If the economy keeps growing, shouldn’t that growth benefit everyone to some extent? How can so much wealth be concentrated at the top, while millions struggle just to cover basic living costs?
If the economy keeps growing, shouldn’t that growth benefit everyone to some extent? How can so much wealth be concentrated at the top, while millions struggle just to cover basic living costs?
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When you are bigger and stronger than everyone else around you it is easy for you to monopolize all of the good stuff. This is true of gorillas and it is also true of human beings.
The only way to counter the extreme power of billionaires is to cooperate. And unfortunately billionaires control the media so they are very good at feeding us reasons not to do that
With money comes power, and the wealthy will use that power to ensure that they get more money. It’s a feedback loop.
Being rich ≠ having lots of money. Being rich = having more money than those around you.
Back in the day they had a thing called “scrip” which was company-printed money they’d pay to miners, and it was only redeemable at the company store. So you couldn’t take your earnings out and spend them anywhere or leave the mine, you had to use it to buy food and pay rent to the company, in the company store, in the company town.
While that was made illegal, in a way it’s not that different to the current situation and your question. You work for a company, and almost all your income is used to buy products from that company and other companies that everyone else works for. Now, the companies are getting a cut of your labor when you work for them, but they’re also taking another cut when you buy something from them. You’re living paycheck to paycheck but they’re accumulating wheelbarrows of cash each year off you.
Every point in the transaction has a company taking a cut from the deal, and that money accumulates with the 1%, and their executive class who serve the 1%.
Assets increase your worth, liabilities decrease it.
The growth is mostly in assets which continue to grow when the dollar is worth less every year.
The poor however, don’t typically work with assets, only liabilities.
So, ELI5: Poor have liabilities which decrease in value over time, while they spend on necessities not assets.
Rich have assets which increase in value over time, while they spend on frivolities because everything they have will continue to appreciate.
As a note: inflation is targeted @ 2% per year. Which means, the Gov is okay with your dollar losing 2% of its value every single year. Compound it, and you’ll also see how it’s made worse.
Let’s add one more! Now let’s do an average of 9% per year inflation. Does that make sense?
Growth alone doesn’t guarantee fairness or shared prosperity. It depends a lot on how the gains from growth are shared. If the economy were a pizza, the wealthy would own the oven and the materials: they could charge more for what they serve and make more money. We just pay for more pizza and work even more at our lower wages to afford the pizza.
Answer: if you have money, you get paid interest. If you have debts, you pay interest.