The Gap Between Rich & Poor
How many times
have I heard the phrase, "The gap between the rich and the poor is
getting bigger"? If I had a nickle for every time I heard that, the gap
would get even larger. It's a misleading phrase, and it is supposed to
reinforce the idea that the rich are getting richer, and the poor are
getting poorer. And in one sense, that is true, but that's a good thing,
not a bad thing. Allow me to explain.
I dont know how to insert my own graphs here so I can visually show you what I mean. So hopefully you can work your imagination and follow along. I've drawn this out to people before when explaining it, so I know my visuals work. I just cant do it here in facebook. Suck.
If the gap between the rich and the poor is getting larger, then it can be reasonably said that the rich are getting richer and the poor are getting poorer. However, whether this is a good thing or bad thing depends upon the context of the total income.
Let us say that the Top 10% of people make $1,000,000/yr. And the Bottom 10% make $500,000/yr. Here we have a gap of $500,000. Call this Model A.
Now, in some other possible world, let us say that the Top 10% make $500,000/yr and the Bottom 10% make $50,000/yr. Here was have a gap of $450,000. Call this Model B.
Now remember, according to this mentality of gaps between the rich and poor, the smaller the gap, the better. So, when we look at Models A and B, the gap is smaller in Model B. Therefore, according to this slogan, we are to prefer Model B.
But who in their right mind would want to live in Model B?! The most people make in Model B is generally less than the poorest in Model A. Sure, the gap is bigger in Model A, but everyone in general is better off in Model A than in Model B. So what is really preferable is Model A, contrary to what the Gap mentality will have you believe.
What the gap does show us is that the rich are getting richer AT A FASTER RATE than the poor, and hence we get this misconception that the rich are getting richer and the poor are getting poorer, but EVERYONE is getting richer. The only place you can something is unequal is in the rate of growth, but everyone is growing. A rising tide floats all boats.
Now, let us make two more models. In Model X, the Top 10% make $2,000,000/yr and the Bottom 10% makes $1,000,000/yr. A gap of $1,000,000. In Model Y, the Top 10% make $1,750,000/yr and the Bottom 10% makes $1,250,000/yr. A gap of $500,000.
The positioning of Models X and Y are different than Models A and B. Here we have Model Y right in the middle of Model X. Is it still preferable to go with the Model that has the smaller gap? Cases can be go both ways. A case for going with Y over X is that the floor is higher, the poorest cannot be as poor in Y than X. A case for going against Y is that the richest cannot be as rich in Y than X. So the risk isn't as big in Y but then neither are the gains.
However, this would only pass under the assumption that the distribution of people from the Top 10% to the Bottom 10% is even. But this isn't necessarily true.
In Model X, while the Top 10% may make $2,000,000/yr, it could also be that the next 80% makes about $1,800,000/yr and then the bottom 10% makes the $1,000,000. The vast majority of the population in Model X is somewhere in the Upper and MIddle Class, while only a fragment are only in the Bottom Lower Classes. In fact, under Capitalism, that is what we see. Not only a rising tide, but an increase in the Middle Class. This is why we want to reject Model Y and accept Model X.
So please, don't buy into this class warfare nonsense. The Gap is getting bigger, sure, but that's not necessarily a bad thing. The rich are getting richer, but so are the poor. The rich are just doing it at a faster rate.
Thatcher, like a Boss.
http://www.youtube.com/watch?v=okHGCz6xxiw
I dont know how to insert my own graphs here so I can visually show you what I mean. So hopefully you can work your imagination and follow along. I've drawn this out to people before when explaining it, so I know my visuals work. I just cant do it here in facebook. Suck.
If the gap between the rich and the poor is getting larger, then it can be reasonably said that the rich are getting richer and the poor are getting poorer. However, whether this is a good thing or bad thing depends upon the context of the total income.
Let us say that the Top 10% of people make $1,000,000/yr. And the Bottom 10% make $500,000/yr. Here we have a gap of $500,000. Call this Model A.
Now, in some other possible world, let us say that the Top 10% make $500,000/yr and the Bottom 10% make $50,000/yr. Here was have a gap of $450,000. Call this Model B.
Now remember, according to this mentality of gaps between the rich and poor, the smaller the gap, the better. So, when we look at Models A and B, the gap is smaller in Model B. Therefore, according to this slogan, we are to prefer Model B.
But who in their right mind would want to live in Model B?! The most people make in Model B is generally less than the poorest in Model A. Sure, the gap is bigger in Model A, but everyone in general is better off in Model A than in Model B. So what is really preferable is Model A, contrary to what the Gap mentality will have you believe.
What the gap does show us is that the rich are getting richer AT A FASTER RATE than the poor, and hence we get this misconception that the rich are getting richer and the poor are getting poorer, but EVERYONE is getting richer. The only place you can something is unequal is in the rate of growth, but everyone is growing. A rising tide floats all boats.
Now, let us make two more models. In Model X, the Top 10% make $2,000,000/yr and the Bottom 10% makes $1,000,000/yr. A gap of $1,000,000. In Model Y, the Top 10% make $1,750,000/yr and the Bottom 10% makes $1,250,000/yr. A gap of $500,000.
The positioning of Models X and Y are different than Models A and B. Here we have Model Y right in the middle of Model X. Is it still preferable to go with the Model that has the smaller gap? Cases can be go both ways. A case for going with Y over X is that the floor is higher, the poorest cannot be as poor in Y than X. A case for going against Y is that the richest cannot be as rich in Y than X. So the risk isn't as big in Y but then neither are the gains.
However, this would only pass under the assumption that the distribution of people from the Top 10% to the Bottom 10% is even. But this isn't necessarily true.
In Model X, while the Top 10% may make $2,000,000/yr, it could also be that the next 80% makes about $1,800,000/yr and then the bottom 10% makes the $1,000,000. The vast majority of the population in Model X is somewhere in the Upper and MIddle Class, while only a fragment are only in the Bottom Lower Classes. In fact, under Capitalism, that is what we see. Not only a rising tide, but an increase in the Middle Class. This is why we want to reject Model Y and accept Model X.
So please, don't buy into this class warfare nonsense. The Gap is getting bigger, sure, but that's not necessarily a bad thing. The rich are getting richer, but so are the poor. The rich are just doing it at a faster rate.
Thatcher, like a Boss.
http://www.youtube.com/watch?v=okHGCz6xxiw
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