Pareto's 80/20 Truth

Pareto's Improvement or law is essentially a natural law of the jungle. The simple hard truth is that life will always be controlled by a minority.

It's just the way it rolls. Politicians who claim to cure the "80/20 imbalance" we see in Pareto through "wealth distribution" are engaging in a futile attempt at social engineering. If they want more a 50-50 split (or some other order), they basically will have to take over our lives.

Heaven knows they try.

Communists tried and failed spectacularly - with blood too. Losers.

In the meantime, as long as we live, we just have to accept reality.

Rather than look at economics let's use sports as further proof of Pareto's law.

In sports, you see, only a select few teams actually win most of the time. Within each sports, only a small percentage of athletes dominate and win various scoring titles.

If a league wanted to make things more "fair" they could, for example, cap the amount of times an athlete scores the most goals. They "could" do this for the "good of the game" citing needing to give everyone a "chance." After all, everyone should get a "shot" at endorsement, amiright?

Of course, that would be absurd. What's absurdity got to do with it anyway? I would not be surprised somewhere down the road some bright twit will come up with this idea if the current "everyone is a winner" mentality holds.

Leagues, however, have tried to "level" the playing field with teams. Salary caps are fiscal limitations imposed on teams. The thinking is is if everyone has the same amount of monopoly money to spend then competitive balance will be created if not restored.

I don't know if salary caps lead - or have lead - to desired results (I suppose someone can argue different teams are indeed winning more than they have in the past) but one thing I know is even within that it creates better teams than others. The salary cap era and revenue sharing concept haven't been around long enough to really determine its success.

Even with a small sample we see some teams are better at managing salary caps than others. You still have to know how to manage your contracts.

You see, whatever system you devise, there will always be incompetence and competence; losers and winners.

The great teams will, to put it bluntly, still find a way to win and bad teams will still stink no matter how much they get in assistance. Sorta like how no matter how much money you give the poor, they will usually spend the dough on various vices.

It's the law of nature. People who are poor, choose to by their own actions. Notice I'm not saying they choose to be poor, I'm saying they choose to make bad decisions that lead to poverty or keep them there. How much of the money really goes into staples and investment as opposed to gambling and alcohol? Just curious.

This is where politicians fail humans. That by continuing to enable them through an expansion of the welfare state they think we're "helping" them. Seems to me along with the money they get, we should educate them better on what to do lest they remain in the "cycle" of poverty. Just my impression.

Anyway, we don't do that. We just throw money at things and turn away. To keep this charade going you need to demonize someone or something. In this case, the mysterious and convenient "1%" so popular now.

Let's look at soccer in Italy, Spain, England, and Germany, the NBA, NFL, NHL and MLB.

An interesting pattern emerges. A small percentage of teams wins the majority of the titles. And within that sample resides still an elite group. The 1 percenters I guess.

The teams listed are rich because they win. They win because, historically, they were better than their opponents. Some may have cheated too. But hey...

ITALY: Serie A

108 editions - 64 titles (60%) by 3 teams. 16 different winners in a 20-team league. Number of times runner up in brackets.

28- Juventus (49)
18 - AC Milan (32)
18- Inter Milan (32)

Beyond the top three, it drops off to 9 (13) won by Genoa who won six of those at the turn of the last century. Italy's Boston Red Sox if you will.

If you were so inclined to add this historic team it would bump the figure up to 68% and four teams.

Since there are usually 20 teams in a league, we can say just 15% (using the first three clubs) of the league represent 60% of titles. The number surpasses 100% when considering how many times three teams finish second (113 over 100).

SPAIN: La Liga

81 editions (9 different winners):

Spain is even more concentrated in less teams.

Real Madrid 32 (52)
Barcelona  21 (44)

53 titles in 81 editions represents 65% of  championships won by just two teams - or 10% of the league.

When you add Atletico Madrid and its 9 (17 runners up) championships you have a situation where 77% of the titles (15% of the league) is won by three teams.

ENGLAND: Barclays Premier League

113 editions (23 different winners)

The English league has a bit more competitive balance.

Manchester United 19 (34)
Liverpool 18 (30)
Arsenal 13 (21)
Everton 9 (16)
Aston Villa 7 (17)

31% of titles concentrated in two teams (10% of league and neither based in London, ahem)
44% in three (15%)
58% in five (25%)

GERMANY: Bundesliga

Did you know Bundesliga means "Best League?" Now you do. Go show off to your friends at the office. Show something for yourself besides eating doughnuts you lazy boob. Germany has still a better balance than England.

100 editions (30 winners)

Bayern Munich 22 (32) - or as the natives call them, Bayern Munchen.
Nuremberg 9 (12)
Borussia Dortmund 8 (12)
Schalke 7 (16)
Hamburg 6 (14)

22% in one (.05). That is, Bayern eats up almost 25% of all titles. The bastards! At least they didn't kill Kenny.

52% in five (25%).

EUROPE: CHAMPIONS LEAGUE
57 editions.

Real Madrid 9 (12)
Milan 7 (11)
Liverpool 5 (7)
Bayern Munich 4 (9), Barcelona 4 (7) and Ajax 4 (6)
Inter Milan 3 (5) and Manchester United 3 (5)
Juventus 2 (7), Benfica 2 (7), Porto 2 (2) (Nottingham 2 (2))

Two teams won 28% of the titles. 37% by three teams. 58% in 6. 68% in 8. And finally 12 teams represent 87% of the titles.

There are hundreds of teams in Europe that compete in their respective leagues. Four of the best have already been mentioned above. Following this, Holland, Portugal, France and Belgium all have strong leagues with teams that compete in Champions League. In addition, Sweden, Austria, Greece, Denmark, Scotland, Norway, Serbia, Romania, Russia, Croatia, Ukraine, Turkey also have teams that compete. Depending on the coefficients of each league, a number of teams can qualify per league. For example, Germany, as one of the bigger leagues, can have four teams. A smaller league can have one or two.

Point is, only 12 teams have won Champions at least twice and within that group, as Pareto showed, there's still another 80/20 split if we consider just Real and Milan who have been the most successful clubs in terms of trophies and appearances.

The same holds for all leagues as we'll see. Within the great clubs there are the uber-great clubs.

And what about the 'Big Four' leagues? Italy and Spain dominate historically. When you add up all the titles in five major tournaments (Champions, Europa, CWC, SC, INT), those two leagues have won more trophies (Spain 52, Italy 51, England 39, Germany 20).

World Cup? Brazil (5) and Italy (4) won 47% of the titles. Add Germany (3) and just three countries represent 63% of the titles. With Argentina and Uruguay (2) the number is 84% in five countries. Only eight countries have won the World Cup. There are roughly 200 countries who are members of FIFA. Only about .04% of the countries of that total have won.

NBA

61 editions.

Boston 17 (21)
L.A. 16 (31)
Chicago 6 (6)
San Antonio. 4 (4)
Philadelphia 3 (9)
Detroit 3 (7)
Golden State 3 (6)

54% of league titles belong to two (.07%) teams. In fact, the Celtics and Lakers have dominated the NBA since the 60s. It's rare that either one of those two teams is not in the finals. 32 times since 1960 to be exact. Not bad.

Add the Bulls to the mix (who are far behind the main two powers) and you have 64% in three (10%) teams.

And so on.

75% in five (17%)
85% in seven (23%)

NHL:

86 editions (since '27) 18 different winners

Montreal 24 (33)
Detroit 11 (24)
Toronto 13 (21)
Boston 6 (18)

28% in one (.03) club: The Habs. Nearly 30% that is.
41% in two (.07). 41% of the league's champions belong to two.
56% in three (10).  Three teams and you get...you get the picture.
63% in four (13%).  Add one more for dramatic appeal.


WORLD SERIES

109 editions (22 different winners since '03)

New York Yankees 27 (40)
San Francisco 7 (19)
St. Louis 11 (18)
Los Angeles 6 (18)
Oakland 9 (14)
Boston 7 (11)

25% of the titles belong to the Yankees. Jerks.
35% in two - the Cards and Yanks.
43% in three - the Giants, Cards and...Yanks
61% in six when you add the Dodgers, A's and Red Sox.

20% (30 teams) of the league represents 61% of the winners.

SUPER BOWL

46 Editions (18 different winners)

Pittsburgh 6 (8). Ever want to spell words as they're pronounced? Pittsberg.
Dallas 5 (8). Dallus.
New England 4 (7) New Ingland
San Francisco 5 (5)
Green Bay 4 (5). Purple Bay. Now that would be a sweet name for a colored town,
New York Giants 4 (5)
Washington and Oakland 3 (5)
Miami 2 (5). Miamee.

9% of league (3 teams in Pitt, Dal, SF) rep. 35% of titles.
19% (when you add NE, GB, NYG) rep. 61% of titles.
25% represent 72%
.
NFL

37 editions

Green Bay 8 (10)
Chicago 6 (10)
Cleveland 4 (11) Once long ago I know.
NYG 3 (14)
Detroit  4 (5)
Baltimore and Philadelphia 3 (4)
Washington 2 (6)

Two teams represent 38% of titles
Three rep. 49%
Four rep. 59%

I think this about concludes our lesson.

What have we learned?

Pareto is all around us. It makes you realize just how futile making things "fair" is. There's no clear way to make this happen without unintended consequences making a mess of this objective. There will always be a minority of people who make up the majority of the wealth because like in sports, some of us are just plain smarter and better than others.

That's life.

Trying to "normalize" this to fit someone's conception of 'fair' is nothing but a myth; a lie.