The Rich Get Richer

[Broken Arrow]

Doesn't look like the rich are getting richer there B.A.. Do they also have a poor chart to show that the poor are getting poorer?

Well, I suppose it does seem that way.

However, 2002 through 2007 wasn't all that bad for all economic classes. People were having a good ole time spending borrowed money through the housing bubble.

The original point is, "The rich gets richer, while the poor gets poorer", to imply a widening gap. Maybe.

But as 2008 shows, that's not entirely true. In 2008, the rich trended down along with everybody else.

So, the rich does not always get richer.

[watsoninc]

Additionally, the ultrawealthy (net worth of at least 30 million) were hit harder than the merely rich.. Consider the results of 13th Annual World Wealth Report. It showed that although both the magnitude of wealth and the number of millionaires decreased by about 19% in 2008. The ultra-wealthy saw their ranks drop 25%, with their wealth dropping 24%.

This is particularly relevant in interpreting such data because the loss of wealth among the ultra-wealthy disproportionately affected the overall trends. Although the ultra-wealthy make up less than 1% of the total millionaires, they hold 34.7% of the wealth.

[happygirl]

I think the cycle of poverty is very real for many. When you are a toddler, you look to the adults in your life to teach you everything.

For example, if parents use poor grammar, a child will most likely learn poor grammar. Then when that child is a teen and trying to get a job, he stands less chance of being hired than a child raised with parents who used proper grammar and taught their child how to present himself in a positive manner. Then, in addition to having more difficulty finding a job, that teen's self esteem starts to erode when he is rejected time and time again and the cycle continues. So, this teen decides he could never make it in college, after all he can't even find a good after school job, so he gives up and settles for whatever low paying job he can find. Then he'll become a parent and will be a role model to his children so they will follow his example and it starts all over.

This is obviously not the case with all poor people, but just one example. I think as a society we too often fail to take responsibility for our own actions and situations, but we also fail to show compassion and understanding and offer a helping hand to those who need it.

[Alex_Adviser]

The richest 2% of adults in the world own half its wealth, the richest 10% own 85% of it, and the bottom half with just 1%.- (From James Petras, “ Rulers and Ruled in the U.S. Empire”)

The above statement speaks everything about why the rich are getting more richer.

[money blogger]

Attitudes of Rich VS. Poor

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.

Thanks for the comments Jim,

I'm so glad you picked up on and mentioned the attitudes. This is the most important part. If people are comfortable being poor, they will never make a transition to middle class and eventually wealth.

[karenkc]

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]

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]

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.