The M-shape Society

Today, 'M' is my topic. However, for those too obsessed with brands and poisoned beyond repair by commercials and corporate marketings, this M has NOTHING to do with Motorola, Mc Donald's, or M-&-M.

The M-Shape Society is a hypothesis that describes wealth is and will be distributed in our society in an M-shape way. It predicts our society will be bi-polar in terms of individual net-worth: people are divided into two mutually exclusive camps of the very poor, and the super rich. Middle-class people will slowly extinct by being swept to either side of the M, as shown below. In other words, people who have the required attitude and knowledge will be obscenely rich, while those who don't slowly precipitate to the bottom and stay there. (There is even a measure for income inequality: The Gini Coefficient. In an M-Shape society, Gini coefficient will be relatively high and close to 1.0)

The consequence is dire for everybody, because we may see most of the wealth held by a handful of individuals, while a lot of people are struggling under the poverty line, where everyday is a battle for survival.

Society with no middle class

This hypothesis is first proposed by Kenichi Ohmae, a renown management strategist.

Does this hypothesis hold water? How do we prove, or disprove it?

To start, let's frame our question like this: The society is becoming M-Shape

Since I am kind of convinced it is true, so I will just try to prove it head-on. If it doesn't work out, a contradiction will be generated, and we could prove it by contradiction.

Here I need to remind myself not to take an example as a proof (e.g. "Cuppa is poor, ergo life is not fair and the society is M-shape."). Can we take the GDP or average income of a particular country and start from there? Nope, because the income disparities will be canceled out and averaged.

How about this: Some governments will release data on household income, and it is a good starting point. Do note absolute numbers usually mean nothing, we need to note the trend, the nascent trails....

What can we say about Singapore?

After some search on the net, I got statistics for year 1990, 2000, and 2007. The graph is plotted as follows:

This graph, plotted with OpenOffice Calc, is interesting.

Until here, a healthy dose of skepticism is needed, because the statistics doesn't tell all the stories. In fact, this is just the annual household salary income from work, and it doesn't take into account the return from investments from stock markets, forex, or real-estates. If we can get statistics from other countries, it will be helpful.

Back to the graph. There are radical jumps for incomes more than 10K over the 2 decades. While the lower-income groups actually decrease in percentage, note also the increase in middle-income groups is much more moderate. All these do get along with our hypothesis, because it shows the rich is getting even richer faster, but I don't feel we have a solid case on hand to prove the hypothesis beyond doubt. It will take Cuppa some more time to observe and sleep on this.

Final observation is out of the topic, but I still want to say: OpenOffice is every bit as usable as Excel and it is free (free, as both in free beer, and in free speech). Use it.