 Hi, Professor Gerald Friedman, Department of Economics, University of Massachusetts at Amherst. And we're here today to talk about the 1%. And we'll talk about the 99% another time. But the 1%, they get about 12%, 14% of national income. They're doing pretty well. They're worth a discussion all by themselves. I recently, I think I posted this on the course PowerPoint, saw a picture of Paris Hilton's dog's house. My dog doesn't have a house, Bay Wolf here. He lives with us. If he had a house, it would be a shed in the backyard or something. Paris Hilton's dog has a mansion, a little small scale. But basically, you can have a whole family living there. And I don't mean a family of little Chihuahua type dogs. But of course, Paris Hilton is due to inherit half of a fortune of about $700 million. So I suppose she could afford to have a mansion for her doggy. It's good to be rich in America these days. It has never been this good. Nowhere do you have it as good as for rich Americans. I mean, there are rich people in other countries who can take advantage of the fact that everybody around them is really poor. The richest person in the world, I believe, is a telecommunications magnate in Mexico. And he can hire a lot of people, really cheap. But in the United States, you get the benefits of all our hospitals and universities, arts organizations, relatively clean air. And you get a huge amount of money. Give you a sense of that. Before 1984, Forbes magazine did not publish a list of the richest Americans. Starting in 1984, they started publishing their list. Sign number one, that the rich are pulling away from the rest of us. They now have a magazine listing who they are. It took $250 million to make it into the Forbes 400 list of the 400 richest Americans in 1984. $250 million sounds like a lot of money. But keep in mind, it won't get you anywhere nowadays. Mitt Romney has $250 million, so there, phew, doesn't matter. He thinks he can be elected president. By the time you see this, you'll know whether or not he made it. But to make it into the Forbes 400, you need close to a billion dollars now. And the average fortune in the Forbes 400, $1.2 billion. That's the average median fortune. That would have put you among the very richest people just 30 years ago. The rate of increase in the minimum fortune to make it into the Forbes 400 is way greater than the rate of increase in median household income. But of course, that's easy to do, because median household income for the rest of us is barely budged since the mid-1970s. While the rich have been getting most of the increase, and the higher up you go, if you look within the richest 1%, the richest 1 tenth of 1% have been pulling away from the rest of the 1%. And within the 1 tenth of 1%, the 100th of 1% have been pulling away from the rest of the 1 tenth of 1%. Who are these people? What's striking is a lot of them would claim that they're self-made. Of the Forbes 400, about 40% inherited their money, and did nothing else about it. When Conrad Hilton dies, and Paris moves into the Forbes 400, which actually she may not do. She may not have enough money if she's split with her sister. But if she did move into the Forbes 400, she would be one of those who just inherited it. 60% are, quote, self-made. Now, let's not get too excited about this. So-called self-made means that they're from the upper middle class, or from rich parents, but not super rich. Bill Gates being a good example. I mean, he went to private school. His father was a major patent attorney. They had good money, but not enough to, they weren't in the scale of the Forbes 400. That said, Bill Gates was $54 million. Zuckerberg of Facebook is held up by many people as an example of a self-made man who contributed to the world economy, and is going to work off with billions and billions of dollars when they sell Facebook. OK, good example. Private school, affluent background. He won the genetic lottery. His parents treated him well, sent him to Harvard. He had lots of opportunities. A lot of people go to Harvard. And don't get billions of dollars to show for it. So there was something special here. That raises the issue. Those who defend the 1% will say what they're getting is a fair return to all that they contribute to society. Zuckerberg will have billions of dollars, yes. But if he hadn't developed Facebook, we would all be a lot worse off. Well, actually, I question that. I kind of find this too difficult to work by Facebook page. And it takes too much time. And these notifications, I don't want to hear about it. But I'm busy. But OK, that said, you'd say the world would be a lot worse off without Facebook. Most people feel that way. He's one of the ones who contributed to that. OK, do we need to give the rich billions and billions of dollars to get them to innovate and create good things for us? And are we better off for having done that? Well, the evidence is pretty clear. And this is being one of the major issues that economists have been discussing for 40, 50 years. Higher levels of inequality are not associated with faster economic growth. Most countries have done just fine, even better than the United States, with faster productivity growth, faster income growth, without such high levels of inequality. Within the United States, the states with the highest income and the fastest income growth are states with less inequality. The greatest inequality is found in relatively backward areas of the United States, like Arkansas and Mississippi. Not in the more affluent productive areas like California and Washington state. High equality is associated with better levels of human capital development, better cooperation among people, and less waste on private security guards and all the nonsense that goes with protecting your privileges. Think about all the money we spend on security in this country. If we didn't spend all that on security, we'd be a lot better off. We need that security because we have such inequality. Without such inequality, we would have less security, less money spent on security. We wouldn't have to compete as much with each other. And that higher cooperation might actually generate higher per capita income. At least that's the experience of the rest of the world. So we'll pick up next time and talk about the 99%. Thank you.