On The Rich Getting Richer

It is often said that the rich get richer and the poor get poorer. Whether this statement is true or false depends to a large extent upon how one measures poverty.

Wealth (or the lack thereof) can be measured in two basic ways: absolutely, or relatively.

Wealth measured absolutely is determined by the level to which a person’s basic needs (not desires) for food, shelter and clothing are being met, regardless of whether anyone else has more or less. Anyone who has more of each of these three necessities than is needed for survival is rich in an absolute sense, regardless of varying levels of surplus among the population. A person who doesn’t have enough to meet the basic needs is poor regardless of whether some people lack to a greater or lesser extent.

Wealth measured relatively is determined by who has more or less, regardless of whether any or all of those people are poor in an absolute sense.  If, in the geographical or political area which is being considered, the vast majority of people are rich in an absolute sense, those who have the lowest surplus will be considered to be poor, and those who have the greatest surplus will be considered to be rich.

Measuring wealth in an absolute sense, the notion that the poor are getting poorer in developed economies is false when compared with the poor of a hundred years ago.  Most of the people who today are considered poor in the United States have shelter, indoor plumbing, electricity, one or more color televisions, one or more radios, a telephone or cell phone, and at least one video playback device. These are luxuries that the poor of a century ago could not have had.  People who do not have health insurance today are able to get medical treatment for emergencies, and receive a level of care that would have been impossible  even for the rich of a century ago.  There are also free clinics in most areas where basic medical care can be obtained.  Today there are social welfare programs such as food stamps, unemployment benefits, and social security, none of which existed in the United States a hundred years ago.  Most localities have mental health crisis centers for those who need it.  There are also food banks, churches, and other charitable organizations that offer help on many levels.  Taking these factors into consideration, the poor of today in the United States and in other developed nations are far richer than the poor of a century ago; so much so that there only a very small percentage of the population is poor from an absolute standpoint.

In developing economies, there were almost certainly times when the population pressures were much lower than today and in which a greater percentage of the population had a surplus of food, shelter and clothing.  In those areas the poor have gotten poorer.  However, the increase in poverty has not been because the rich have taken a greater share of the wealth.  The powerful have been taking resources from the less powerful in those areas since at least the beginning of recorded history.  The reason for the increase in poverty is because the death rate has declined due to improved medical technologies, and local populations have increased dramatically.  Areas have reached population levels that have outstripped their economic ability to provide for those populations.  In time, as democratic political systems and capitalist economic systems are adopted by developing countries, those countries will see a decline in absolute poverty, although not in relative poverty.

Measuring wealth relatively, the proposition that the highest levels of the rich have a greater surplus than the lower levels of the rich is true, but this isn’t because they have robbed anyone.  As the market for goods and services increases, due to both population increases and increasing globalization, the amount that a person can potentially make also increases.  In a population of only three million, the potential number of widgets sold for a $1.00 each might make the seller appreciably richer than the average person, even when competition is taken into account.  In a market of three billion people, the number of widgets sold for the same price is potentially a thousand times greater, so the people making the most profit from those widgets could become vastly wealthier than they could have become in a smaller economy.

The majority of people are paid for their labor rather than by selling goods or services in a global marketplace, so although their wealth is generally increasing in an absolute sense, the amount of their surplus compared to those with scalable incomes is considerably smaller.  In that sense, the rich are growing richer and the poor poorer, and this is likely to continue until world population and the globalization of trade reach a peak.  Interestingly, though, once humans begin moving off of the planet and the area of trade becomes interplanetary, the total population will probably begin expanding at a faster rate again, and the rich of the future will probably make the rich of today look like paupers (relatively speaking).


About Mark James Wooding

I was born. I was scared. I tried to get back to the warm place, but they wouldn't let me. I cried. Since that quite unexpected and traumatic event, I've been trying to make the best of things. I've written a book called Seek Wisdom, Practice Kindness, which contains a philosophy of life as well as an attempt to describe why people do the things they do. I edited a book called The Magical World of Poetry, a collection of public domain poetry that includes many of the traditional favorites and a few others I was fortunate enough to come across. Both books can be read on their respective websites, which are listed in my Links section. I also wrote a novel called Sasha and Samantha Save the World, which is available on Amazon.com.
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