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mirza's avatar

Why do "the rich get richer while the poor get poorer" in america?

Asked by mirza (5029 points ) August 20th, 2007
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29 Answers

klaas4's avatar

It's what you say. The rich get richer, and the poort get poorer. How more the rich get rich (more money for them) the poor get more poorer (lose money from the rich)

I think it is that simple, but I see GD Kimble is replying too...
Please correct me if I'm wrong!

MarkHeftler's avatar

By the simple consideration of another saying; "you gotta spend money to make money". The rich have assets available to them, such as disposable income, which can be put to good uses, like stocks and accruing interest in banks. Clearly, the poor lack these.

glial's avatar

Life is what you make it. If everyone was rich, no one would be rich.

I guess you have to establish "what rich is".

If I didn't work, I would be poor. If I continue to work and invest, my wife and I will be worth over 2 million dollars at retirement.

I could have given up a long time ago. I have Crohn's Disease and have had 2 heart attacks and am only 34.

In America, I'm sorry, I don't feel sorry for anyone. I have student loans and have had to work for everything I have. The key word being work. Life is hard, no doubt. But no one can change things for you, you have to make it happen for yourself.

Don't knock the rich, most of us work for them. Without those that move our country forward, where would we be?

GD_Kimble's avatar

Because wealth is a self-sustaining system that largely functions through interdependence with other wealthy people/institutions.Poor people are essentially out of the loop. This was the great miscalculation of Reagan's "trickle down" economic policies. He believed that if the government actively supported the wealthy (and the economic institutions run by the wealthy), those institutions would grow- necessitating job growth , and increased options for the blue collar/poor populations. Which in turn, would increase output and make the buisnesses grow even more--- repeating the system, each time the lowest economic class "moving up" a notch.
BUT THAT'S NOT WHAT HAPPENED.
The huge tax breaks and assistance to white-collar America did indeed improve those buisnesses, but it did so by creating an environment where the companies were growing by means of infrastructure... mergers, creating mega conglomerates, outsourced labor into third-world markets, which actually put already poor people out of work.. Reaganomics did everything it was supposed to "help" the American economy BUT create new jobs. Which just illustrates the issue.. the horrible recession of the 70's was cured.. American GNP/GDP was at an all-time high, yet somehow, unemployment in the blue-collar sector was at it's highest since the Depression. The rich were getting richer, and the poor were getting poorer.
This is the eternal problem.. the poor largely don't have access to the opportunity and resources to CREATE wealth or participate in established institutions of wealth. A kid struggling to get by with his minimum wage job isn't prepping a portfolio to present to Conde-Nast investors, he has to keep his lights on at home.
Now, as the global economic community keeping hartling along into the 21st century and systems of wealth change, evolve, and reinvent themselves.. we see the the same things, the poor don't have the means to embrace the new economy.
The Cliff's Notes: Wealth in America is a self-sustaining system that doesn't especially necessitate (or encourage) any involvement of the poor, and without resources, access to education-- the poor can't break through to the other side.

GD_Kimble's avatar

that should say "hurtling".. among many other typos.

bob's avatar

Actually, the poor in the U.S. don't get poorer. Income and standard of living at both ends of the spectrum continues to increase.

The reason some people talk about a widening "income gap" and increasing income disparity between rich and poor is because the rich are getting richer faster than the poor are getting richer. Both groups are still getting richer.

There are lots of reasons why the rich do well. Education and access to capital help make people successful. A stable home life will help make kids successful in their education.

But I don't think the success of the rich is defined by preventing poor people from having opportunities. It is less important to punish the rich than to find ways to expand opportunity to as many people as possible. Really good public schools. Universal health care -- especially for kids. Affordable colleges. People who graduate from college have lots of opportunities to succeed.

hossman's avatar

Is there anywhere in the world, any time in history, when the rich didn't get richer as a general principle? Of course, there are always a few individual exceptions. I do have to disagree with the assertion the poor are getting poorer. While the poor may be perceived as getting poorer, and while the gap between the rich and poor may be getting larger (which is a development inherent in the process of being wealthy, and has little to do with any government's policies), and the middle class may be shrinking and getting poorer, in terms of absolute standard of living, the poor is quite a bit richer than just 50 years ago.

SquirrelEStuff's avatar

Hossman, i agree that the poor is getting "richer," but think about the prices of everything in the last 50 years and how many other things you pretty much have to pay for (car insur., tolls, higher taxes,) I think that the "inflation tax," as Ron paul calls it, is really starting to catch up to us. Remember, our paper money system has been around for less than a hundred years.
Heres a great quote i read from Ralph Naders father..,
"why will capitalism always survive?
Because socialism will always be used to save it."

hossman's avatar

Prices mean nothing without comparison to income. "Inflation tax" is a catchy, and nifty phrase, but means nothing without a comparison to increases in real income. Further "inflation tax," which really isn't a tax, but a description of the effect of inflation on holders of cash or cash equivalents, is a natural and unavoidable result of government fiscal policy. The only alternative would be to prohibit governments at all levels from selling debt. Which would result in severe restrictions on government spending and benefits. Which would result in a massive collapse in employment, consumer spending, etc. Which would be far more detrimental than the "inflation tax." I'm not a fan of government debt, but sometimes it is necessary, and could not be eliminated within any one administration. You've got to be careful when these nifty phrases get thrown around. Again, with the Ron Paul as Messiah message. You really need to stop being a shill for his every catch phrase. Do you, or do you not enjoy a higher standard of living than the Depression? Than the Eisenhower era? OMG, are you really going to bring back the gold standard arguments of William Jennings Bryan?

extolsmith's avatar

In America, the poor get richer as the rich get richer. It takes hard work and a proper brain to go from poor to rich. If one's wealth does not increase with time there are only two reasons; one is content with life, or one is a fool.

Your debt, overspending, and not planning for the future is not America's, Capitalism's, or The Rich's fault. Plus, it should be no concern of your's that another continues to grow wealth.

Poser's avatar

1. The average American (poor or middle class) works the first several months of the year to pay his taxes. The rich don't.

2. There is no financial education for the poor and middle class. The rich teach their children how to be rich. The poor teach their children how to be poor. The school system teaches our children nothing.

3. As with a previous question, marketers have convinced the poor and middle class that the way to happiness is through consumption.

4. The rich invest. The poor spend.

SquirrelEStuff's avatar

@poser... not only do i agree with you that average americans work several months out of the year to pay their taxes. Consider this also.... Businesses and corporations do NOT pay taxes. We (the consumer) pay their taxes through the products and services that we buy from them. ex. if my business has to pay 10000$ in taxes this year, next year i am going to raise my prices to make up for it.

mirza's avatar

@chris6137- i strongly disagree w/ the statement that "Businesses and corporations do NOT pay taxes" - in reality the majority of america's taxes is paid by the businesses and the top 5 percent of the population

hossman's avatar

The fairest way to express it is the private sector pays taxes to the public sector. Certainly one way to look at it is consumers pay taxes for businesses because it is reflected in the prices consumers pay for products. But businesses also pay taxes for consumers. Most employees don't realize their employer has to match the employee's Social Security and unemployment contributions. But just as valid as your analysis businesses pass their taxes onto consumers through the costs of goods and services, consumers pass their taxes onto businesses by not purchasing a higher quantity of goods or paying a higher price for goods because they are paying taxes, thus reducing the business profits. It is an interactive whole, and you cannot label it solely by looking at it from your relative position. Further, what the public sector takes, much of it is returned to the private sector through government payment of wages and government payment for goods and services. Look, it is just one lump sum of resources, the government simply compels redistribution of it in a manner that would not occur without the government's interference. And that interference is not always a bad thing.

bob's avatar

@Chris: Businesses do pay taxes. Yes, businesses get their money for taxes from the money they make from selling goods. But they still pay taxes. Otherwise, by your logic, businesses don't pay any costs at all -- they don't pay rent, they don't pay for raw materials, they don't pay their employees. After all, those costs are all passed on to the consumer in some fashion or another.

You could say that businesses don't pay taxes if you wanted to make a particular point -- that taxing businesses hurts consumers as much as taxing the consumers directly -- but you should know that 1) it's not literally true and 2) that point is meant to illustrate that we shouldn't tax businesses or people. It has nothing to do with the rich getting richer or the poor getting poorer.

hossman's avatar

chris, where's your logic here? Are you arguing businesses should be taxed more, in which case prices will be increased, or they shouldn't be taxed at all, since consumers just end up paying it anyway? And businesses certainly are taxed. The business owners pay income taxes. If it is a corporation, the shareholders will pay capital gains taxes. I can't tell for sure, but somewhere you're picking up information that seems to be carefully selected and designed to upset you.

glial's avatar

Wow, that site is a plethora of liberal propaganda. Nice

Conrad_III's avatar

From a historical perspective, America was just as poor as most nations all the way up until World War II. In early America, there was almost no inequality because almost everyone was poor.

Then in World War II the nations of the world payed us a whole lot of money to make weapons for them. In fact, we were one of the only nations in the world who came out of World War II richer than when we went into it.

Then we had the golden age of the 1950’s, where families could get by with only one working parent, good paying jobs were available to people with little education, and Wally and the Beav lived just down the street.

Then the economy re-adjusted itself and in today’s world, you need a heck of a lot of education just to get by. And as it always happens, the people in society with the lowest status get hit the hardest: poor people are having their meager, low-paying jobs taken away by immigrants, and minorities, with little opportunity for education, are doing worse than they ever did.

So to make a long answer short, the entire American economy is readjusting itself from our post World-War II boom, and as usual, the rich are generally keeping their wealth, and the middle and lower classes are losing theirs.

ironhiway's avatar

It’s simple really the rich live by a philosiphy. It goes like this if you want to be rich watch what the poor people do and don’t do it. Also if a poor person makes money he’s no longer poor getting poorer.

steelmarket's avatar

This topic is impossible to discuss with any meaning without a clear definition of “rich”? Is it standard of living? Net worth? Disposable income? Ability to create wealth? Investment opportunity? Freedom from debt? Ability to pass on wealth to the next generation? And then, we have the definition of poor…..

@poser is certainly correct about most Americans being woefully ignorant of finances much less economics. We don’t even have the correct basic knowledge framework to understand, much less discuss, our economic problems. Not dissing anyone here – I am for the most part in the same boat.

urugeht's avatar

Well, it’s easier to be on top and then stay on top. Rich people already know what to do to be rich and that’s why they can improve and get even richer. The poor are always living the same way and there’s almost no way for them to improve. It’s harder for them to climb up on the social ladder.

Noel_S_Leitmotiv's avatar

Because the rich are adequately motivated to achieve and keep wealth, the poor are not.

Hypocrisy_Central's avatar

Fact from fiction, truth from diction. Because the rich think like capitalist, and the poor think like consumers. Take a rich man and a poor man and have them both come into $360,000 dollars, the rich man will be thinking more of where or how he can put that money to make him 30 million dollars in X amount of months, years, etc. The poor man will get the cash and think big screen, fly new ride with all the options, cruise, dream vacation, new wardrobe, bigger house, a boat maybe, all those things chew up money but they are not bringing any in, much worse, creating debt in many cases. Eventually the bottle runs dry when you are taking from it and nothing is flowing in. That is the main reason why.

ItsAHabit's avatar

Hypocrisy Central is correct. Most people who have won megabucks from a lottery seem to piss it away. Similarly, many entertainers and star athletes over-spend and end up with little or nothing. Exhibit A. is Michael Jackson.

schoenstra's avatar

All that most of the folks today are looking for is a level playing field. The justification of “supply-side” Tax breaks was to provide more jobs. It did not happen, but still the breaks continued. The power brokers have decided that “earned income” is inferior to “passive income”. If passive income was reduced to equality with earned income we could lower the top bracket on individuals, and corporations. Exempting payment to shareholders pretax would eliminate the double taxation issue yall like to cry about. Then the treat those payments (Both long term and short term) as earned income(because they are). I do agree with conseratives that the “death tax” is a disgrace. Large estates will be reinvested and provide taxes and anything not reinvested will be spent and taxed. Tell me with a straight face that there are not milionares(and greater earners) who pay less taxes than the upper middle class. We need to reform the bottom too. Nobody should have a tax burden less than zero. No indivdual should recieve more money back than they put in. Corporations should be given the option of a reasonable flat tax (around 16%) with no deductions other than shareholder payouts.

Hypocrisy_Central's avatar

@ItsAHabit You didn’t think of “Hammer Time?” hee hee hee

whiteliondreams's avatar

After reading many repetitious and fallible claims, I must say that granted, the poor may not be getting poorer because you cannot take away what they don’t have as far as monetary or material value is concerned; then, you cannot also take anything from nothing. That is impossible.

However, yes, the rich are getting richer and it has everyone to do with education. Whatever promotes or impedes education begins with volition. That is a difference that no one wants to acknowledge. It has nothing to do with opportunities. Opportunities exist, but the will to thrive is left to the individual. Now, before you get jumpy, education is not limited to academics

When I speak of education, I am speaking of knowledge and when I speak of knowledge I mean theoretically and pragmatically. The former is psychological nurturing and development, whereas the latter is volition. Everything else within it is based on ecological and sociological events and environments, which make every human acquisition of knowledge different.

We don’t need objective calculations to realize that there are outs ands of Americans with bachelor degrees and no jobs. It doesn’t cut it anymore. Another implication we also fail to realize are the demands, not the supply. What are Americans wanting that the rich are supplying? Our hunger is their fulfillment. This can be seen in two distinct manners, but I am only discussing the one sided picture of humans with an opportunity and not knowing how to take it.

I read one book of Robert Kiyosaki and while I know he is a capitalistic genius, he points people in the direction that they do not follow. He gives you the answers, but no wants to believe him because he is wealthy. I learned a lot in two seminars about real estate, but the “game” has changed so much, you have to be poor to invest your time. That is the final note I will discuss.

Time is not only a myriad of illusions and measurements, it’s a requirement in any social or agricultural setting. We depend on time as we depend on food. It is life threatening to not be cognizant of where you are on time. Opportunity is also time driven.

How can you take the opportunity to succeed when you have 2 part time jobs, 3 children in grade school , 1 in child care, you recieve food stamps, rely on public transportation to get anywhere (although quite economically I might add), and have no high school diploma because you dropped out because your parents had it rough, they got divorced or never married due to their parents losing a job because of war or depending on a single paycheck? The cycle goes on and on and it must be broken, but e opportunity needs to present itself in a fashion that the individual can recognize and relate to.

By the way, yes, I’m done now.

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