The phrase, “The rich get richer and the poor get poorer” is considered by many both a truism and an indictment of the free-market system. Typically, this statement is followed by a demand for some type of government controlled “redistribution of wealth” or “stealing from Peter to pay Paul.” Thomas Sowell argues that, in fact, the statistics actually argue the opposite, that the rich are getting poorer, and the poor are getting richer.

…income tax data recently released by the Internal Revenue Service seem to show the exact opposite: People in the bottom fifth of income-tax filers in 1996 had their incomes increase by 91 percent by 2005. The top one percent — “the rich” who are supposed to be monopolizing the money, according to the left — saw their incomes decline by a whopping 26 percent. Meanwhile, the average taxpayers’ real income increased by 24 percent between 1996 and 2005.

Why does this seem to contradict the normal statistics? These statistics (from the IRS) track individuals through time, where as most statistics about income distribution take a snapshot of the entire population at one time. When we look at the population in any given year, the income of the people in the lowest 20% might have grown less than then income of the people in the top 20% (this is often the case). However, the people who were in the bottom 20% in one year have often moved out of the bottom in another. In the same way, those in the top 20% often fall down out of the top position into a lower one. The truth is that most people are constantly increasing and decreasing their wealth, as they gain skills after years of work, or retire from it later on. In fact, as Mr. Sowell reports, in a University of Michigan study, over an 8 year period, half the people in the bottom twenty percent– those we think of as “the poor”– were not in that bracket the following year. Three percent of those in the bottom bracket one year were actually in the top bracket the following year.”

Hence, while the statistics in any one year tell one story, the statistics of individuals through time tell another.

Question - which is the more important story? That the overall statistics show an increasing gap between the lowest 20% and the highest 20%? Or that people often dramatically shift their relative income, moving in and out of poverty, the middle class, and the wealthy with regularity?

I think the answer is, “yes.” They are both important, and compliment each other. For Money, Mission, and Meaning listeners, the key is to notice that just because general statistics say one thing, your own path might look completely different. As the saying goes, “you don’t drown if you fall in the water. You only drown if you stay there.”

To learn more about the extraordinary mind and timeliness of Thomas Sowell, please enjoy how this clip from a 1980 lecture is still as timely today.

I have been receiving so much inspiration and joy from Amory Lovins recent honors, I thought I would mention him again in the context of Money Mission and Meaning. Amory is an extraordinary example of someone who realized his unique contribution, developed his prodigious talents prodigiously, and set out to make money, through a mission that makes meaning - aka, the Rocky Mountain Institute. After decades of being on the fringe, his ideas and person are becoming a mainstream icon, which simply tickles me pink!

After receiving the Volvo environmental prize earlier this month, he and long time compatriot in profitable environmentalism Paul Hawken have been named the key figures of Ford motor companies new “Transformation Advisory Council“. The third named member is Peter Senge, Harvard management guru, author of The Fifth Discipline, and colleague to Fred Kaufmann, one of my virtual mentors from the Integral Institute. Very good company indeed.

Let’s cross our fingers and exploit our rolodex’s that Amory’s plan to triple the efficiency of cars, trucks, and planes by fully using existing technology, and “winning the oil endgame” get’s Ford’s full support, and revolutionizes the the transportation industry. Go Amory Go!

About 10 years ago, I had the great fortune to be invited to hear Amory Lovins speak on Natural Capitalism, a philosophy that outlines (among other things) how businesses can use design efficiency to increase their bottom line while reducing their environmental impact. Integrating his then 20-years of experience in the field (now over 30 years), the book Natural Capitalism turns many business and enviromental issues on their head, offering an approach that avoids the often condemning approach of some environmental activists. His ideas (as well as his co-authors Hunter Lovins and Paul Hawken) have since become part of the canon of environmental business practices, inspiring consultants and thousands of businesses towards greater sustainability. (for example, see my interview with Jeff Slye )

On November 1st, 2007, Amory was been awarded the Volvo Environmental Award in recognition his lifetime work. The nearly quarter-million dollar prize support Amory’s Rocky Mountain Institute in its work to use design efficiencies to end US dependence on foreign oil, design cars that triple our best fuel efficiency at half the weight (see video below), eliminate the need for heating and air conditioning in buildings, and much, much more.

For more information about Amory Lovins, check out the Rocky Mountain Institute, or for more in depth study, check out this series of five video lectures on Design Efficiencies he gave at Stanford earlier this year.

Congratulations to Amory for integrating his Money, Mission, and Meaning, and dramatically shifting the course of humankind towards greater beauty!