"Why do the poor stay poor and the rich get richer?"

[ThisDinosaur]

Since the central premise was questioned early:

Only 4% of people raised in the bottom quintile move up to the top quintile as adults.
But 8% born in the top fell to the bottom.
37% born in the top quintile will fall below the middle

43% born in the bottom remain there.
40% born in the top quintile remain there.

http://www.pewtrusts.org/~/media/legacy ... eampdf.pdf

Between 1979 and 2004, the top 1% of earners have had a real after tax growth in income of 180%.
The top 20% have grown by 70%. The bottom 20% have grown their income by about 10%.

https://www.brookings.edu/wp-content/up ... morton.pdf

The US also shows less socio economic mobility than (in order) France, Germany, Sweden, Canada, Finland, Norway, and Denmark.
If Jacob had never moved here, he would be wealthier than Hamlet.

[BRUTE]

what about that rising tides stuff? of course the 20% of all humans will always be only 20% of them. if somebody rises, someone else gets kicked down. but the cake might be getting bigger, so that the poor are less poor, and the middle class are less middle. not sure if that's in the original question, but in brute's view that would still be a positive development.

[ThisDinosaur]

There's Absolute Mobility and Relative Mobility. Absolute Mobility relates to the "cake" getting bigger in terms of growing available capital/standard of living. Relative Mobility has to do with changing your rank among the players.

If all the capital, income, or investment returns for a time period are thrown into a pot, and the whole population is playing a game of chance, there will be an "average return" for the whole group. Some will outperform the market, some will underperform. In order for One individual to outperform *a lot*, he effectively has to take some of the returns from Several who end up underperforming.

So, if you are able to lock in the Average return (i.e. index funds) you are actually outperforming MORE than half of the players, but guaranteeing you wont get to the top. I think this is why Jacob says indexing is a tool for the middle class. It only works, though, if the "cake" is getting bigger, not if cake-slices-per-capita are actually falling.

[ajg01]

I think much of it comes down to a number of features an individual may or may not have. The more you have of these the more likely you will be rich and get richer:

- IQ
- EQ
- physical attractiveness
- come from a stable family
- come from a family with capital
- European
- from a western country
- heterosexual
- freedom from physical and mental disabilities

The less you have of the above the more likely you will be poor and stay poor.

My god I realized as I have written the above down how convinced I am of the above and how depressing that is. And how unfair.

Thrifty I disagree with the western country thing. In fact if you are born in Singapore, UAE, or Ireland you are far more likely to be wealthy.

[GandK]

The whole mobility thing is so... ick. I'm glad that "getting ahead" is possible, and would like it to be more possible, but the fact that we even use this terminology is troubling. If I'm getting ahead, someone else by definition is slipping further behind. This makes me feel dirty. I don't want to gain at someone else's expense. I don't know that our resources are explicitly finite like this, but this is how we all think, and therefore act. Rankings, rankings, rankings. (To say nothing of the fact that having more resources doesn't necessarily translate into a better quality of life, as many here can attest.)

It's like the hypocritical discussions that we parents have about equality in education. We say we want all kids to get ahead, in spite of the logical impossibility embedded in that statement. But the reality is that we want our own kids to gain an advantage (implied: over the others).

[bryan]

The whole mobility thing is so... ick. I'm glad that "getting ahead" is possible, and would like it to be more possible, but the fact that we even use this terminology is troubling. If I'm getting ahead, someone else by definition is slipping further behind. This makes me feel dirty. I don't want to gain at someone else's expense. I don't know that our resources are explicitly finite like this, but this is how we all think, and therefore act. Rankings, rankings, rankings. (To say nothing of the fact that having more resources doesn't necessarily translate into a better quality of life, as many here can attest.)

It's like the hypocritical discussions that we parents have about equality in education. We say we want all kids to get ahead, in spite of the logical impossibility embedded in that statement. But the reality is that we want our own kids to gain an advantage (implied: over the others).

This comment reminds me of the rational, soothing speech of Milton Friedman. Pretty sure he has said something like "improving your lot in life" as opposed to "getting ahead." A few related (first three I clicked):
Redistribution of Wealth
Greed
Responsibility to the Poor
Bottom v Top

[The Old Man]

When I submit that ERE is not the middleclass, I'm merely suggesting that it's its own little kingdom. Several of you have made comments about being increasingly unable to relate to other people's problems and interests. That's a sign that you're relocating class-wise. Your lenses are changing.

A Study of Social Class in America by Will Skinner
http://www.willskinner.com/

The essay in the link is perhaps the best discussion I have come across on social class in the USA. In my opinion I also believe the ERE ethos is not the middle class.

"I think the fundamental point of class is that, yes, it comes down to money, but it comes down to how money and its effect on childrearing has formed a person. That is, the money he or she grew up with/in/around. His pecuniary milieu. From money (or a lack of it) springs refinement, education, manners, distinguished speech, wisdom, licentiousness, decay and everything else that is indicated by the word "class" (or a lack of it)."

The ERE mindset with its emphasis on the Renaissance ideal is somewhat outside of the social class system, but I believe is closet in spirit to the upper class.

[jacob]

Nice link. Fussell is also fun if a bit dated.

I'm still trying to find a significantly more granular classification scheme that I saw on a blog some 5-7 years ago. The lists looked at different classes within the media-class, the finance-class, the working-class, ... The enumeration scheme was something like E-1, E-2, ... E-5 (John Stewart), F-3 (financial analyst)... or W-3 (union boss). If anyone has a link, LMK.

[jennypenny]

Do you mean Michael Church's 3 ladder system? We had a thread on it, but the link to the original article is busted. Here's an article with an excerpt ... [deleted]

Sorry, wrong link. Here's the article ... http://www.meetup.com/Philadelphia-Poli ... d/49570124

[BRUTE]

A Study of Social Class in America by Will Skinner
http://www.willskinner.com/

interesting.

brute thinks that ERE is definitely spawned by being middle class, probably even True Middle and not Upper Middle. but obviously one moves away from typical class ideals/goals during ERE, even regular FI.

anyone in upper doesn't need money, hence, ERE is a useless idea to them.

anyone in lower is likely so far removed from money, role models, and inspiration that it's unlikely they'll ever stumble upon ERE, either by accident or explicitly through the website. they may also lack the education. even though, as jacob has shown, it would theoretically be possible to do ERE in 5-10 years on minimum wage, it does seem that almost all individuals in this forum and other FI forums (MMM) are from Lower Middle, or, more commonly, True Middle.

True Middle jobs especially pay well enough, but don't come with the "class" attached to it like Upper Middle jobs: lawyers, doctors, and so on may make more than engineers, but they are expected to be cultured, have fancy dinner parties, wear suits, fine watches, join country clubs, drive an imported luxury vehicle, and so on.

essentially FI is the hack of being a culture-lacking buffoon while making the income of a cultured person. this does require education, though, which makes it hard for members of the lower.

what's interesting is that brute has never, ever, met a human from any of the Uppers in person. the only ones brute can even think of are kings/queens, or in America, maybe oil and cattle money. the Bush family is the first that came to brute's mind, and interestingly, like mentioned in the essay, none of them seemed to brute very cultured. educated, sure, but not cultured.

brute himself is pretty straight True Middle, likely a little low on the money and a little high on the culture (thanks, parental units).

like many here, brute has at one point found himself somewhat outside of the paradigm, unable to really identify with "his" class, but clearly not belonging into one of the others. brute finds it hard to converse with Upper Middles, as he hates poshness. as mentioned, he's never even met a real Upper human. most of brute's friends are other "daywalkers" (=fell out of the class system somehow), and sometimes lower-middle or upper-labor.

brute can understand the desire of Burroughs mentioned in the essay, trying to mingle with labor to experience something. brute also feels like the lack of striving can be a lot more fun to be around than the typical eternal hamster wheel of Middle.

[jacob]

@jp - Yes! This one: https://web.archive.org/web/20151006183 ... n-the-u-s/

[batbatmanne]

@jp - Yes! This one: https://web.archive.org/web/20151006183 ... n-the-u-s/

Hmm, I think on this analysis ERE is largely G3, although ERE is still difficult to classify compared to other subcultures. For the labor ladder, hard work is seen as a measure of worth. Work and income are understood to be related in a largely linear way, with higher income workers being harder workers and consequently more highly valued. It seems very difficult for me to reconcile the ERE mindset with these views, although there is certainly room for an ERE person to engage in the kinds of higher roi blue collar work (mostly L2, although an ERE landlord may qualify as L1) that is typical of the labor ladder. On the other hand, the elite ladder is largely defined by a level of wealth that would have no use for ERE except perhaps for E4, which also strikes me as antithetical to ERE given the aspirations of high wealth and social mobility, as well as a willingness to take on unnecessary risk to achieve these things.

The gentry ladder rejects the direct association between income and worth. However, most of the time the gentry ladder seems to associate worth with the ability to conform and succeed in other conventional work roles that purport to take as their end something other than the production of a commodity. In more insidious forms, the work of the gentry is understood to be more virtuous, and a tendency to place any significant considerations on money in one's choice of vocation is eschewed. In any case, the majority of the gentry is just as guilty of careerism as the laborers. Nevertheless, I think this ladder is the most amenable to the ERE desire to avoid the practical necessity of wage labor. I suspect most of us are therefore best classified as G3, being educated enough to consider an unconventional view about the nature of work and money, and having little career aspirations during our accumulation phase. It is also notable that ERE places much more significance on things like the relation between income and expenses, rather than considering these in an absolute sense, as well as emphasizing the possibility of replacing the need for income with practical skills and strategies. An ERE person will likely view wage labor most similarly to E2. This perhaps sheds some light on the notion of the ERE aspiration to be a "poor aristocrat."

[fiby41]

Because of the Matthew Principle or the Shree Suktam. Jordan Peterson mentions the former frequently in his videos. They are to the effect respectively:

Every one that has shall be given, and he shall have even more. But from who doesnt have shall be taken away even that which he has.

Or

Adressing Lakshmi, the Goddess of Wealth:

Those who have some wealth [are able to] beget more with your grace. So enrich me with some [of your grace.]

सोमं धनस्य सोमिनोमह्यं ददातुसोमिनः ॥

~Shree Suktam in the Rig Veda.

This is also related to the question ThisDinasaur raised in the Jordan Peterson thread. Peterson says that you will end up with this type of society where a small percentage of the population will own a large percentage of its resources no matter what type of economy you start out with. That it is the law of nature to him.

My opinion: But this does not mean we cannot or should not work to eradicate this and bridge the gap. Because it is in our own self-interest. Inequality and poverty lead to discontent and discontent leads to revolution. Very few of us would want a revolution on our hands, especially in our country.

Charity is one of the ways of doing this. I remember the Is Charity Immorral? thread which had a lot of points that could also apply to this thread.

[ThisDinosaur]

This is also related to the question ThisDinasaur raised in the Jordan Peterson thread.

How? Which question?

[fiby41]

Which question?

If the abstract ideas Peterson is extracting from the bible are really as fundamental as he claims (i.e., they predate our divergence from lobsters 600 million years ago) they should be present in other long-lasting religious traditions. Are they?

Abstract ideas common accross religions.

How?

Matthew Principle is named after Saint Matthew whose quote is above.

[Bankai]

Momentum and inertia.

It's like asking why fat people stay fat and fit people stay fit/become fitter. They are just different (kinds of) people. One needs certain traits and habits to stay fat/fit. By definition, people who became rich/fit have already developed traits & habits which allowed them to get there.* So it's only natural that they stay rich/fit or become even richer/fitter as time passes, insofar they don't undergo some sort of negative transformation. Similarly, to stay poor, one needs to consistently think and behave in a certain way, hence reinforcing certain beliefs about oneself and money. Both groups have momentum and inertia working to keep them on tracks.

* yes, some people inherited or 'won' money, but this is about 'becoming'

[BRUTE]

traits can include genetics. brute would also add environment.

[Sclass]

It's like asking why fat people stay fat and fit people stay fit/become fitter.

* yes, some people inherited or 'won' money, but this is about 'becoming'

Not a big fan of this analogy, but there is also an implication that some education or knowledge is at play among the other things you mention. The fit people I know seem to know what to do to stay that way. As opposed to an obese person who happens to get pancreatitis and is forced to go on a one month water fast and becomes slimmer only to get overweight again. I employ such a person. Ignorance at work.

Kind of like hitting the skinny lottery then squandering the winnings over a year.

DNA or family traditions may have a lot to do with it. There seem to be two types of rich kids. The useless money wasting brats and the young tycoons. Look at Warren Buffet’s grandkids...he has both types.

As I’ve watched my seemingly middle class friends achieve great success it is interesting to dig deeper and see that their families weren’t always middle class. Divorces, political instability and displacement may have contributed to a temporary step down. I’m sure this isn’t everything but I’m beginning to see this repeating pattern of strong people coming from strong people. They may carry hereditary traits for dominance or just family traditions for things like discipline or work ethic.

[tonyedgecombe]

72% of the adult population in America is overweight, I find it hard to believe that is just a problem of ignorance.

[jacob]

Well, one needs both motive and opportunity and there's plenty of opportunity.
Maybe 80% motive and 90% opportunity. That's 72%.