Sunday, January 23, 2011


The Plutonomy Symposium — Rising Tides Lifting Yachts
Over the last 20 years or so, in certain countries, the rich have been getting substantially richer. As Figure 1 shows, the share of the top 1% of the population of income has grown substantially in countries such as the US, UK and Canada. The countries, which apparently tolerate income inequality, are what we call plutonomy countries – economies powered by a relatively small number of rich people. ...

We should worry less about what the average consumer – say the 50 percentile – is going to do, when that consumer is (we think) less relevant to the aggregate data than how the wealthy feel and what they are doing. This is simply a case of mathematics, not morality. ...

But how do we make money out of this? Well for starters, by worrying less about “the consumer” and spending more time segmenting the data. Secondly, we can worry less about the apparent profligacy of the so-called US consumer, or their cousins in the other plutonomy countries like the UK or Canada. Finally, we can identify stocks than benefit from the concept of the rich getting richer.

Fascinating stuff.

(via Michael Perelman)

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