: Why does the rich gets richer and the poor gets poorer?
In: 0
Because the rich have resources to risk toward innovation and development. The poor are using their money for consumption.
Because history shows that allowing an economy to progress free of regulations always lead to corrupt individuals willing to do whatever it takes to make more.
The concept of a “free market” is a fallacy that only ensures those who make it to the top not only stay there, but have the power to make sure those below never stand a chance to catch up.
a rich person will buy seeds and plant them. in a few months they will have a bunch of food. so much food they can sell it and buy more seeds
a poor person cant afford to wait for a seed to grow so they have to buy food today. so they never have any extra food to sell.
money is like that
There are several reasons why it is hard to climb out of poverty relative to rich people.
Wealth benefits wealth. With having money you have the ability to do things like invest, buy properties, own companies.. all of these earn their own income.
While people in poverty are just struggling to get by, buying small packages which actually have a higher unit cost than bulk, or being stuck without clear ways out.
One famous example of this is the “boots theory”,(copied wikipedia and an excerpt from Terry Pratchett’s 1993 *Men at Arms*)
>The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles. But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet. This was the Captain Samuel Vimes “Boots” theory of socioeconomic unfairness.
While this is not an all encompassing explanation since inequality economics is a very broad and deep topic, this is an example of issues that barely getting by cause. A modern example I think is looking like Electric Vehicles. Gas is currently expensive. Sure you can get around that by having an EV like a tesla or plug in hybrid, but if you don’t have surplus to just go out and buy a 30k+ vehicle or have charging infrastructure for it, you’re still stuck with a gas vehicle and paying for gas.
Additionally there are just more opportunities for people with surplus capital. They can afford to take a risk, they can afford to send people off to college, to levy social connections, to take a risky investment.
There are the terrible “give a rich man $1000 and 6 months, and he will return with $10,000, and give a poor man $1000 and it will be gone immediately” memes/graphics/tweets… because things like the above.
If all your needs are met, surplus money can just go off and get put to work making things more efficient, or just stuck in a bank account somewhere stacking interest. Someone with means can yolo a thousand into a meme stock or crypto, and not be upset if they lose it but still collect the gains, while someone who has no extra surplus must use whatever income they have to survive.
Because money equals power and those with money have the power to make the rules about how the system works.
It is easier to get richer if you are rich because you can leverage your existing wealth to get more wealth.
Because the rich has access to the law makers and donate huge sims to keep them in power.
The law makers then make laws in favour of the rich to keep the money flowing to them.
Example is that very rich people often pay very little or no taxes, while normal people pay in full or get punished.
The first part is true, but the second is not:
> The world made good progress – in the last decade the share that lives on less than $10 per day has declined by 10 percentage points – but the chart also shows that much progress is still needed. 62% live on less than $10 per day and 85% live on less than $30.
> The global data makes clear why the world needs much more growth to end poverty. The world as a whole today is in a situation not so different from Sweden a century ago. The majority of the world left extreme poverty behind, but is still far poorer than $30 a day.
https://ourworldindata.org/history-of-poverty-has-just-begun
Mainly because the rich are currently in control of our current economic system, so society tends to be structured in a way that benefits them.
Latest Answers