## The "80/20" Rule Leads To The 1%

The 80/20 rules, formally known as the Pareto Principle, is a common rule-of-thumb in lots of situations. In general, it says that 80% of all effects in a particular situation comes from only 20% of the causes in that same situation. If you can eliminate the right 20% of the problem *causes*, then you can get rid of 80% of the *effects* from those problems.

Reading Taleb's "Antifragile", he points out that the complaint against "the one percent" holding 50% of the wealth in the country is a natural outgrowth of the 80/20 rule. There's no conspiracy, it just works out that way. Of the top 20%, 20% of them will hold 80% of that wealth; of that subgroup, another 20% will hold 80% of that wealth, and so on. Eventually we find that about 0.8% of a population will hold about 51.2% of the wealth, just as a rule-of-thumb. So, a baseline point of 1% of the population holding half the resources doesn't seem that out of line to me, mathematically and statistically speaking.