Lorenz Curve Revisited

This is not a debate or a countervailing point. It is a clarification. My L-Curve graph has nothing to do with the Lorentz curve. I did not even know about the Lorentz curve when I did it. My graph is a linear plot of income vs population percentile. There is nothing right or wrong about doing a graph this way. It's a different way of seeing the information. The simplicity of a linear plot of income vs percentile of the population is it is so intuitively understandable.
--David Chandler

Couple of years back I found out that some of our esteemed University Professors of Economics do not understand what Lorenz curve is, what possible shapes it can have, and its relationship with income distribution or wealth distribution and its significance in relation to Politics, Governance, Banks, Money printing, or Bail out.

[I do not invite any debate or counter points - I care less if you read my writings or not. This is strictly one way communication]

Lorenz curve whether income or wealth shows distribution of the same over a nation. The curve has to lie strictly below the hypotenuse of the right angle triangle with unit base and unit height. The area between the hypotenuse and the measure of income distribution. it can be zero minimum, maximum being half (area of the triangle, when one individual own every thing, or has all income). 'Zero' is healthy, 'Half' is unhealthy. In US it is nearly 'Half' in fact it has crossed theoretical limit long ago!!!!

How could this happen for a democracy is unbelievable. Does it mean that out of 100 person, only one person works and earn while 99 persons are being just lazy and do not work. No this has been achieved systematically, by the system we have developed by legislation year after year. When Government decides to print money and give it Bank - it gives loan. Banks are supposed return back this loan. However they don't. The money leaves the Bank and accumulates in individuals possessions who run this outfits. However they protected by legislation, and further protected by Government who writes off this Loan and their inability. They are further given loans to recover their loss. No money that goes out of Bank really gets to borrower - borrower only gets some short time material possession - like a place stay - a car to roam around. They simply do not belong to them but mortgaged to bank. While this be so when Banks are bailed out, or loaned money from Government - it is the people of the country is giving equal share to the Bank not out of choice but by virtue of elected officials. When Bank's are bailed out, these entire nation goes negative and owes the loan instead of Banks.

Lorenz curve drops below X-axis in the negative Y-axis for most of 0 to 1 of x-axis till it shoots up 1. Thus income distribution of USA has crossed the theoretical limit of 1/2 for quite some time now. As far As Income distribution goes.

What about wealth distribution?

Wealth is dynamic changes over time - it is land mass, production, value addition, depreciation - but for Lorenz curve it is again One (1). How this wealth is distributed over the entire population? Here again curve should remain between 0 and 1/2. 0 is desirable for social health, 1/2 is worst case. For USA, it is 1/2. How could it happen in so short a time when average American working hard and producing owns nothing but Debt? It can no longer be a surprise.

Here are two links to if one is inclined to know more.

http://www.lcurve.org/ [

• Quoting from a recently-published book by political philosopher David Schweickart,

If we divided the income of the US into thirds, we find that the top ten percent of the population gets a third, the next thirty percent gets another third, and the bottom sixty percent get the last third. If we divide the wealth of the US into thirds, we find that the top one percent own a third, the next nine percent own another third, and the bottom ninety percent claim the rest. (Actually, these percentages, true a decade ago, are now out of date. The top one percent are now estimated to own between forty and fifty percent of the nation's wealth, more than the combined wealth of the bottom 95%.)

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http://en.wikipedia.org/wiki/Lorenz_curve