We show this intrinsic property by a simple speadsheet simulation of multiplicative growth as a game: 50 players play 50 rounds.
To see a running example just click here.
Each player starts with equal wealth = 1 in round 0, his wealth in the next round is computed as newWealth = oldWealth * randomFactor;
randomFactor is a normally distributed random variable with mean = 1.05 and standard deviation = 0.2 . You may change mean and sdev in the green fields.
So in this simple spreadsheet growth is simulated by the formula
newWealth = oldWealth * NORMINV(RANDOM();mean;sdev)
Look at the Wealth Distribution Histogram and find out how many players are in the class with lowest wealth compared to the class with highest wealth.
Wealth tax and Heritage tax are profound measures for compensation and redistribution against growing inequality of wealth. See what happens if you apply a moderate wealth tax:
Simulation with wealth tax in Google Spreadsheets
(click link for direct view)
Simulation without wealth tax in Google Spreadsheets
(click link for direct view)
Simulation in Excel for download
(click link, then choose download button upper right corner)
Simulation in LibreOffice Calc ods for download
(click link, then choose download button upper right corner)
(click link, then choose download button upper right corner)
For a detailed discussion see:
Entrepreneurs, Chance, and the Deterministic Concentration of Wealth, Joseph E. Fargione u.a., 2011
https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0020728&type=printable
and my paper in German:
Vorteile von Vermögenssteuern spielerisch erklärt
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