The question may sound simple, but I'm sure based on just the discussion here, you can tell it's not quite so simple. The main discussion here seems to be based around the types of attitudes, abilities, circumstances people have that got them to where they are.
I don't think this really answers why "the rich just get richer". The first point, which has already been mentioned, is that people with lower income have to spend a higher proportion on "necessities" (however you want to define those), leave a lower proportion for "wants". Beyond those two categories lies the money people put into savings or investments, which can be anything from an emergency fund to majority ownership in a company.
The rich have more money that they can use on wants and the last category. They can cover their wants with ease and then have a larger amount remaining to use as an emergency fund, save for their kids education, save for retirement, etc. None of these necessarily make one much richer, just more secure in their life.
Beyond these, the rich have more money they can put into investments whether it something basic such as mutual funds and stocks or investment into a business that they have expertise in.
I think this is a good basic explanation in general for why "the rich get richer" but it really doesn't cover everything.
To really the answer the question though, you need to look at trends over a longer period of time than just the recent recession. One common piece of data to look at is the what % of the nations income the top .01% of people get. I attached an graph showing this information.
A basic explanation of this data is the increase in social welfare (and corresponding tax increase) after the Great Depression and then reversal of this starting with the Reagan administration.
It is pretty clear that the rich are getting richer, and due to their ability to get richer, the less they are hindered in this pursuit, the quicker their wealth accelerates.
|