Frequently I hear ideas and observations passed around which have become the lingua franca of modern progressives. We’re part of the 99%, – or – they are part of the richest 1%. It’s unfair and we need government to step in and change it so everyone has an equal opportunity.The issues driving this are a complex combination of education, changing demographics, modern work force requirements and globalization.
We must remember that wealth isn’t really finite. The growing assets of the rich have minimal bearing on the living conditions of the poor. In many cases, the rich getting richer actually improves those conditions.
(With the super-rich, how they spend their money is infinitely more important than how much they have available to spend. If the money is circulating equitably, then it doesn’t really matter who is paying the tab — it will still generate the same amount of new wealth.)
To see the real problem, we need to look at the bottom of the pyramid, not the top. And we need to look at incomes on a per-segment basis in terms of raw wealth-generation.
Let’s illustrate using examples.
Kumar is an single entrepreneur in semi-rural India. He runs a innovative web-based service business. He nets $24k USD in annual income, which lets him live very well in terms of local purchasing power.
Sanjay lives in the same town as Kumar. He runs a food stand, and is lucky to crack $4k USD working the same number of hours. He has four children.
This is the problem. And it isn’t directly a 1%-er problem.
Sanjay is stuck in a financial rut because he hasn’t moved to a more productive form of employment. He chose a localized, non-scalable, labor-intensive job. Based on market forces, his wages are permanently limited.
Why didn’t he choose a more lucrative form of employment? Probably some combination of the following:
- He lacked the sufficient education to understand the economics involved in his decision.
- He lacked the freedom to change professions (i.e., socioeconomic barriers).
- He lacked the psychological tools to make an effective entrepreneur.
- He lacked the capital required to pursue a more profitable enterprise.
Solving those challenges is the pressing global issue, and that problem is becoming just as relevant in first-world economies.
The inconvenient truth is that there really isn’t a lack of jobs in North America. Pretty much every successful company has permanent hiring needs. They just can’t fill them.
~ Jeremy Arnold, Economic development researcher/writer. Article originated in Quora 2-04-15