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Downton Abbey economics

from David Ruccio

Henry-Talbot-and-Lady-Mary-Crawley

If you watched the Downton Abbey Season 5 finale, you will have seen the elaborately staged grouse shoot:

The bird shooting party is an extraordinary example of what life is like for these fortunate silver-spooners. They have helpers to clean their guns and prepare their guns. They have helpers to carry their guns to the field and to quickly reload for them after they shoot. They have helpers to beat the bushes and scare the birds into flight above their heads. And once the birds have been shot out of the air they have dogs to retrieve them from the fields.

Anything else we can do for you, chaps? Why yes. Once the unlucky birds are brought back to the house, it’s up to Mrs. Patmore and the cooks to clean and prepare them and serve them up as a delicious dinner. It’s amazing how much you can get done when everyone else does it for you. That’s a secret the rich have always tried to keep to themselves.

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As it turns out, those scenes are a good way of understanding the mechanisms behind James Kwak’s chart of wealth distribution in the United States:

Imagine all the families in the United States lined up from left to right along the X-axis, from poorest to richest; the red line shows the total value of (almost) everything they own, minus their debts. All household wealth is represented by the area under the red line. The problem with understanding this picture, however, is that the red line is indistinguishable from zero for the vast majority of the population—all the wealth is crammed into the right-hand part of the chart.

Indeed! Those at the very top today have figured out what those who lived upstairs in Downton Abbey knew almost a century ago: it’s amazing how much wealth you can come to own when everyone else creates it but ends up owning very little of it.

  1. rddulin
    March 3, 2015 at 6:42 pm

    What is amazing is how poorly debt-issued money keeps score.
    It would be the same with a debt-issued academic grading system.
    What would happen if you could pay your teacher to issue your grade before you took the class or passed the necessary tests.
    Qualification in a given subject certainly has a time value similar to the time value of money. The teacher should be a good judge as to whether a student could fake proficiency in any subject.
    Then there would be borrowed grades in circulation with earned grades creating grade inflation.
    The lenders and the borrowers both prosper.
    The students that earned grades only worth a fraction of the effort put into earning them.
    The moral is that no score keeping medium can be lent and still keep score accurately.
    Can’t have both, sorry.

  2. sffein
    March 3, 2015 at 11:21 pm

    But they were SO happy doing all those things. Except Daisy … but Miss Bunting infected her with socialist ideas.

  3. Herb Wiseman
    March 4, 2015 at 2:01 pm

    Linda McQuaig illustrated this same point in the 90s with a parade metaphor passing a viewer during one hour. While I do not remember the details, there was nobody to see during the first 20 minutes or so and then, after that, the figures were very small. It was only in the last minute or so that the giants as tall as the clouds passed the viewer.

  4. March 7, 2015 at 10:15 am

    i wonder why economists are always concerned about wealth inequality when it is clear that resources can never be distributed evenly.i think its high time economists start teaching the truth that inequality is normal and proffer ways for people to manage and maximise the little resources they have

    • rddulin
      March 7, 2015 at 1:27 pm

      Economists taking notice of wealth inequality is a first step in the understanding of real world economics. Different people will obviously have different levels of wealth. The key to understanding an economic system is understanding how some people, undeserving of wealth, acquire it from people who have earned it and do deserve it.

    • John McDonald
      March 9, 2015 at 5:16 pm

      “inequality is normal,” but that “is” statement does not lead one to the statement that inequality “ought” to be normal.
      “inequality is normal,” but that does not mean that increasing inequality is normal or ought to be normal.
      “inequality is normal,” but in thousands (millions?) of ways human beings find it morally desirable to limit it and sometimes make equality the norm by instituting various laws, rules and regulations. From just about every sport with rules, to highway safety regs., to food and drug safety, to workplace safety to … inequality of power and goals of health and fairness put the lie to the bland statement that “inequality is normal.”

  5. Macrocompassion
    March 7, 2015 at 10:39 am

    The opportunity to earn wealth through wages is the thing that is unequal and should be better distributed. As usual in these kinds of discussions it is very easy to miss the basic point by the introduction of the wrong words. Inequality of anything may be normal, but the gross differences in incomes that we see today are completely unacceptable for a just society.

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