Conventional wisdom holds that the richest Americans are hoarding the nation’s wealth for themselves, but that isn’t true.
Today, Alexander Green explains how accepting responsibility for our choices and actions can help us achieve more income and wealth.
Economic inequality has become an obsession in recent years.
President Obama called it “the defining challenge of our time.” Pope Francis called it “the root of social evil.”
Between 2009 and 2016, the number of articles in The New York Times containing the phrase soared tenfold.
Conventional wisdom holds that the richest Americans are hoarding the nation’s wealth for themselves, while everyone else stagnates or loses ground.
This is laughably wrong. Yet most people don’t know it, thanks to biased reporting.
U.S. average household income and household net worth hit all-time records in 2018.
There have never been more households making more than $100,000 a year. There have never been fewer households earning less than $35,000.
Yes, the rich are getting richer faster than everyone else. And we should do what we can to improve social mobility in this country.
Yet economic inequality in itself is not morally objectionable.
What is objectionable is poverty.
If a person lives a long, healthy and pleasurable life, what difference does it make how much the Joneses make, how big their house is or how many cars they drive?
Our goal should not be that everyone has the same. It should be that everyone has enough.
This confusion of poverty and inequality is due to what psychologists call “the lump sum fallacy.”
This is the mistaken notion that wealth is a finite resource – like a pizza – that is divvied up in zero-sum fashion, so if some folks have more, others necessarily have less.
That’s not how the economy works. Wealth is not just distributed. First it must be created. And it increases over time.
That is why the economy, household income and household net worth rise.
Notice that the people who grouse the loudest about economic inequality never explain why this occurs in the first place.
There are five main reasons:
Some people don’t work.
Some work but don’t save.
Some save but don’t invest.
Some invest but not prudently.
Some invest prudently but spend the money instead of letting it compound.
There is plenty more to say about each of these issues. It’s also worth noticing that successful risk-takers see their economic fortunes rise the fastest.
Yet you’ll find this objective, matter-of-fact explanation is highly unpopular in some quarters.
Because it makes clear that the real source of economic inequality is not greed, selfishness or “a rigged system.”
It’s personal accountability.
It is only when we accept complete responsibility for our choices and our actions that we take the giant step from childhood to adulthood.
Yet many choose to embrace the psychology of helplessness and victimhood, preferring to explain all their struggles in terms of the actions of others.
Like you, I meet middle-aged men and women who are still grumbling and complaining about earlier unhappy experiences, who are still blaming their problems on other …read more
Source:: Investment You