Rich get Richer?

[kav122]

I am really upset. I just read this in one of my previously favorite blogs, and it is really disheartening. Here is the story:


Things are set up so that the rich get richer and the poor get poorer.

I used to believe this myth as well, but it simply isn’t true. Things are set up to reward people who work hard and who provide a lot of value to others, and believing in the myth that “the rich get richer and the poor get poorer” simply ignore the people who regularly come from nothing to become a success (often by working incredibly hard and using their talents in an intelligent fashion) as well as the people who have plenty and squander it away.

The truth is that if you work hard, work intelligently, and work to continually build value for yourself, you’ll do just fine in life. If you make the choice to just put in your hours at a 9 to 5 job and then play hard on the weekends, you’re also choosing to stay in the same socioeconomic class. If you make the choice to excel at your job and then spend at least part of your off hours starting a side business and/or improving yourself, you’re putting yourself in place to move up.

It’s not about “the man holding you down,” it’s about the choices you make every single day. The next time you sit around with your pals talking about how the system is set up against you, ask yourself if you couldn’t be doing something right now to improve your situation - or improve yourself.





Now, this sparked a lively debate between whether this is true or not. Here is the gist of what I replied in the debate:

I, too, disagree. I read some very inspiring stories here, (many readers had submitted their own rags-to-riches stories) and my husband is an immigrant that came from nothing when he was 15 (picking up cans for money), to a very good provider for myself and our son.

I don’t disagree that that can happen. Success stories about all over the United States. But as someone else said “poor doesn’t mean wealthy or not wealthy.”

The people who shared their stories here were not wealthy. Although they were “poor”, they obviously have brains and drive and ambition and all of these great things that America was structured to foster.

We all realize that some people have more opportunities because they were “blessed with coming from a richer family.” And we accept that as something that they were given that others don’t have, and this gift helps them immensely.

Have you ever thought of ambition, and drive, and self-worth and intelligence as gifts? You were all given these gifts, or you wouldn’t be on a financial blog. You need to realize that not everyone was blessed with these gifts. You can call them lazy. You can say that they need to get a job. But then you are not empathetic.

Not everyone got that gift either.




I understand that for many people, they see a poor person and think "Man, if I was in that position, I would go get a second job, or a third. And I would not go out to eat. And why do they have that toy? They are poor and we are supporting them! SO UNFAIR!"

I just want to say that if you were in their position, then you probably wouldn't be poor for long. Because you probably would get a second job. Bravo! But have we really reverted to the survival of the fittest here? Are we willing to say "screw 'em" to all of the homeless/welfare people in our country?

Don't worry, I will say a prayer for you if you answered yes to that.

[lucille]

I learned over the years of working in corporate America that working hard and being loyal will get you nowhere. So many companies have a culture where being a yes person to whatever meme and sucking up to the person directly above you in the food chain will get you further than any amount of good work. People who do a fraction of the work and have a fraction of the skill frequently get ahead or fare better because they spend their effort on social positioning in that food chain. There are still places where your actual work and skills can be rewarded and appreciated but it is not a given to the point it can be seen as the path to success.

It has become so dog eat dog or maybe it was and I just didn't realized it until later. But I too have seen an erosion in caring about others, our country and society in favor of "I got mine and screw you" type mentality.

It is also true that many things are set up to make the poor poorer. They have a harder time finding banking resources or if they can they come with hefty fees. The cost of a place to live take up a larger portion of their income as does health care and other must - haves. It becomes even worse if they live in a city where owning a car is the only realistic way to get to work. I spent an afternoon in traffic court about five years ago (forgot to keep my insurance proof in my car). The majority of the people in this courtroom were the working poor who didn't have state mandated insurance. There is not adequate public transit and the cost of insurance here is fairly high. It was just another sign of how those on the bottom rungs have to work twice as hard to get ahead. Oh and when we moved from a slightly less desirable neighborhood to a nice suburban one our insurance costs almost were cut in half.

Everyone is not so callous and dog eat dog. There are many people who see it as important to make sure people have a fair chance to get ahead instead of purposeful road blocks put up to prevent them even with effort. What we have seen over the last 7 years is a continual erosion of those things that fostered opportunity for those willing to try. College is harder to afford, social programs are constantly getting cut and would be disbanded if some people had their way. Even those of better means are being constantly threated by a lack of job and financial security.

There was a post on the book Supercapitalism yesterday, another one by the same author is The World is Flat that talks more about globalism. Two other books I highly recommend reading are Nickel and Dimed that talks about how the system is harder on the poor and also Fast Food Nation that dives into that a bit more and then goes into our food system and what is highly flawed about it.

[jkuo13]

There is a lot of truth to the idea that working hard will get you pretty far. You can't get very far unless you put in some effort. That being said, the idea of working hard to pull yourself up doesn't always work out, especially if you're stuck in the lower rungs of the socioeconomic ladder. The system is a bit stacked against poor. Getting credit is harder, housing takes up a bigger percentage of income (and is usually in a less than desirable area), food choices in poorer areas aren't that great, medical care might well be out of reach, etc., etc. IMO, starting from a baseline of amenities (roof over head, food in stomach, no medical worries, family support structure, good community, etc.) gives you a huge head start. People who state that working hard will get you ahead regardless of economic circumstances ignore the fact sometimes starting off low and then suffering a few hard knocks really can trap people in poverty.

It's naive to think that only hard work is necessary to get ahead in life. Luck and what socioeconomic class you're born into still play significant roles. Morgan Spurlock did a t.v. show "30 Days," and the first episode involved him intentionally seeing if he could survive on minimum wage for 30 days. He was already educated and presumably already successful, and yet he didn't manage to succeed when forced back into lower class life. It's an interesting experiment that quite clearly demonstrates the significant disadvantages the poor start off with.

[kav122]

Just to clarify, I was disagreeing with the author that the myth wasn't true.

Haha, okay, that didn't clarify. I agree with the "myth" that the rich get richer. There!

And thanks, lucille and jkuo13 for your lovely comments! I agree, jkuo13, that show "30 Days" was AWESOME!!! I think that all of these people that say, "oh, yeah, I used to be poor" should watch that movie and then they could at least see someone who was working hard and getting beat down by the system. I just kept thinking when I was watching that movie "imagine if they had two or three kids!!" How horrible and sad that some people think that all it takes is a good kick in the butt.

[Gootsy]

It's funny, the other day I was doing some research on places to put my money for investing. Banks and online Discount Brokers. Checking their fees and services mostly. Can't tell you how many times I said to myself, "Jeez, if I had more money(was 'rich') I could avoid 90 percent of these stinking fees.

Which naturally made me think of how, "The rich get richer, the poor get the picture...." (good song btw heh)

Then yesterday I read that same blog post you put up, and was like, "WTF?" Could you perhaps post a link to it? I was reading it in my reader and forgot which blog put it up.

But I do agree that eventually working hard, and in the right direction, will reward you eventually. Just might take several years of slow progress.

[kav122]

http://www.thesimpledollar.com/2008/...-stick-around/

[Gootsy]

Awesome thanks.

check this out. found in my reader this morning . Nothing mind blowing, but funny that it's just after that other post.

February 8, 2008
Net Worth Values - The Rich Get Richer?

The other day, in response to my article about average net worth values, a reader named ‘g‘ left a fascinating comment. As I pointed out in “Lessons Learned From Average Net Worth Values,” there is currently a huge disparity between the median and mean net worth values in the United States.


For those that need a statistics refresher, the median is the value separating the higher half of the sample from the lower half, whereas the mean is the plain old arithmetic average. So what this disparity indicates is that some fraction of those individual in the upper half of the sample are way, way, way above the median, thereby dramatically inflating the mean. In other words, the distribution of wealth in this country is highly skewed.

While this might not come as a surprise, it’s interesting to look at these same values over time. This is where the aforementioned comment comes in… According to ‘g‘, this is what the numbers look like based on historical data from the Federal Reserve:

1960: Median = $8,690; Mean = $10,420 (Median is 83% of mean.)
1976: Median = $13,549; Mean = $16,893 (Median is 80% of mean.)
1982: Median = $19,446; Mean = $26,259 (Median is 74% mean.)
2004: Median = $93,100; Mean = $448,200 (Median is 21% mean.)

As you can see, the numbers have become increasingly skewed over the years. In fact, since 1960, the median household net worth in the United States has increased 10.7-fold, whereas the mean has increased 43-fold.

http://www.fivecentnickel.com/2008/0...ch-get-richer/

[kav122]

Originally Posted by Gootsy

Awesome thanks.

check this out. found in my reader this morning . Nothing mind blowing, but funny that it's just after that other post.



http://www.fivecentnickel.com/2008/0...ch-get-richer/

thanks for that info!

My net worth is really low, like negative 1000 and something, but I always think it is crazy when they say the mean for people my age is so high! I guess this explains it. On networthiq there are people who are my age that are on up into the 6 figures! I can understand that some people have incomes in the 6 figures, but man, to have a net worth that high is crazy!

That just shows the HUGE range in America.

[Xin Lu]

I love this discussion. I think it all comes down to how people manage their money and how much they want to grow their wealth. There are a lot of stories about lottery winners who lost their winnings in a very short amount of time, and a lot of rags to riches stories. I do think there are a lot of advantageous that rich folks have over poor people (education,networking,etc), but there is always opportunity to catch up. My parents came to the States when they were almost 40 and we had nothing. My dad barely spoke English and in fifteen years they were able to both make over six figures and save a lot of money. They did it through hard work. I am translating my Dad's memoir about this actually:

http://baglady.dreamhosters.com/cate...rs-in-america/

So I guess some of the rich do get richer just because their money is producing more money, but if the poor wanted to get ahead in America it is possible.

[Finally_Frugal]

I agree that the rich have gotten richer over the past 20 years or so, while middle-income and lower-income folks have seen their 'real' dollars hold steady or decrease. This has a lot to do with tax policies that various politicians have voted in over the years, in my opinion. Statistics like those already quoted in this thread prove this, along with many other stats I've seen in reputable newspapers and magazines.

I do also agree with the idea that those who are willing to work hard will be rewarded, however. People who refuse to take responsibility for their lives/situations frustrate me. I work two jobs (50-55 hours per week), go to graduate school, and attempt to have a social life. I do this so I can pay my debts, save some money, and improve my life. Eventually, I'll get there---and it's going to be a long, hard road, but I'm ready to take responsibility!