when you are making enough on your stocks to stop working? Perhaps, but the green line only tells part of the story; you aren’t exactly the ruling class if one unexpected emergency bill can instantly send you into bankruptcy. What if we draw the line where extremely rich people are earning more on stocks than they are on wages? That’s also plausible — but as Branko Marcetic often points out, capitalists are commanding such high salaries these days that this has become a major component of their net worth.
At a casual glance, these are the kinds of questions you might ask. But if you look a little closer at the graph, you’ll notice something strange: neither axis is linear. The Y scale grows first in $20k increments, then in $200k increments, then $2m increments, and finally in $60m increments. The effect, then, is to take a very close look at people who have less than six figures in wealth, and then to wildly distort the rate of growth in upper wealth ranges. The X axis, meanwhile, proceeds in ten percentile increments until the very end, where we zoom in on the top 1%, and then the top .01%, .001%, and .0001%. This also has the effect of distorting just how wealthy the wealthiest Americans actually are.
But there’s a reason I distorted the graph as I did. Here’s what a linear graph of the US economy actually looks like:
When we look at the data this way I don’t think it’s very hard to figure out who the ruling class is. They’re the giant blue spike in the top 1% — the people who are so rich that every other trend in the US economy is relatively microscopic.
Capitalist ideology has a whole arsenal of justifications for economic inequality: the rich just work harder than everyone else, they contribute more to society, violating private property rights for the sake of redistribution is counterproductive and immoral, and so on. While the public seems to accept these ideas intellectually, however, the justifications that resonate the most are the ones that maintain the possibility of upward mobility and economic leveling through the market. Past studies have shown that even Republicans and even the rich prefer a distribution of wealth that is far more equal than the distribution that actually exist. Randian narratives about the irrelevance of inequality and the entitlement of the rich may have currency among an unusually loud set of Silicon Valley oligarchs and radicalized libertarians, but among the broader population the capitalism’s load-bearing ideological narrative seem to be the ones that let people hope for a more equal society.
This, I suspect, is why the chart above has always been my surest foot in the door when talking to people about socialism. Another research finding that has been replicated on multiple occasions is that the general public radically underestimates just how unequal our economy has become. And the primary reason for this, according to a 2024 study, is that most people wildly underappreciate just how rich the rich actually are. In that paper, the authors find on average Americans tend to underestimate extreme wealth by five orders of magnitude.
There are multiple reasons for this. One reason for this is what the authors call scope insensitivity:
The mechanisms underlying scope insensitivity suggest that instead of the quantity of a target object (e.g. the exact amount of dollars owned by a rich person), the affect triggered by the prototypical image of the object (e.g. a rich person) conveys meaning to individuals (27, 31, 32). As a result, an additional amount of income in upper echelons of the income distribution may trigger a weaker affective response than the same amount of additional income in lower parts of the income distribution. That is, from the perspective of an observer, a person earning $1.3 million—the average income of the richest 1% of the US population (44)—is seen as less different from a person earning $1.4 million than the same absolute difference at lower income levels, for instance, between $50,000 and $150,000$.
We do not appreciate how rich the rich truly are, in other words, because the cultural signifiers of extreme wealth — yachts, wardrobe, mansions — look a lot like the cultural signifiers of ordinary wealth. Mathematically, politically, and economically their situations are actually quite different. NBA legend Allen Iverson famously blew through most of his fortune in just ten years by obscene amounts of money on nightclubs, luxury goods, and his entourage; but living that exact same lifestyle it would take Jeff Bezos 10,000 years to spend all of his wealth. Allen Iverson can afford to attend expensive silver plate fundraisers for a political campaign; Jeff Bezos can afford to start his own party.
A related but distinct explanation for “scope insensitivity” simply has to do with our cognitive ability to understand large numbers. Humans are very good at understanding smaller numbers and how they relate to each other, but when numbers get too big we start to lose perspective and have trouble grasping their sheer magnitude. This is a problem one encounters in other scientific fields like cosmology a lot: the human mind can easily grasp the concept of 4 and even 40 stars, but cannot even begin to conceptualize the roughly 4,000,000,000 stars that may inhabit our Milky Way galaxy. One proof of this is that even readers who are well-informed about cosmology probably didn’t notice that the above figure is incorrect: we have 400,000,000,000 stars, not 4,000,000,000 stars. The reason you didn’t notice this is that at a certain point your brain just looks at these numbers and thinks “that’s a lot of zeroes.”
Popular science writers are fond of using thought experiments and analogies to help readers understand massive numbers, and this is a habit that socialists would do well to cultivate as well. Imagine for example if we stacked the median American’s personal wealth in dollar bills. It would be about 69 feet tall, or the height of a typical medium-sized tree, which at first glance seems quite impressive. But with some careful math and considerable help from Photoshop, I’ve created a visualization of what this would look like if we did the same thing for Elon Musk:
Stacked as dollar bills, Elon Musk’s estimated wealth would literally extend well into outer space, 57,700 miles above the surface of the earth and about a quarter of the way to the moon. Even when we illustrate it like this the brain simply cannot grasp ranges of wealth that approach the $1t mark, but the visualization is striking enough to seriously challenge modest conceptions of what wealth in the 21st century really means.
Scope insensitivity is a serious and underdiscussed1 obstacle to understanding wealth, but I’d like to conclude this post by drawing attention to a point that has otherwise gone unremarked. Earlier we noted that Americans tend to underestimate how rich the rich are by about 80%. That means that if we compare the wealth composition the richest Americans to this popular estimate of their total wealth, we get something like this:
Though their correspondence is not exact, I think it’s at least interesting that the public’s estimate of the wealth of the rich is in the same order of magnitude as their non-stock wealth that the richest Americans actually hold. It’s the capital holdings of the rich that turn the public’s significant overestimate into an extreme underestimate.
It is capital, in other words, which accounts for the most egregious scope insensitivity problems that distort our understanding of the rich. If the wealthiest Americans had wealth in the $37m-87m bracket that would put them right in the wealth range of your typical NBA All-Star, somewhere between Klay Thompson and Draymond Green. This level of wealth is still extraordinary, but it is one that Americans seem to comprehend much better — in part because they have a grip on what the lifestyle of an NBA player is like, and in part because the numbers involved are easier for our brain to work with.
If socialists want to build class consciousness, we need to build a cultural intuition about extreme wealth that is categorically different from the lifestyle of basketball players. The release of the Epstein Files has played an important role in this regard, because it has given Americans a glimpse into a world that is very different from the world we are familiar with. And most Americans, I think, will find the world they live in to be utterly repulsive: it’s one where laws and basic moral norms are violated with impunity, where elites are sheltered from inconveniences so trivial that it wouldn’t even occur to you to think of them as inconveniences, and where the rest of humanity is generously regarded as cattle. Socialists need to shine a brighter light on the lives of the ruling class, but to do that we need to first build an understanding of just how rich the rich really are.
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I have another piece coming that talks in a more general way about this relationship between the cognition of magnitude and the economy.