Letter to the Editor: Comparing Apples to Apples

Regarding yesterday’s letter (“Who Wins? Follow the Numbers,” November 17), compare apples to apples. The letter confused the cumulative interest rate with the compound interest rate. Using his numbers for starting and ending values, for a $1,000 investment to grow to a value of $33,563 requires an interest rate of 7.13% compounded annually. Similarly, the increase in annual labor compensation was 3.70% compounded annually. But that’s a comparison of apples and oranges.

Looking at the same numbers another way and ignoring inflation, the total increase in capital wealth by investing that $1,000 over those 50 years was $32,563. (If capital had invested the same amount as the worker’s one-year earnings 50 years ago, it would now have $372,920.) Over those same 50 years, a person who earned $11,120 in 1972 received $1,685,134 in total compensation if she is still working. today. More apples and oranges.

I do not dispute that capital has not profited more than labor over the past 50 years. The real measure is the distribution of wealth. Here in the United States, the richest 10% own 68% of the wealth. The middle 40% of us have 29%, and the bottom 50% own only 3.2% of the total wealth. Money makes money.

So if you have money to lend, you will have more. How much you get is a decision we make as a company. It is also a reflection of how we value each other. Right now, I would say some of us don’t like each other at all.

Robert Sessums
North Yarmouth

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