how does the rich get richer than the poor?

Answer 1

As an economist, the answer is unfortunately complex but it can be simplified down a little, I think.

There are three things which make people richer than other people.

The first is the quality of education. Education permits a person to be more productive in the same number of hours. Many poor work really hard, but their labor cannot be sold to customers for a lot of money because it isn't of high value to the customer base. Let me provide an example. The average American produces 30 times the goods and services a person in Bangladesh produces in any given hour. It is likely the Bangladeshi worker not only works harder, but works longer hours as well. So education produces about an 8-12% pay increase per year of education past the sixth grade in the United States. A physician forgoes both work and ease of life and in exchange they are paid a very high salary because most people are not willing to do the same thing, or lack the skills. Scarcity of beanie babies or skills or anything determine price. Any physician could work at the counter in McDonald's but not anyone working at McDonald's (if anyone) could work as a physician. So the value of a McDonald's worker is comparitively low because they use common skills most people have.

The second is risk taking. One important observation is that the rich often take risks with their money the average person would be terrified of. Imagine if your pay were changed from an hourly amount, paid by your "rich" employer, to an amount determined by customer purchases. If no one walked into the store that morning, then no one got paid anything. Even if people did walk in and bought stuff, you didn't get paid until all other costs involved in that sale were paid for. It could be months before you broke even at work.

So the rich take disproportionate risks compared to the average person and they get paid disproportionately to bear those risks.

Finally, certain laws, such as minimum wage laws make people poor. As counter intuitive as it seems, minumum wage laws do a lot to make the poor worse off. Minimum wage laws have been shown to directly increase poverty and to make the wealthy wealthier. This occurs in two ways. It increases inflation on the poor more than the wage while reducing the national income so everyone is worse off. Inflation works to transfer money from those without assets to those with assets (poor to rich). Second, workers who could have found jobs at lower wages are no longer legally able to be employed. Further, they lose access to on the job experience and training making them even less valuable than they were before because others who then work are even more skilled raising the bar even higher. So as the economy progresses, they lose ground. They end up worse and worse off, a little bit each year, and the rich end up getting the benefits.

Answer 2

Generally, by providing more value to society and a little bit of luck. The rich also tend to be financially literate, able to live within their means, invest and take a few good risks*.

Contrary to popular belief, the vast majority of rich people earn their wealth by providing something of value to their fellow humans. That's how this capitalist system works. To sell something, someone else has to see enough value in it to buy it.

Let's say an author writes a book on how to lose weight that educates 1 million people on how to drop the weight and keep it off and in the process makes $2 million. All million people would say that what they learned was well worth the price they paid for the book. Just think of the medical bills they may have saved.

*Good risk - Playing the lottery - not a good risk. Investing in stocks and real estate that have a long history of appreciating in value - good risk.

Answer 3

From my experience within my own family I have found that the rich stick up for each other. Also, they tend to be a little stingier. I have a sister who is VERY wealthy and this is how she and her husband do it. For family (including our parents and all the nieces and nephews) they buy $5 - $10 gifts at Christmas. Except in the past 5 years she decided they could not afford to buy for nieces and nephews or sisters so they only buy for parents. BUT for their friends who are wealthy (dentist, doctors, bankers, etc) they buy $100+ gifts at Christmas. They do not buy birthday gifts for family - only for friends who have money. When these people have births or weddings in the family, they buy BIG and the results have been that when they had a child, these same people bought BIG for their newborn. They go to the local dollar store to buy gifts for family members when they have a birth in the famly. They do not loan money to anyone. They take everything they can get off of people. When my daughter graduated they gave her $25 but when their dentist friend had a daughter to graduate they gave her $200. So therefore the dentist friend could not be outdone when their daughter graduated. He doubled that as a gift. Plus I was told that they "no longer have a savings account" which I don't believe for a minute - but they put all their money in CD's. I can not say my sister worked hard for the money because she didn't work outside the home. Plus with the position my brother-in-law had with a local bank, people gave to them all the time and did work at their home for free to stay on his good side so that he would approve things they needed at the bank. They used people a lot to get what they have.

Answer 4

Just take a look at our disappearing middle class and the reasons around that and you'll see why. Average Americans are being sold out by our government officials in favor of the wealthy. Outsourcing good paying jobs, immigration, high health care costs, if you don't have health care and you get sick you lose everything, heck even if you do have insurance and become hospitalized you end up in debt. Wages have not kept up with the cost of everyhting yet people think they deserve everything because they want it. That puts them in debt and no matter how much stuff you have, if you don't have money you are poor, you can't sell the stuff you buy at a profit, generally so that puts you further in debt. It's going to get a lot worse, you can bet.

Answer 5

The rich have more investment oppertunitys.'we dont work for money,money workes for us'.When youre in a position where you can take time and decide between investment oppertunitys,you can come up with some amazing things.off the top of my hed i can think of three ways to make 30% compound interest pa and it is extremely stable.as close to riskfree as you can get.take for nstance property,or import and exporting.you can litterally quite easilly tripple youre investment over night,if you just had the time for sourcing.

Whereas the poor(low income bracket) need to work for a living and when they do retire with an amount of money,they are not educated or are not willing to take a chance in investing or trying something new...does this make sense to annyone

Answer 6

When you see a Rose Bush , do you see a bush of thorns with roses , or do you see a bush with roses that has thorns ? The rich have goals , they do not procrastinate , they do take chances with investments , and they keep up with their ideas and decisions. They never stop learning and paying attention to the opportunities that are available to "everyone" ! The rich act on their beliefs , stay focused on their goals , and they don`t waste time . The rich plan , save , and they stay away from the things in life that are not productive .

Answer 7

The last increase on July 24, 2007 was the first of three steps of the Fair Minimum Wage Act of 2007. The act will raise the federal minimum wage: to $6.55 per hour on July 24, 2008, and to $7.25 per hour on July 24, 2009.
however {depending on where you live} states countries city's can set higher minimal wage rate
for example

Santa Fe $9.50

San Francisco $8.50

Washington state $7.63

Oregon $7.50

Alaska $7.15

District of Columbia $7.00

California $6.75

Hawaii $6.75


New York $6.75

also some small business and Jobs where you get part of your income from tips (like busboys) don't count.

Answer 8

find Robert Kiyosaki's "Rich Dad, Poor Dad". its a must read.

Answer 9

It takes money to make money