The top 1% is often portrayed as a fixed income group. It is not - it is the high end of a household income distribution, one that includes different households from year to year. So it doesn't really make much sense to talk about "the 1% and the rest of us". Most households, in the US at least, have a high income moment, transitory though it may be. For instance, according to Mark R. Rank at Washington University, 12% of US households will reach the top 1 % of income earners at least once, 39 % will spend time in the top 5 % of earners, 56 % will be in the top 10 %, and a whopping 73 % will spend at least a year in the top 20 % of earners. And according to the Tax Foundation, during the period of 1999-2007, 50% of Americans who earned over $1 million did so just one year. Another 15% managed just two years over that period.
Ok, so I tell this to my inequality warrior friends and those who grudgingly accept the general principle (if not my specific figures) will still say something to the effect, “wealth matters much more than income anyway”. And then they point out the super-rich own the lion’s share of wealth in the US and the world. In case I’m not sufficiently outraged, they’ll send me a chart to drive the point home - something like the following:
The implication being if we just redistributed a bunch of that wealth, the war on poverty would be over! Is that so?
To answer the question, we have to consider what wealth is and what it does. Next.