This will be The Most Important Class Your School Never Gave You
A huge proportion of the world is up in arms at the moment about the “evil 1%” and they are on something of a crusade to vilify anyone who hasn’t resigned themselves to being poor & miserable.
They will often suggest that it is “Immoral” and “Unfair” for the successful few to control a large amount of wealth. This movement, championed by people like Bernie Sanders (He’s poor by the way) will claim that great wealth is created at the expense of other people, that it is unethical and must be stopped. But we have to dig deeper, and we have to examine the truth and ask ourselves why?
Sure it sounds like a problem on the surface, it sounds like an enormous problem, something that should be dealt with immediately! And it fits nicely into the assumptions and negative financial beliefs that so many of the worlds poverty class maintains. These beliefs have lead to a huge demonisation of success in recent years, and an open distaste for people who achieve wealth and are living a life of abundance. Why this demonisation? From movements like Occupy Wall Street to workers going on strike and demanding more pay there are enormous amounts of people who think this way, but there is a fundamental flaw in their entire argument. A flaw that can be undone through education & providing them the economics class they were never given in school.
The first thing we need to understand is that these people are making an assumption.
They have assumed that if one person has an abundance of something, it prevents other people from having the same thing. They view the world like a cake, and believe that if someone takes a slice of the cake there is less cake for them. They have internalized this belief, often from growing up in an household where a scarcity mindset was the norm.
They assume there is a shortage of wealth, money and opportunities, and they have come to the unreasonable conclusion that the world is a place of scarcity.
Let’s examine this on a deeper level.
Imagine if you had a magical cake topped with $100 bills, and if you took a slice of that cake the slice would magically grow back and be covered with more $100 bills. You could grab hand fulls of cake all day long and the cake tin would fill right back up. Every time you removed a hand full of the $100 bills, more appeared to replace them.
If your friends came over, saw the cake and started stuffing their pockets with slices of cake & $100 bills, only to watch more cake appear in front of them. Would you care? Would you be upset if they left with an entire truckload full of cake & $100 bills if the cake was just replaced anyway? No you’d be be like “Dude I have a magical money cake come and get some! It’s awesome” because you could just go through to your kitchen and get more cake whenever you wanted.
In that situation, would there be any problem if one of your friends had grabbed a billion dollars & you’d only picked up a few million? Of course not, it wouldn’t matter. There’s still just as much cake for you. You could just pick another few hand fulls of cake, pull the $100 bills off the top and you’d have just as much.
So if there was an infinite supply of $100 bills would it be a problem if someone had 2 billion and someone else had 50 million? You wouldn’t care. Everyone would just be encouraged to reach out and pick as many as they could off the top of the cake. If someone having more than you didn’t prevent you from having just as much, or going out and getting even more no one would care. It doesn’t matter who picked up more that day, because you could go and get just as many whenever you wanted. And you’d encourage everyone else to take as much cake as they could.
On the other hand if there was a limited amount. If there was a shortage. Lets say there were only ten slices of cake left in the world, and that was it. All the other cake on the planet had magically dissappeared and there were only 10 slices left. You would have to work out if one person got some, someone else would have to get some, etc. Now people are going to fight over the cake, they’re going to want it to be divided equally, and shared out among everyone. If one person got 8 slices of cake and you only got 2 you’d be pissed, you’d be angry at them for taking the cake you could have had!
This is the exact difference in mindset between the rich and the poor.
This is the cognitive divide that determines whether someone is going to become wealthy or not, and this is the reason why most people will sadly never be rich. Whenever you hear poor or middle class people saying it’s unfair for someone to be insanely rich, when you hear them complaining about income inequality or a wealth divide they are making the assumption that there is not enough cake for everyone. They are making the assumption there is not enough to go around, and that they are going to miss out if you have some. Their belief is that wealth is limited and we all have to fight over whatever little scraps we can get. Whereas the wealthy are living in a world where the cake is infinite, and they can create more cake whenever they want.
This problem is easily solved and we can explain it by shrinking the size of the economy in our minds so it’s easier to understand:
If you imagine a caveman tribe of 100 people living in a valley, and the valley is surrounded by mountain ranges too dangerous for them to pass so they cannot leave the valley. Much like we cannot yet leave the earth. So they’re all trapped in the valley together in their little tribe. Now lets say there is a farmer with some grain, a fisherman with some fish and a carpenter with some wood. We have two options, either we divide those resources out among the tribe, or we create a system where we send people out to gather more.
So we create a system where one person harvests more grain, another catches more fish and someone else goes to cut more wood. They do so and they come back with more. Now the amount of resources within the tribe has increased, there is more of everything.
We now have a production system, we’ve created a system where the wealth available to everyone in the tribe actually grows, a capitalist system. Other people would see this and begin to look for other resources (They’d start innovating) and we’d soon have people picking berries, harvesting fruits, mining rocks and so on. Soon we’d have an economy with vastly more wealth and resources than we started out with. There would be more of everything we had, and there would be new and exciting things being added all the time. We would have a civilization where everyone was getting wealthier and wealthier, their quality of life would continually increase as there was more types of food, different resources and better products being created.
Because when you have people producing, everyone is better off. If the farmer got old and stopped farming it would be bad for everyone because there would now be less resources being created. So the farmer would teach his children, they’d start their own farms and now we’d have more people producing, and even more wealth being created. So the more producers there are, the better! The tribe would thrive and grow. Innovation would be encouraged and those who produced valuable resources for the tribe would be rewarded. Everyone would become more wealthy.
Now here’s exactly where we face a problem today. The supporters of Bernie Sanders (or Jeremy Corbyn here in the UK) would suggest that instead of doing that! Instead of creating a system where everyone gets wealthier. We take the small piles of grain, fish and wood that we have to start with and we divide them all out among the tribe members. Everyone would get their little pile of resources and be equal. There would be no ‘rich’ and no ‘poor’. Everyone would have a couple of sticks of wood, a tiny sliver of fish and barely a handful of grains. No one would need to go out to find berries, no one would learn to hunt, no one would start mining rocks, because they’ve just been handed enough to ‘survive’ (albiet in abject poverty). Everyone would sit down with their little pile of stuff, rapidly use up what few resources they had, run out and starve to death.
The same applies to the world economy. We are creating new products, services and innovations daily. We are producing ‘resources’ daily, and are not limited to material resources, we have an infinite scope to create information, software, TV & Movies, Books, art and so on. There is absolutely nothing present in reality to suggest that there is any degree of scarcity whatsoever. There is simply no real factual basis for people to believe scarcity is a problem.
Now some people would argue “Well there is only so much money in existence, so of course there is scarcity”.
We print it.
We literally print it. Every single day the USA alone prints hundreds of millions of dollars. The money tree isn’t a magical myth at all – we grow cotton on trees, turn it into fabric notes and we print it every day by the truck load. There is absolutely no shortage of money.
On top of the fact we print it, there already exists hundreds of trillions of dollars worth of wealth on planet earth. The richest man in the world at the time of writing is Bill Gates, and he is worth around $50 billion, barely one twentieth of a single trillion. In fact you could completely remove Bill Gates entire sum of wealth from the economy and it wouldn’t even cause a blip. No one would notice. So one person earning a few million here or a few billion there is completely inconsequential, it’s so miniscule in comparison to the economy that it couldnt possibly affect the lives of you or anyone else.
But lets pretend for just a moment that there is a limit, lets pretend there is only a finite amount of money on the planet. Lets take another look at our example where there exists only 10 pieces of money cake left. Now imagine a situation where one person has $7 worth of cake and theres only $3 worth of cake left to be shared out among everyone else. So what happens when everyone else only gets a few cake crumbs? What happens in a value producing society is that the purchasing power of those crumbs (dollars) goes up, because there is now less in circulation, and there are more products & resources being created, each dollar has more value, and can buy more goods & services. The dollar becomes more valuable.
So we already know the person who claims there’s only a finite amount of dollars available is wrong, because we continually print more each day. There’s an effectively infinite supply, especially with modern banking we can just add bigger numbers.
But even if we didn’t have an infinite supply, even if we stopped printing it we’d be fine. Because the value of each dollar would go up, the purchasing power would increase, and everyone would be able to buy just as many goods & services for less dollars.
So when we have producers in the economy, we continually create more wealth. Regardless of the number assigned to the currency. Because the value increases and that’s what matters. There are either more dollars, or each dollar is worth more. It doesn’t matter how you spin it. As long as there are value producers the system continues to create wealth and everyone gets richer & richer.
See this completely destroys the entire argument of it being unfair or there being a shortage, when we live in a society where anyone can become not just a millionaire but a multi-billionaire without even remotely affecting another person’s ability to do the same. Such an argument simply has no basis in reality.
I’m sitting in a restaurant eating breakfast as I type this out, the view from the window beside me contains an ocean of buldings, offices & glass towers. All I see when I stare out at this view is wealth, enormous wealth. Each of those office blocks is worth tens of millions of dollars. The businesses housed within their walls are each assets worth millions if not tens of millions of dollars. The ocean before me contains so much wealth that even the richest men in the world could not single handedly afford to buy it – yet it is not an ocean, not even a lake. It’s a tiny puddle, the view from a single window, in a single city among tens of thousands of cities that exist on planet earth.
The problem we face today is that we have not a wealth divide but a production divide.
There is one class of people, who produce value. They contribute to society – they create new products, build businesses, cure diseases and solve problems. If we think back to the caveman tribe for a moment, these are the members of our tribe who look at what the fisherman & farmer are doing, and go out to harvest berries themselves. Today we call them “Entrepreneurs” and “Innovators” as if it’s something to be viewed as the exception not the expectation.
The problem we face is that there is another class of people, a class of people who have bought into the idea that it is ‘immoral’ or ‘unethical’ for value producers to be rewarded for their contributions to society. A class of people who believe the farmer should give away his grains and fisherman should be forced to hand out his fish for free. Meanwhile these people refuse to act as value producers themselves, they focus their life on being a ‘consumer’. On taking value and using it up, without even creating value or contributing in return. These people are called ‘poor’ and make up a large part of the 99% who now view themselves as victims, despite being a victim of no one but their own bad decisions. It’s due to a fundamental flaw in the way they think, not in the system they exist within.
You see wealth is everywhere, it is truly abundant and there is absolutely no shortage. And you can have as much of it as you want. You just have to give something back in exchange.
Everyone can have their cake & eat it – But only if they embrace Capitalism.