Rich Getting Richer, Faster

It's likely that you've heard the saying "the rich get richer and the poor get poorer." In fact, if you're like 90% of Americans, you've probably used the phrase -- usually to refer to some wealthy person who doesn't "deserve" their wealth and who just landed on another gold mine. ;-)

This article from Money Central tells us that the rich are getting richer -- and faster than ever. Their comments:

Two new studies find the rich are getting richer at a faster pace.

A study released last week, from the Center on Budget and Policy Priorities and the Economic Policy Institute, found that the gap between the highest- and lowest-income families is significantly wider than it was 25 years ago.

And an analysis of income-tax data by Congressional Budget Office found that the top 1% of households own nearly twice as much of the nation’s corporate wealth as they did just 15 years ago.

This really shouldn't be a surprise to anyone. Because of the power of compounding, once the "rich" get a certain level of assets, those assets alone start earning more than the poor do at their jobs. As a result, the rich get richer faster than ever.

That's why I recommend:

1. Spending less than you earn.

2. Saving a good portion of your income as a result.

3. Doing steps 1 and 2 for a long, long time.

If you do these, you'll eventually have people saying they you keep getting richer while they seem to be getting poorer. ;-)

Comments

[coglethorpe]

As it says in "Rich Dad, Poor Dad," the rich buy assests. We are at a point in our society where the middle class buy liabilities at and what I think is an unprecidented rate. The poor take on sub-prime lending which just destroys them financially.

In the mean time, people get rich off of all that interest the middle class and poor are willing to hand them.

[Gary Bourgeault]

Good Post. So many try to make it look like the so-called "rich" have somehow gotten that way through spurious means.

Instead it is the long-term outlook, coupled with deferred gratification that makes those who are called the rich that way.

It is simply a matter of investing more than you consume over a long period of time.

[BigBuddha]

This is unfortunately a very real situation in society today in general. Cashflow Money management and accrueing proper investment (appreciating assets)whatever there form, hopefully income yielding as well, is the only way to move forward, or else the gap will open wider at an ever increasing exponential rate.

[Charles]

Rather than a matter of moral failure among the yobs, the growing disparity is instead due to several policies and trends.

1. The elimination of usury laws and the lowering of credit standards.
2. High levels of legal and illegal immigration. Honest unskilled and semi-skilled work pays less and provides fewer benefits as a result.
3. Degree inflation. Over 50% of 18 year olds go to college. More years out of the workforce, more debts to pay. Why? Because employers are prohibited from measuring IQ and use degrees as a proxy instead.
4. Legally mandated favoritism toward non-Whites. Whites must therefore incur greater expense in terms of education and training.
5. Criminality and academic under achievement on the part of non-Whites compels Whites to pay a premium in housing costs to live in safe neighborhoods and have access to decent schools.
6. The emergence of a non-native cognitive elite which effectively blocks natives from participation in certain fields, especially IT.
7. Immigration and lowering of credit standards drives up the cost of housing.

There's plenty more, but aren't they all just a bunch of lame excuses? This is America, anyone can get rich. Best damn system the world has ever known. You betcha.

[Paul]

It seems inevitable to me that in a growing economy the disparity between the rich and the poor must always grow. That is because no matter how good the economy is there will always be people who make little or nothing. At the same time, the high-end incomes will always grow. So the disparity will always increase.
As to the cliche, it is true that the rich get richer. I don't think it is true that the poor get poorer. In the United States, the poor are relatively affluent compared to world standards or even compared to condtions in the US as recent as fifty years ago.