Defending the 1% - a story of legitimate wealth

This is the 5th part of the "Leftie Serie" which I created after attending the People & Planet Conference on the 8th of March 2014. 
Here are links to the other posts: Feminist Economics, Inequality, Financial Crisis, Layoffs vs. Bonuses

I hear a lot of talk among Lefties about the "top 1%", the richest in society. Especially the last few years with the Occupy movement where these issues have been heavily discussed. The idea is that the richest 1% make so much more money than does the poorest, or even average worker in a country - and for some reason that this should be unjust, unfair and bad. Fair enough: the argument has some appeal to it - why should anyone make riddiculous amounts of money, when workers at McDonalds are payed minimum wage?

The discussion can be prolonged even further, considering the 1% of the 1%, that is, the top 0,01% of income-earners. In the U.S, the limit for entering this exclusive club is around $10m/year. Quite a hefty salary. Are they worth it?

Greg Mankiw, a Harvard economist I'm somewhat in love with, wrote a longer piece about income and inequality (here), where he presents compelling reasons for why the premises of the arguments of the left are incorrect, thus invalidating the arguments. The shorter New York Times version can be found here.

Interesting is his comparison to the main actor in the block-buster Avenger, payed an astonishing 50 million dollars. However, that represents only 3% of the total revenue of that movie. Or, to put it differently, for every $8 ticket someone payed for going to the movies to watch his performance for two hours, 25 cents went to the actor. Is that "overpayed"? Riddiculous amounts? Hardly, and few people would disagree. The effect that happens, Mankiw argues, is that globalisation and technological improvements means billions instead of millions can watch such a movie; that Apple products are sold to a market of billions instead of millions. Surely, because of the pure scale itself, salaries for those kinds of people skyrocket.

Mankiws words are well-expressed:

"People are similarly unperturbed when they learn that in 2013, E.L. James, author of the 'Fifty Shades of Grey' triology, earned $95m or that in the same year the basketball star LeBron James earned $56 million in salary and endorsements. When people can see with their own eyes that a talented person made a great fortune fair and square, they tend not to resent it." - Greg Mankiw, NY Times

Problem is, the rest of the 1% (or the 0,01%), make money in ways that people don't intuitively understand, using their talents in ways people don't see how that generates a great fortune. The problem is thus not that some people are handsomely paid; the problem is that their critics don't understand why.

Hence the "Deserving 1%" or "Legitimate Wealth".