The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1934-11-07
ECONOMIST SEES NO
BASIS FOR CLAIMS
ON WEALTH, income
Says 4 70 impossible to Tell
How Either Is Distributed
In America
By HERBERT b. DORAU
Associate Professor Of Economics
New York University

new XOfk Unlvef81ty
Careful and competent economists
are cautious about drawing conclusions
as to the distribution Of our national
wealth and income. Even after ex-
tended study Of the most reliable facts,
experienced students regard their
findings as tentative and approximate.
This is as 1t should be in dealing with
facts so difficult Of accurate ascer-
tainment and 50 dangerous to social
solidarity, particularly in times such
as these.
Unfortunately similar restraint does
not characterize all public utterances
dealing with this difficult question as
to how our wealth and income are
divided and even more unfortunately
the public is not In position or dis
posed to recognize authoritative con-
illusions. It is reported that cabinet
member recently stated that two per
cent of the people own 80 per cent OF
the wealth of the United States. From
another source we are told that one
per cent Of the people own 60 per cent
of the wealth. It Is difficult to refute
such statements since there is no Of
ficial or authoritative source Of facts
from which such conclusions can legi-
timately be drawn. We know little
enough about the distribution Of in
come and unfortunately even less
about the distribution of wealth. Ger
tainly the evidence is insufficient to
justify such conclusions.
Public Naturally Confused
The public is excusably confused and
naturally believe the statements that
are III line with what, at the moment,
they should like to believe Is true. It
is doubtful whether any great number
of casual readers even clearly dis
tinguish between the distribution Of
wealth and the distribution Of income.
In addition to distinguishing between
the annual flow Of income and the
fund Of accumulated wealth, 1t Is nee
essary to understand the difference
between the ownership OF wealth and
control Of wealth. The modern cor
poration and highly developed credit
system make 1t possible to control
much more than one owns. While this
Is highly advantageous and likely to
create problems Of another sort, there
Is, however, no necessary direct rela-
tlonship to the distribution Of the
ownership Of wealth.
The way in which the total national
income Of 4 people q distributed q
far more important than the way in
which the accumulated fund of wealth
is distributed. Similarly, the distri-
button Of ownership Of wealth IS far
more important than the distribution
Of control. Thus it is fortunate that
control is more concentrated than
ownership and ownership more con-
centrated than income. It is unfor-
tunate. however, that the layman can
be led to confuse these three measures
and to attach undue significance to
the less important. This Is no doubt
due to the fact that the more striking
statement can be made about concen-
tration Of control and the distribu-
ton Of ownership and because the
worst impression is carried over to ap-
ply to the measure of the greatest I'M
portance, namely the distribution Of
income.
Classifications Change
In = recent estimate of the distri-
button Of income. Col. Ayres finds that
10 per cent Of the people probably
obtained as much as 34.6 per cent Of
the total income while 50 per cent OBJ
tained 74.6 per cent OF the total In.
come. One aspect Of income distribu-
ton which is rarely recognized is the
tact that the same people do not neces-
sartly for long appear in the same
classification. An averaged distribu-
ton over five or ten year period or
through the ups and downs Of BUSH
ness cycle would no doubt disclose q
very different picture.
In Americas Capacity to Consume"
recently published by The Brookines
Institution, the authors after careful
analysis conclude that 80 per cent Of
our national income went to reward
labor Of all classes. and 20 per cent to
the reward Of past savings, as Z return
for the use Of capital. A little simple
mathematics will demonstrate that the
important problem still Is the distri-
button Of currently earned income, no
matter how unevenly ownership or
control Of the result Of past savings
may be distributed. Income Is q bet
ter measure Of economic position and
prosperity than wealth. Income can
give satisfaction directly: wealth, In 4
large way. affords only the means Of
production