The Rich Get Richer

[karenkc]

Originally Posted by m3racer

The average American IS lazy. It amazes me how lazy we are as an American society. I was having this discussion with a colleague from Japan. He was amazed at the entitlement programs here in the US. He said if you graduated with a US degree in social services you would be unemployed in Japan because there is no such thing over there.

There is a large difference between the two cultures though. In Japan when you're hired you're expected to stay at the same company for life. In the US it's common to be laid off, fired, etc.. There are obviously more factors than just that one difference also. It takes some complex thinking to get to the root of an issue. good luck!

[Vytautas]

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.

[kanjoh]

The rich are absolutely getting richer. Income inequality is a serious problem. To me, the solution is not redistribution of wealth as much as it is about educating the population about how to manage their money better.

Once people understand how to be more effective, savvy consumers, they will have far greater control over their own wealth and their ability to generate more income.

[snafu]

I'm back in China...I have to admit I forgot what being poor really looks like. Government is trying but corruption is still rampant. We are so privileged in western countries, we don't really understand what it means to be poor. Did anyone see SlumDog Millionaire? Getting enough to eat to sustain you for the day is the goals of millions.


During the Bush administration, there was a giant widening of pay structure between Executive level and staff. I thought I read... Bank Executives increased their salary/bonus/perks by something like 70% in the past 12 years! Line workers rarely kept up with inflation!

[tripods68]

Here's my two cents.

If we can control health care cost from rising in double digit and house affordability index does not go out-of-whack while "real" wages rises more than inflation rate, middle class once again will bring this country economy on the right track. Some here may not agree but I do believe this is one of many solutions.

[wincrasher]

The gap is widening because the middle class is systematically being dismantled. To a large extent, this is being facilitated by the Republican philosophy that has controlled our government for a generation.

Tax policy, reduction in spending on college education, deregulation, globalization.... it goes on and on.

The rich have reaped huge benefits from tax policy alone.

[money blogger]

Originally Posted by Radiance

Well, I think the rich get richer is true, when you have money you have more options to make more money.

I just don't think that is a bad thing.

I actually find it hopeful, as I start making more money, it will be easier and easier to make more and more money.

Now, if someone says "what can I do, the rich gets richer" then to me that is an excuse, What can you do? Build your own wealth, start making some money that will let you make money.

The rich getting richer is not what is stopping me from improving my financial situation.

Well said,

I think that's the mindset I was trying to unearth.

As far as circumstances dictating one's financial situation, I think people do use 'the rich just keep getting richer' as a copout. The general population is lazy, and because of their lack of understanding of the importance and power of their thoughts, they live in a self-fulilling profesy.

In the words of Earl Nightingale, 'we are where we are, becasue that is exactly where we want to be.' In north america today, there are far too many examples of people who come from more than humble backgrounds and have worked to develop themselves into ultra successful business owners. Look at the founder of the Second Cup for instance. He was once homeless.

If people only wanted to be wealthy, and wanted it enough to work unwaveringly until it happened, they'd achieve success. Earl Nightingale also said that 'if a man would forsake even his own existence for the accomplishment of a goal, he will most assuredly achieve it.' Sounds harsh, but success has it's price.

He also defines success as 'The progressive realization of a worthy ideal.' Whatever that ideal is, his point is that the fight, and how you fight it determines your success. Not having achieved something, because there is always more to achieve, but having fought the fight.

He also says that 'you are what you think about all day long.'

So, if you want to be part of the statistic of 'the rich get richer,' think of yourself as being rich, and do whatever you can to make your thoughts a reality.

Cheers,

[Snodog]

Along with health issues and disabilities some people just do not have the aptitude to work a decent paying job and thus are doomed to a life of poverty.

I worked with a janitor like this. He was a good man and a very hard worker but wasn't ever going to make big bucks.

Some people are just born to be janitors and thats all they will ever be. If everyone can go to school- graduate or start a business and make a lot of money who is going to clean our bathrooms? The world needs janitors too.

Its a shame we don't treat these people better.

[Snodog]

Originally Posted by EEinNJ

Check out Robert Reich on Youtube, he does a lecture on this topic. He was in the Clinton admin and is a professor at UC Berkley, so his views are left-leaning to say the least, but he does know what he's talking about.

I listened to that just last week. Its over 1 1/2 hours but well worth it IMO. Income inequality is one of the more serious problems we face. Here is the link for those who may be interested.

[Vytautas]

It's true that people use "the rich get richer" as an excuse for their own situations. But that does not make the facts any less real that it is harder for people to move up the income scale in the US today than it was in the past. People will grab on to anything as an excuse but that should never overshadow the facts behind what they are using.

[elessar78]

I think the rich DO get richer. Think about it. Most people only need a certain amount of money to survive, then add to that luxuries and creature comforts. If you're smart with your money or have tons of it, then you get to a point where you pay for your cost of living + cost of luxuries and you still have money left over.

That left over money can be used to generate more income through interest or investing in businesses or buying real estate.

Poor or middle class people (who don't manage their money) don't have that surplus. And if they do, not in the same quantity as the truly rich. So those that are already rich get richer at a faster rate than even middle class people who live below their means.

The same is true with countries. Rich countries have more time and resources to devote to figuring out how to stay atop the food chain. While poor countries have a dearth of things to contend with to actually get on with the business of wealth building... disease, war, natural disasters, corruption, etc.

Aside from the occasional earthquake out west, the US, Britain, France, Germany are pretty free of natural disasters. Think about all the countries that seem to suffer and it's all the usual suspects.

[investingnoob]

The rich just got poorer!
But the billions they still have, they will be fine..

[Scanner]

As far as circumstances dictating one's financial situation, I think people do use 'the rich just keep getting richer' as a copout. The general population is lazy, and because of their lack of understanding of the importance and power of their thoughts, they live in a self-fulilling profesy.

Well, never one to mince words, I think that's "rancid piffle" from The Secret and new Age Oprah stuff deserving of the ridicule it got on Sat. Nite Live.

To suggest that somehow the poor are there because they are "negative" is just dumb.

Or a child in poverty dieing of starvation (and many kids do everyday) because they aren't visualizing food. . .I don't know what to say - rancid piffle is probably the PC word for this forum .

[jasonnoguchi]

To make this very simple to understand, imagine an island with 3 persons on it. one person has lots of cash, one person has lots of shells and one person has a little cash every month. person with little cash each month borrows money from person with lots of cash to buy shells from person with lots of shell. Person with little cash then gives almost all his monthly cash to person with lots of cash and person with lots of cash splits the "loot" with the person with lots of shells.

Thats why the poor gets poorer and rich gets richer. The poor FEEDS the rich!

[money blogger]

Originally Posted by jasonnoguchi

To make this very simple to understand, imagine an island with 3 persons on it. one person has lots of cash, one person has lots of shells and one person has a little cash every month. person with little cash each month borrows money from person with lots of cash to buy shells from person with lots of shell. Person with little cash then gives almost all his monthly cash to person with lots of cash and person with lots of cash splits the "loot" with the person with lots of shells.

Thats why the poor gets poorer and rich gets richer. The poor FEEDS the rich!

That's funny. I'm sure the average person reading this post can understand what you're talking about, however, for those who aren't making the connection, could you explain please?

I read it to say...
'The average working class person borroughs money from VISA to buy... pretty much everything they have (sad but true). The companies they buy things from and VISA are sharing the glory of riches. The working class individual spends almost all of his/her hard earned money to fund the debt and keep it in good standing.'

Is that about right?

[kenyantykoon]

the rich know what to do with every dollar something that the poor do not. if a rich man has $100 to spare, he will probably by a good stock or something but a poor person will spend it because he wouldnt know what to do with it. it all comes down to financial education

[EEinNJ]

American capitalism holds out the promise that the 99% of us who aren't rich can become one of the 1% if we just work hard, aren't lazy, etc. Obviously, mathematically that can't happen. If the pie is only so big, and only grows at a low single digit rate, the only way someone can become rich is if others become less rich.

There's a big difference between the micro economic idea that people are poor because they don't know how to save, or don't work hard enough, and the macro economic world which is destroying the middle class.

What if you aren't trying to be rich, you just want to get by and have a happy, comfortable life and are content to work at a job. Well, if your taxes go up, your cost for medical care goes up, gas, food, etc.- and you're lucky to keep that job, let alone get a raise- THAT's what's going on in this country. Oh, and if you thought saving and investing would make up the difference- the S&P 500 is at the same level as 10 years ago.

[kgloh_23]

I am agree the rich is more easy to be getting richer.
But it is depend on individual attitude. If the rich know how to let money to work from them to getting more money, they will become richer.
There are also a lot of rich people become poor especially it come to next generation if they don't have making money mindset and poor attitude.
With good attitude, poor people also can become rich, the only question is you willing to be or not.
Don't give excuse! There are no permanent loser or always winner, be patient and never give up. Cheer.

[jasonnoguchi]

Originally Posted by money blogger

That's funny. I'm sure the average person reading this post can understand what you're talking about, however, for those who aren't making the connection, could you explain please?

I read it to say...
'The average working class person borroughs money from VISA to buy... pretty much everything they have (sad but true). The companies they buy things from and VISA are sharing the glory of riches. The working class individual spends almost all of his/her hard earned money to fund the debt and keep it in good standing.'

Is that about right?

Thats exactly correct. That is why in economics, a strong middle class is essential to economic growth and that was what I learnt in economics school so obviously it has been DESIGNED that way.

[money blogger]

So let's assume there are three classes of people

Poor
Middle / Working Class
Rich & Wealthy

Let's also assume that it will always be this way.

For goodness' sake, it was stated by a very wise teacher 2000 years ago, 'that the poor will always be with us.'

So the Follow-Up Questions are:

'What can a poor person do to participate in the middle class?'

'What can a middle market person do to become financially independant?'

'What can a middle market person do to become rich/wealthy?'

'What can the rich/wealthy person do to stay that way?'

I appreciate as much imput as possible. I'm sure everyone can benefit from your tips and councel.

Cheers,

Guy Gagnon
Business Relations Technologist
Angulus Marketing