Throughout history, social mobility has been a pervasive issue yet rare occurrence. In America, the wealthiest nation in the world, the top 1% own more wealth than the bottom 50%. They profit off of every possible decline and are hesitant when things are stable.
They are beyond greedy when folks are fearful and scared to death when others are hungry.
This divide has only gotten worse over the years and nothing seems to stop it.
Even those who have rightfully earned their fair share are brushing this ongoing growing problem under the rug as they enjoy the fruits of their labor and subsidize the poor for it.
For a healthy equal democracy, although life is never fully equal, the middle class needs to thrive and unfortunately that has only gotten worse. For the first time in history, Millennials are doing worse than their parents. They were ravaged by two recessions, the ’08 Housing Crisis and 2020’s Covid pandemic while Silicon Valley and retirees (Baby Boomers) have had their best year yet with a booming stock market and WFH bound.
Since America was born, inequality has been prevalent in various dimensions and still to this day it exists. It has only been exacerbated by the pandemic. Life is unfair and especially in developed countries, there is a stark difference between social classes despite relief and deficits. The rich get richer and the poor seem to get poorer due to expansive innovation, inflation, the economy vs stock market mismatch, inheritance, tax system, networks and family circumstances, the biggest predictor of one’s success rate.
Ironically, it’s frightening how overly-optimistic Americans are about their prospects for upward mobility. This pervasive wealth fantasy is inherit to American’s lives and too many believe they will experience the rags to riches story if they just somehow work hard and take chances.
Wealth Affair
To be truly wealthy, not by perception, you must invest in yourself and plan for the worst hope for the best. When the top 1% started out and built their foundation, they suspected they would stay in the same place for a while or even worse, move down the income-ladder. After all, 90%+ of startups fail and that’s the risk to reward one must take to earn big forever. People are too optimistic and not realistic. This is ruining dreams and the people we admire understand taking a bet on themselves with no immediate reward is part of the plan.
As a builder, they focused their attention and energy on truth now on lofty and un-relatable dreams.
There’s no secret sauce to becoming who you want to be. A ton of luck is involved and after all, the more successful you are, the luckier you are. The easiest way to manifest it is by doing and meeting more.
The rich are more alike than different, especially within their daily habits and what they prioritize which includes family, friends, colleagues and down-time.
Stealth wealth is hard to possess when you want to defend you and your wealth yet is necessary to stay safe and sound, something the rich desperately need.
When you look at their resources and time spent, they naturally hack the system in a legal way. Majority of them have a family office and their wealth tied up in passive and portfolio income streams. They don’t rely on anyone besides themselves.
A family office is a private company that handles all personal affairs and investments, manages all properties and household expenses. You can route and pay your bills from there and it’s set up to ideally preserve legacy, compound wealth and of course, escape the dreaded taxes. Just like real estate or an LLC, anything that is considered a business can deduct expenses from and receive a tax write-off through depreciation. This is the easiest example that perpetuates the wealth divide besides the beloved stock market.
The more you earn, the more taxes you must pay in the regular system.
Buy and hold has to be the plan.
Secret
There’s nothing spectacular about the wealthiest people on earth. They live in their own bubble and sometimes tend to neglect the people that helped build their space rocket. We selfishly follow them because we are envious of their wealth and partly their mission, but mostly back to their net worth. This leads majority of the population to glamorize the unimportant, tangibles and number tied to titles that won’t help them grow.
Psychologists have studied these questions and have shown that wealthier people, on average, are less empathetic. They are less socially oriented despite networking being a true advantage in a competitive space. You have to focus a lot on yourself to make improvement. If you put your head down and focus, that’s where real change lies.
It’s important to note that no one is the same before and after a lump sum and there’s no one personality that helps pursue more wealth creation or have a negative impact. It varies on the individual. They can turn into jerks outsourcing everything and neglecting the people that cannot be replaced or dig into themselves not allowing money to bring an abundance of easy choices.
Chance
As mentioned, luck, preparation and timing are enormous contributors to success and relying on one position to make it to the top isn’t going to cut it anymore.
Look at professional athletes or lottery winners. It’s very hard to win any jackpot and rare to witness a lower-income kid rise the ranks to become an NFL or NBA star player. With no exposure to dealing with their finances, they put themselves in jeopardy and end up in worse circumstances they desperately wanted to get out from.
It’s easy to earn wealth but growing, saving and keeping it is the true battle.
That’s why education is the pinnacle of growth.
Fantasizing about wealth is dangerous as well because it reverses your relationship with people and you may enjoy it too much that people start relying on you for it. Just read here how showing less = having more in hindsight. That’s why stealth wealth not revealing what you are worth is key. If your friends expect super high-end things as your birthday gift or revert to always providing you the tab, they become freeloaders. Pride gets in the way and money creates awkward conversations and dynamics.
In addition, when you have a lot of money there are issues with trusting other people. You do not know who’s coming at you, pitching business ideas and asking to be your friend for your money, especially potential romantic partners.
Old Money Versus New Money
Preserve capital, invest assets and don’t show the gains. Easier said than done especially when you know you’ve earned it but worth it when you rise the ranks.
Bezos or Warren are relatively worth the same on any given trading day but one possesses an entirely different lifestyle than the other.
Which one is criticized more heavily?
You could argue the one who thanked Amazon employees for paying for his space flight and buying a half a billion dollar yacht.
By and large to be clear, just because you attain a certain degree of wealth and status, doesn’t make you a bad or disingenuous person. In fact probably the opposite since you must have been able to work with people to build an incredible foundation and legacy for yourself and seemingly the world.
These people are highly scrutinized because they can be. Whatever they do will be wrong but if you were in their shoes, you would probably do the same. We have as many faults as them. They got lucky, stayed realistic, didn’t fantasize over their next paycheck or mansion and most are still working till this day, decades after they could’ve called it quits.
Our flawed American system has allowed individuals to amass such wealth at the expense of others. These rules, policies, rewards and incentives are tearing us apart from our social fabric. We hate those who have more than us because it feels like a competition.
We need to get back to a healthy society not to disparage the wealthy but rather look up to them and in return, have them help us out as their duty not out of kindness or for publicity.