Do Rich People Actually Exist?

Do rich people actually exist? A lot is said of wealth inequality, how society has never seen such an uneven distribution of wealth, but what does that actually mean? What does it mean to rich? Is anyone rich? And do rich people have anything to do with wealth inequality.

What defines a rich person?

In it’s simplest term, the amount of money they have in the bank. Going a bit deeper it’s how many assets they have under their control. If they needed to raise money, what could they sell? And there is the money underneath the mattress, a bit old school but it’s there nevertheless.

And that’s basically it.

Bank, assets, mattress. The amount of money tied up defines if a person is rich or not. What amount of money is “rich” I think will be different for every person.

Lets for one moment pretend that a person has 1 trillion pounds. Let’s pretend, for the sake of simplicity that all that money is in the bank and readily accessible.

Is that person rich?

If they are not actually spending that money, one could say no.

A relatively “poor” person with say 100,000 pounds in the bank is in the same position if they do not spend money.

In short, a rich person is only rich when they are spending money.

But is even that description accurate?

What is “spending money”?

In it’s simplest form, it’s the process of one person giving money to another.

Perhaps it’s a plumber, perhaps it’s for a designer handbag which ultimately leads to some of the money filtering down to the person that farmed the cotton the bag is made of. And it turn, some of the money makes it down to the miner who dug the metal out of the ground that went in to making the machine that harvested the cotton.

Hopefully I’m not labouring the point here.

Ultimately spending money is the process of giving money to another person whether it’s for their labour or for their resource.

Boiling all of this down, being rich means giving a lot of money to other people. Ultimately.

What about the money in the bank? What about the money under the mattress?

Let’s assume there is a trillion under the mattress. That’s a trillion not in circulation which makes the value of all the other money in circulation worth more. A benefit for everyone except the rich person.

What if there is a trillion in the bank? That’s a trillion the bank can lend to people to invest in businesses. A benefit to everyone.

So what is rich really? What does it mean really?

We’ve said the rich are only rich when they are giving their money to other people.

And we’ve said rich people who aren’t giving their money to other people are increasing the wealth of everyone who are giving their money to other people.

What does it mean to be rich? What is “rich”?

Being rich is not having money. Being rich is not giving money, at least not directly.

Being rich means control. Control over the world’s resources.

The “richer” the person the more control they have. Giving money to people to get things done, that they want done. Building and creating things they want built or created.

If a rich person is stupid they will give their money to people for reasons which are not productive. For example giving a trillion dollars to build a yacht.

Stupid rich people will also give money to people who will also make stupid decisions.

The problem is not “rich” people. The problem is stupid rich people. People who give their money to other people for stupid reason or give their money to stupid people. Either way, the money flows through the economy and gets spent on unproductive things. This, in the long run, drives up prices or to put in another way, devalues the money that people have earnt or are earning. Making life more expensive for everyone else.

Because vast sums of money have been squandered instead of being invested in things that will make mankind more productive.

Again, the problem is not that people are rich, the problem is people who are rich but who are also stupid, and therefore making life more difficult for everyone else.

Logically speaking, stupid people do not become rich, unless they are very flukey. Generally speaking people become rich because they are clever and give people what they want. But there are exceptions. People who get money from people, whether those people wanted to give them money or not. This could be people working in government, or people who get money from government.

You might say plenty of people inherit and sure, if the kids are idiots this is the same problem. But if the parents were also idiots the economy has already adapted so no new problems will occur when idiots hand down money to other idiots.

Rich people are only a problem if they are stupid. In all other cases they are a plus for society.

Rich people (or hundreds of thousands of people who are moderately wealthy) but are stupid, the ones that accumulated their wealth by people giving them money involuntarily (and shareholders who who green-light massive pay increases to their CEO friend at the expense of the company) are the problem with the economy.

They make it more expensive for the intelligent people to live (because of the inflation they cause) and they make it more expensive because taxes and regulations need to be increased to keep their income stream alive and to drive out competitors to their income stream.

This is where the pay gap comes from.

Not from capitalism but from people getting money via an unfair advantage be it receiving tax money as income or by receiving preferential treatment on government contracts or in the service of government approved monopolies. The list goes on but I think you get the idea.

Either they receive protection from government or they receive money from government, directly or indirectly.

Sure, not all these people will be stupid, but this is the only way stupid people can become rich.

If we want to reduce the income gap, the wealth gap we must reduce taxes. The more money that is earned voluntarily, the greater the percentage of GDP that comes from voluntary transactions the wealthier we will all be and the more rich (read clever) people there can be helping everyone.

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