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Do Hardworking Wealthy People Work Harder Than the Hardworking Poor?
A thought experiment on wealth inequality
Whenever we enter the discussion of hard work, we rarely speak about proportions. Specifically, the proportion of capital we start with.
When you have enough capital, you can hire people to take your problems away. Your capital allows options previously locked away.
Let’s use $10,000,000 as an example.
You can think about this horizontally across industries spanning virtually anything. The stock market, for instance; Carl Icahn’s fund, IEP, yields a 12% dividend right now. 12% of $10,000,000, per year.
Let me just give you two people in this thought experiment. One person has nothing, but works every single day. The other person has $10,000,000. That $10,000,000 is all in stocks that pay dividends. I’m not talking growth or anything of that nature. I’m strictly speaking dividend payments. At the end of the year, this second person who doesn’t actually work makes $1,200,000 doing absolutely nothing except parking their money in an equity.
Median household income is approximately $65,000 a year. That’s household income, not per person, mind you. You are earning $1,200,000 without any growth in a company by doing nothing. That’s about 20…
