Richest 2% Owns Half the World’s Wealth

A fascinating discussion broke out at Slashdot.org over this article

Richest 2% Own Half the World’s Wealth

A guy named Alex posted one of the most insightful comments on why people do not accumulate wealth. It strikes at the heart of the question, “Do I build wealth toward a multi-generational family vision or is my responsibility simply to provide for myself and those under my roof during this life?”

Read his whole comment here entitled – “Ownership Society” and its pitfalls

He concludes his comment by stating -

For people to acquire wealth, they have to own assets. But people don’t want assets, they want the income that the assets generate. So somehow, the market will need to capture this, which you are seeing, as more and more 401(k) plans offer automatic “annuitization” at retirement. In addition, for people to gain these benefits (individual investments with a historic return of 10%, compared to pension funds with a historic rate of return of 8%), they had to take the risk. Even though the average person would be better off, and some would be much better off, some people would be losers.

How much potential “gains” would you trade to know that you never have to worry about housing, food, healthcare, and education. For most people this is a lot, which is why they work corporate jobs instead of as contractors, where the expected return is higher but the downtimes hurt people more. Economics is just starting to appreciate this, with a realization that utility decreases a LOT more with a 1% loss than it increases with a 1% gain.

He nails, in a better way then I’ve yet read, the economic philosophy and motivation of the typical American regarding the building of multi-generational assets. It really does come down to whether you building for a long or short-term vision.  Are you building a multi-generational family line or a single-generation family lifestyle?