The Rich Get Richer

[money blogger]

I always hear people at work say this. As if it is an excuse or justification as to their own personal financial situation. It’s like "Oh well, what can I do. The rich get richer."

The gap between the rich and poor continues to widen. Why is this?


Thanks,

B

[EEinNJ]

You are correct, the gap between rich and poor is widening. The simplest answer is because of stagnant wage and job growth, though in my own view globalization, consumer debt, and corporate profiteering are big factors.

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.

[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.

[Broken Arrow]

It's an easy generalization to make, but often times, it is said without any discernible proof as to one way or another. Personally though, I believe the rich have also gotten poorer.

For example, let's take a look at wikipedia's list of billionaires. I realize that wiki as a source should be taken with a grain of salt, but if there any truth to the listing, you'll see that most of the billionaires have lost much of their capital in 2008. And that makes sense. After all, most own companies or at least stock, and the stock market tanked in 2008.

Of course, it is indeed possible for the rich to get richer. They have more capital, better networks, more options.... But the reality is, the rich doesn't always get richer.

[boosami]

But on the flip side of things: Mo' money mo' problems.

[arthurb999]

The poor are just lazy and terrible with money... that's how they got there in the 1st place.

This is america, everyone has the opportunity to not be poor...

(barring extreme situations)

[watsoninc]

Originally Posted by RedThunderBird

Every thing is relative , and this is another myth ---- take for example Michael Jackson by the time of his passing , he left a debt of over $400,000,000.00 which is beyond my imagination

Although Michael Jackson did have a staggering amount of debt, AP just reported today that he likely died $237 million in the black, which is still rich by most people standards. He was definitely cash poor though.

AP Exclusive: Jackson said net worth $236M in 2007 - Yahoo! News

Originally Posted by Broken Arrow

It's an easy generalization to make, but often times, it is said without any discernible proof as to one way or another. Personally though, I believe the rich have also gotten poorer.

For example, let's take a look at wikipedia's list of billionaires. I realize that wiki as a source should be taken with a grain of salt, but if there any truth to the listing, you'll see that most of the billionaires have lost much of their capital in 2008. And that makes sense. After all, most own companies or at least stock, and the stock market tanked in 2008.

Of course, it is indeed possible for the rich to get richer. They have more capital, better networks, more options.... But the reality is, the rich doesn't always get richer.

Additionally, last Thursday Merrill Lynch and Capgemini released the annual wealth report showing how the rich actually got 19% poorer in 2008, erasing the past two years of economic growth. I incidentally wrote about this today. The number of the world's millionaires also decreased by 19% as well.

Nonetheless, I think this statement is typically true and is a function of how they get their money compared to the non-rich as alluded to earlier. Most of us are not rich and earn the bulk of our incomes as employees (even if we work for ourselves). Thus, our wages are subject to what someone is willing to give us for our time and skill, which apparently hasn't changed substantially in the last decade. However, most rich people earn their income from businesses they own and their investments. Although the risks are higher for them, so are the rewards. If they are successful they get richer. In fact, if we are successful working for them, they still get richer.

[Broken Arrow]

Thanks for the input, watsoninc. That I can agree with.

The poor are just lazy and terrible with money... that's how they got there in the 1st place.

Ah, waitaminute. I hope that was some kind of dark humor, because I think some would not only disagree, but find that to be extremely offensive.

One can generalize that perhaps the poor have less options and avenues available to them, but lazy? And terrible with money?

I know a several people right now who are very good with their money, but be it medical conditions, or being laid off in this economy, or it's the farm life, and they're generally difficult to begin with... they just struggling right now.

And they're working hard too.

America may be the land of opportunity, but as one of my Sociologist once told me, sadly, that is only an idealistic notion, not a realistic one.

[m3racer]

Originally Posted by Broken Arrow

One can generalize that perhaps the poor have less options and avenues available to them, but lazy? And terrible with money?

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.

[watsoninc]

Originally Posted by Broken Arrow

Thanks for the input, watsoninc. That I can agree with.



Ah, waitaminute. I hope that was some kind of dark humor, because I think some would not only disagree, but find that to be extremely offensive.

One can generalize that perhaps the poor have less options and avenues available to them, but lazy? And terrible with money?

I know a several people right now who are very good with their money, but be it medical conditions, or being laid off in this economy, or it's the farm life, and they're generally difficult to begin with... they just struggling right now.

And they're working hard too.

America may be the land of opportunity, but as one of my Sociologist once told me, sadly, that is only an idealistic notion, not a realistic one.

Thanks Broken Arrow

One of the saddest quotes I have heard are that "the hardest working people are the most poorly paid." There are plenty of hard-working people who are not paid very well in the US and definitely overseas. This by no means says that all poor people work hard or all rich people are slackers. I am just thinking that my landscaper appears to be working a lot harder and makes significantly less than say a Paris Hilton (annual income ~$7 million).

[GREENBACK]

One thing that perturbs me is that there is a line of thinking that rich or just successful people were somehow gifted their money. The current administration seems to be throwing fuel on this fire. Most of these people worked very hard to get where they're at in life. You have the Paris Hiltons out there but the majority of rich people made it thru hard, intelligent work. Even the majority of athletes and entertainers have worked very hard to reach their position in life. There's just something about hating on the rich that gets some people going.

[Runaway Finances]

When I was in college I got a summer job as a heavy equipment mechanic and started at $6/hr. I had no real experience and it was just a summer job. I don't recall what minimum wage was back in 1976. The point is that my son made about $6/hr in High School a year ago. I bought a brand new Toyota Celica for $3900 in 1975 (Senior in High School). A brand new car like it would cost at least $15,000-20,000 today. So wages have not changed much but car prices have skyrocketed. This is just one reason the rich get richer and poor get poorer. Wages have not gone up proportionately to the rise in prices of goods. This is more true towards the lower end of the pay scale in my opinion.

[irmanator]

Originally Posted by arthurb999

The poor are just lazy and terrible with money... that's how they got there in the 1st place.

This is america, everyone has the opportunity to not be poor...

(barring extreme situations)

I think this is an unfair generalization, some poor people are honestly stuggling and had no one around to tell them how to not be poor. I personally thought it was hopeless till I saw richdad poor dad book. Now I don't agree with him on alot but at the back of his book is a reading list and the book about the Millionaires next door is what got me thinking different.

That being said, I don't begrudge the rich their rewards either. I just resent being labeled as lazy because I am poor. I realize hindsight being 20/20 that I would have done things differently and maybe been in a different income bracket had I known then what I know now.

[jIM_Ohio]

The poor will always have a few attributes in common from one generation to the next:
1) they are closer to earning zero than anyone not deemed poor
2) when others make more money than another, that person might have a feeling of being poor
3) what really needs to be measured is if the people which are poor now, are also the same people which are poor in 15 or 25 years.

Rich get richer- of course
2 main reasons
If I have capital or the ability to borrow it, I can make money
and no matter how much money a certain segment of the upper class makes, they will always want to make more.

It is very possible the difference between the rich and the poor is not just the money, but also in the attitudes and value people have about money.

[GREENBACK]

Growing up in a lower class neighborhood there are basic norms that people adhere to. If everyone around you is not striving for more than young people tend to follow this lead. I'm sure the opposite attitude prevails in more affluent neighborhoods. When people talk about the "cycle" of poverty it is such a true statement.

[disneysteve]

Originally Posted by Runaway Finances

When I was in college I got a summer job as a heavy equipment mechanic and started at $6/hr. I had no real experience and it was just a summer job. I don't recall what minimum wage was back in 1976. The point is that my son made about $6/hr in High School a year ago. I bought a brand new Toyota Celica for $3900 in 1975 (Senior in High School). A brand new car like it would cost at least $15,000-20,000 today. So wages have not changed much but car prices have skyrocketed. This is just one reason the rich get richer and poor get poorer. Wages have not gone up proportionately to the rise in prices of goods. This is more true towards the lower end of the pay scale in my opinion.

In 1976, the federal minimum wage was $2.30. If you were earning $6.00 at that time, you were making 2.6 times the minimum wage.

Today, the minimum wage is $7.25. Earning 2.6 time that would give you a current income of $18.85.

[irmanator]

Originally Posted by GREENBACK

Growing up in a lower class neighborhood there are basic norms that people adhere to. If everyone around you is not striving for more than young people tend to follow this lead. I'm sure the opposite attitude prevails in more affluent neighborhoods. When people talk about the "cycle" of poverty it is such a true statement.

Exactly my point. Exactly why I would rather be the poorest in a middle class neighborhood than the richest in a poor neighborhood. When I lived in the city, they neighbors had a bad attitude about certain things. Now that I live outside the city in a semi rural area I am around people whose attitude is better and I am learning things from them.

[asmom]

I'm surprised that no one has brought up the fact that wealth is relative. Poor in one country may be well-off in another. It is also a reflection of your values, your needs and your wants. I have met many, many hard-working intelligent "poor" people who are perfectly happy; I spoke to a wonderful lady today who told me how happy she felt to have her health, a wonderful family and her faith but yes she is poor. She would be surprised to find that she is lazy and terrible with money.

Does that mean every poor person is noble with a value system that values family over possessions? NO. Does that mean that every rich person is materialistic and greedy? NO.

It just means that one's financial status is a reflection of many different factors. My personal philosophy: take care of your own business and don't worry about what anybody else does or does not have.

[maat55]

The rich get richer because they use good sense with money, the poor get poorer because they use bad judgment with money.

[julee_m]

Sometimes people with good judgement have bad luck, and conversely those with bad judgement have incredibly good luck. Someone could work hard and save and then get a debilitating disease and see their savings disappear. Many people who claim bankruptcy have medical bills despite having health insurance. I hate over-generalization. There are so many different factors impacting wealth, including having good examples, good looks, social contacts, education and just plain luck.