…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.[The fact is, however, that]:
- U.S. average household income and household net worth hit all-time records in 2018.
- There have never been more households making over $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…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 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 [but] 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 5 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…
Personal responsibility changes everything. It means you own your thoughts, impulses, feelings and actions. You are accountable for the consequences they bring and the impact they have on others. This is not a burden, incidentally. It’s a privilege and an honor to take ownership of your actions. It creates freedom and control. It gives meaning to life. Self-reliance is the great source of personal power. We create ourselves, shape our identity and determine the course of our lives by what we are willing to take responsibility for.
If you want to do something about economic inequality in this country – especially as it relates to your own financial circumstances – the important thing is not what you believe or whom you vote for. It’s how you handle your own time, choices and money.