More On Medal Inequality at the 2008 Olympics
The chart above shows income shares from 2006 IRS data (most recent data available), and the most recent medal shares from the 2008 Olympics (as of 9 a.m. today). Notice the amazingly similar outcome between shares of adjusted gross income earned by the top 5, 10 and 25% of Americans, and the shares of the 906 Olympic medals in 2008 earned by the top 5, 10 and 15% of medal-earning countries.
The "income inequality" that seems to disturb so many people is almost exactly replicated in "Olympic medal inequality," and yet seems to cause no objections or concerns about inequality, and generates no calls for "medal taxes" or "medal redistribution," etc.
The diagram below shows that the distribution of 2008 Olympic medals, like the distribution of income, clearly follows a standard Pareto distribution, and not a normal distribution.
In a Pareto distribution, there is an "emphasis on the extreme," in contrast to an "emphasis on the average," in a normal distribution (see chart above).
Is it possible that underlying the widespread objections to income inequality is the assumption that income should be distributed normally, and not according to a Pareto distribution? After all, an income distribution with an "emphasis on the average" sounds a lot better (at least to many leftists and redistributionists) than a distribution with an "emphasis on the extreme." Perhaps if more people could understand that Pareto-distributed outcomes are often the norm in both nature (see examples here like sizes of sand particle, and sizes of meteorites) and in competitive sports like the Olympics (and see NBA example here), we would have a better understanding that it is natural that income will always be Pareto-distributed. Let's just accept it, and not spend time worrying about income inequality, just like we accept Olympic medal inequality.
And perhaps all of the redistributionist tax policies and progressive income tax schedules are really an attempt to take a naturally occurring Pareto-distributed outcome for income, and artificially impose a normal distribution.
Imagine for a moment how "Olympic medal taxes," and especially a "progressive Olympic medal tax," with subsequent "medal redistribution" at the Final Ceremony to achieve a more "normal distribution of medals" would quickly destroy the competitive spirit of the Olympics and reduce the overall level of athletic performance, especially on the "extreme," world-class athletes at the top like Michael Phelps. If the final ceremony at the Olympics included imposing a medal tax on an "extreme athlete" like Michael Phelps, and redistributing some of his gold medals to countries that earned "too few" medals by some consensus, you can imagine what might happen - he might not show up at the next Olympics, or certainly wouldn't have the same incentive to train as hard.
We might get the same outcome when we attempt to tax the top, or "extreme income earners" - they'll stop working or won't have the same incentive to work as hard.
Bottom Line: The Olympic medal winners are respected and admired, despite the inequality of the Pareto-distributed outcome in those competitions, with an "emphasis on the extreme" athlete. Instead of always vilifying them, perhaps we should pay the same respect to the Pareto-distributed winners of our free enterprise system - the successful, world-class, "extreme" workers at the top of our economic ladder.