There is much talk about inequality lately. The top 1% take home 24% of the nation's income. In 1976 they took home just 9%. Wealth inequality is even worse. The top 1% of Americans own 40% of the nation's wealth. The bottom 80% own 7%. The concentration of wealth in the top 1% bodes ill for democracy. An aristocracy is in the process of being created that is controlling the levers of government by means of money in the form of campaign contributions and lobbying. Thus is democracy thwarted.
It shouldn't have to be this way. As technological progress has continued, wealth is being created at a rapid pace. If this wealth were evenly distributed, the average person should only be working 10 or 20 hours per week and have twice the income that he or she now receives. Think about it. Lesson 1 in "Wealth Creation for Dummies" is that as you become more wealthy you should be able to work fewer hours. A modest amount of wealth insures that a person doesn't have to work at all. A wealthy person receives most of their income from the return on their assets - which is another name for wealth - in the form of interest, dividends, rents or other forms of investments such as factories which are mainly capital investments in the form of robots rather than investments in human capital. They receive so-called "unearned income" while people whose only income is from their labor receive "earned income." Being wealthy to the point that you don't have to work does not mean that you have all the commonly imagined accoutrements of wealth - big houses, fancy cars, expensive jewelry etc. You can be wealthy to the point of not having to work and yet not be able to afford more than a modest lifestyle. At that point you have true freedom as you have complete control over your time and energy and are not accountable to anyone.
If wealth were evenly distributed and since most products are manufactured by automated processes requiring little labor, people could have most of what they consume while not having to work much. Certainly with the robotization of the work force and the even distribution of wealth, consumable products should cost virtually nothing. However, in the real world products do cost a great deal and the profits from the sale of those products go mainly to the upper 1% because they own most of the wealth. They own the factories that produce the products; they own the robots. They own the physical capital and supply chains and retail outlets. So rather than the wealth that is created by the robots being evenly distributed, it accumulates more and more in the hands of fewer and fewer people who end up with far more wealth than they really need to live even a high end lifestyle with multiple homes, cars yachts, airplanes, art, jewelry etc. They spend their extra money on lobbying and campaign contributions which gives them control over what has become an ersatz democracy.
Lesson 2 in "Wealth Creation for Dummies" is that as soon as possible you must get yourself in the position of not living paycheck to paycheck. This means that even if you have a good job, you can't be spending your whole paycheck every month shortly after you receive it. Because what happens is that as soon as some unexpected expense pops up, you go into debt and your financial situation worsens because now in addition to your other expenses you have to pay interest on that debt - to some wealthy person for whom it represents unearned income. You need a buffer whether in the form of a savings account or in the form of a Home Equity Line of Credit (HELOC) so that you can manage the ups and downs of cash flow without paying exhorbitant amounts of interest. You also need a second job, the proceeds of which go right into savings and creating wealth. A good way to do this is to buy fixer-uppers, fix them up and rent them out. At this point in time when interest rates and property values are extremely low, it's the ideal time to follow this strategy. As soon as the rent that can be charged exceeds the mortgage to be paid, you have a source of wealth that is creating unearned income and that will go on creating additional income, rent being one form of the phenomenon that wealth creates income, ad infinitum. These assets, unlike a pension, can be passed down from generation to generation.
It takes a surprisingly small amount of wealth to generate an income sufficient to live on providing you don't need to live the lifestyle of the rich and famous. For example, just three mortgage free rentals renting at approximately $1500. per month per property is enough for a small family to live on as long as you live modestly. And just because you collect unearned income every month doesn't mean that you can't continue to work at something you really love doing. Lesson 3 in "Wealth Creation for Dummies": Work as a self-employed person is far more rewarding then work as an employee. When you work for yourself, you aren't subject to being laid off, fired or having your job outsourced. You don't have to take a subservient position relative to an employer or potential employer. You don't have to go begging in the job market for a job. You have control over your time, work the hours you choose and vacation when you want not when your boss tells you to. You don't have to swallow hard and say nothing if your supervisor insults you. You are your own boss. This is what freedom is all about. Freedom is much more than just the freedom to make money which is what the right wing would have you believe. Wealthy people no matter the amount of their wealth are self-employed by definition because they are not dependent on any job or any employer. In today's world of employee uncertainty, this kind of independence is priceless.
But the real world situation is entirely different than the scenarios I've painted in "Wealth Creation for Dummies." Most people live paycheck to paycheck, are entirely dependent on someone giving them a job and are not in a position to contradict their boss. Meanwhile, wealth and the income that wealth produces as a return on assets goes to fewer and fewer people, exacerbating income and wealth inequality. Lesson 5 in "Wealth Creation for Dummies' is to change your ideas about what money is used for. Money shouldn't just be used for consumption. You don't need all the products that TV advertising is urging you to buy. You must develop sales resistance and use your money insofar as is possible for wealth creation. Isn't the goal to get in the position of not having to work? The typical middle class position on this is that you should work for a set period say 30 years as an employee at a job and then collect a pension for the rest of your life. This process does not really create wealth for you; it creates wealth for your employer because the assets the return on which goes to pay your pension are owned by your employer - not you. With a pension once you die, it goes away. If you own the wealth that your pension is based on instead of your employer owning it, you can pass it on to your heirs (Lesson 6).
Second, employers aren't providing set pensions any more - only 401ks which are defined contribution instead of defined benefit plans. This means that they may be totally worthless which many of them have turned out to be when you reach retirement age. Therefore, you have to create wealth for yourself (Lesson 7) instead of counting on your employer to do it for you. Thirdly, 30 year careers are few and far between any more. The shift from defined benefit pensions to 401ks really makes a sham and a mockery out of the traditional middle class aspiration of a college degree and a secure job with a secure retirement. There just ain't no such thing any more. Intead of wealth creation most college students are creating debt in the form of student loans which will follow them the rest of their lives. Therefore, you have to take wealth creation into your own hands and not expect some employer to allow you to live paycheck to paycheck. Now should you expect a college degree to in and of itself create wealth for you? A college degree only gives you a ticket of admission to the corporate world in the form of an employeehood. In this form you are likely to be laid off, outsourced or downsized. You are much better off starting to create wealth right out of high school instead of creating debt which is what most college students are doing. As a self-employed person you don't need a college degree and there are no roads to the creation of wealth that are closed to you. Just ask Bill Gates, Steve Jobs, Michael Dell or Larry Ellison - all college dropouts and high tech billionaires.
If you create wealth for yourself instead of relying on a pension you may be able to retire in less than 30 years. There's no law that determines when you should have to or not have to retire. If you are self-employed you can work as long as you want to. You don't have to retire at 65 if you love your work.
Now the concentration of income in the upper 1% which is a consequence of the concentration of wealth in the upper 1% leads to its own logical contradiction which suggests that this wealth maldistribution is not inevitable. Consider the largest concentration of wealth in the US - the Walton family based on the Wal-Mart chain of stores. But what does Wal-Mart really do? They amalgamate products manufactured in China, arrange them on store shelves and hire a few cashiers to collect money from consumers. It's not rocket science. The same applies to Home Depot, Best Buy, Costco, Target, Loew's and any other large nation wide retail chain. They provide nothing of value but they have concentrated wealth in fewer and fewer hands as they've replaced Mom and Pop operations throughout the country. This begs the question why shouldn't these retail operations which just assemble products made in China, arrange them on store shelves and hire check out people (which are increasingly being replaced with automated check out stations) be cooperatively owned with the rewards of ownership (shares of the wealth) being more evenly distributed among larger and larger numbers of people? It should be a no brainer because nothing these stores are doing requires a large amount of brain power to undertake.
Part of the answer is that the person or persons who started these retail stores were ambitious entrepreneurs who worked long hours to get their operations going. The average person does not have the time or energy (not to mention the capital) to do this or to attract a large number of people to get a cooperative venture going. In other words how do you set something like this up if not for the ambitions of the individual entrepreneur? Here's one way: a group of citizens could petition local government to provide startup money for such a venture. After all local government consists of a bunch of local citizens. If there was enough of a collective will to set up a co-op retail merchandising operation, it could be done using local government to provide capital and manpower and organization. Once in operation a co-op such as this could replace Target, Best Buy, Home Depot, Costco etc and profits could be plowed back into the local population. In addition an operation such as this could provide employment for the local population and a share of the wealth so created. In banking this is already being done in North Dakota which has a publicly owned state wide bank. The profits are owned by the people of North Dakota.
For another approach check out Mondragon.
This is exactly what is needed to distribute wealth more evenly and to distribute the demands for necessary labor more evenly. Instead of fewer and fewer people becoming fabulously wealthy and owning multiple million dollar homes which they don't need, the bulk of the population could be in the position of working fewer and fewer hours taking full advantage of the robotization of the work force and having income based on the wealth so created.
Lesson 7: Wealth produces income; income does not produce wealth if your mindset is to consume up to your income level. Therefore, consume less and instead of saving for your old age, invest to create wealth, but invest in real assets not in phony paper financial assets which can evaporate at a moment's notice.
