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Life Wealth Work

“We All Have 24 Hours a Day”

“We All Have 24 Hours a Day”.

Have you heard people say this before? Usually it’s said by someone humble-bragging about how they manage to work 10 hours a day, raise children and run three marathons a year. Of course, they’re usually saying this to someone who can’t seem to find time to work out (or something similar that can easily be dropped off the list of daily activities).

Yeah, we all have 24 hours a day. But, unfortunately, we don’t all have the tools to make the most of those 24 hours.

Let’s look at two extremes.

Julie is a single mother that works full time as a line-worker in an automobile factory. Her two kids are in grade 3 and 6. Her day starts at 6am when she prepares breakfast, lunches and shuttles her kids to before-school care. Julie gets to work in time for a 9 hour shift. By the time the school and work day is done and everyone is back home, it’s usually around 6pm. Just in time to prepare dinner and help with homework. Of course, this assumes that Julie has already gone grocery shopping earlier in the week. By the time dinner and dishes are done, it’s easily 8 or 8:30pm. Exhausted – mentally and physically – Julie now has about 1-2 hours of free time.

Does Julie catch up on some housework? Maybe. Self care? Likely not.

That’s where Julie’s 24 hours goes.

Compare that to Eddie, who is married with two children in grades 3 and 6. Eddie’s wife – Francine – is a marketing consultant and he works as a bank executive. They have a nanny, maid and comfortably hire people to help with household maintenance, like gardening. Their nanny manages the children full time, grocery shops, makes meals and handles school pickup and dropoff. Eddie and Francine work long hours, but often squeeze in some gym time at lunch or go for a run after work. They frequently attend functions after work to network for whatever moves come next.

Notice the difference?

Julie, Eddie and Francine are all equally busy. However, one family has way more sources of help than the other.

Some might blame Julie for her predicament. “She shouldn’t have gotten divorced”, “she should have worked harder and gone to university”, etc. What people fail to grasp is that Julie made the best of her situation. She came from a working class family that didn’t have money for the extra layers of support provided to Eddie and Francine in their youth.

Julie really had no choice but to reduce the burden she placed on her family by working at McDonalds through high school to help with bills. She blasting through community college and then took whatever decent job came first. Then came the children and emotionally abusive husband.

Eddie and Francine, on the other hand, came from upper-middle class families, which themselves hired nannies and maids. Their first jobs were handed to them by their parents’ friends, and were in junior corporate positions. Their parents never needed help with bills and Eddie and Francine could both comfortably educate themselves up to the masters level. While Eddie leveraged his junior corporate jobs into full time work, Francine took a risk and started her own business. If it failed she could always move back with her parents. By the time they married, Eddie and Francine were already getting more than their 24-hour’s worth.

“We All Have 24 Hours a Day”

There are 24 hours in a day, but unfortunately that time isn’t allotted the same way across classes.

If you’re someone who can afford help, count your blessings and realize that you have a huge advantage.

If you’re someone who can’t afford help, I suggest you identify your top 3 priorities in life and allow yourself to leave lesser priorities untended.

Start building wealth today!

Categories
Wealth

Visualizing the Billionaire Class

I believe people deserve to get rich if they work hard.

But there comes a point at which wealth is so obscenely huge that you have to wonder if it is really deserved. Can a single human really earn $150 billion without it coming at the expense of other humans?

While history has shown that humanity’s wealth pie can be expanded over the long run through productive innovation, over the short term it’s likely that hyper competitive behaviour is a zero sum game.

Today, Amazon is rapidly growing at the expense of small independent retailers. This has never been more clear than during the Covid-19 crisis, as lockdowns shut almost all of Amazon’s brick-and-mortar competition. While Amazon is probably creating long term wealth for society, right now it is succeeding at the expense of others.

The chief beneficiary is Jeff Bezos, Amazon CEO and founder, who is now worth over $150 billion. Amazon has added a ton of efficiency to our lives and Jeff Bezos deserves to be rich, but $150 billion is obscene.

At what point does genuine wealth creation transition into exploitation and hoarding? It’s not an easy question to answer, but that’s not the point. If wealth anomalies like Bezos don’t pass society’s smell test, action must be taken.

Society makes judgment on the scale of wealth differences between ordinary people and the 1%, deserved or not.

Ordinary people earn in the tens of thousands and can barely save for retirement. To most, millionaires are considered rich. Once you start talking about $ billions the sheer scale of wealth is baffling.

I recently saw an article that highlights how ridiculously wealthy billionaires really are. Below is a graphic visually comparing the difference between various wealth levels. Remember, Bezos is worth 150x the largest box below.

While ordinary people struggle to pay back their college debts, billionaires have to work hard to spend their money:

  • Elon Musk can spend a MILLION dollars EVERY DAY for 65 years
  • The Koch brothers can spend a MILLION dollars EVERY DAY for 242 years.
  • Bill Gates can spend a MILLION dollars EVERY DAY for 247 years.
  • Jeff Bezos can spend a MILLION dollars EVERY DAY for 306 years.

Anyone arguing that billionaires are created because they help generate societal wealth, should look at the following chart. While worker productivity has risen, average wages have stagnated. Meanwhile, income going to the top 1% (aka the billionaire class) has skyrocketed. In other words, billionaires are built off the backs of the average worker.

The top 1% has captured a growing share of societal wealth partly because the tax system has changed to favour the rich. The two charts below compare tax rates by income level in 1950 and 2018. In 1950 the top tax rate was 70%. In 2018 it was just over 20%.

While Amazon shares hit new highs and Jeff Bezos gets richer, 40% of US renters face the risk of eviction. Those are families and children and hardworking people, many of whom will soon be homeless.

For many the American dream has become the American tragedy. Gone are the days of collecting a paycheque and a comfortable retirement pension. Loyalty is irrelevant. You are on your own to build wealth for you and your family. For some this means building a bulletproof portfolio. For others it means constructing multiple sources of income.

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Categories
Life Wealth

How Abundance Might Lead to Revolution or War

Why you should watch this interview with tech entrepreneur turned author (“The Price of Tomorrow: Why Deflation is the Key to an Abundant Future”), Jeff Booth:

  • Technology is driving costs lower and productivity up, creating a potential world of abundance. (Think about how many screens you have in your house compared to your parents’ house.) However, it is also creating immense deflationary pressure, which is intensifying.
  • The side effect of improving technology is that many jobs are being automated and made redundant. Your job and your children’s jobs are at risk, while the few at the top reap the benefit.
  • For decades, central banks have attempted to compensate for deflationary pressures by growing money supply by vast amounts. Most of this new money has flowed into financial assets, resulting in asset price inflation. Owners of financial assets gain, but these owners are disproportionately the wealthy. Yes, many people have 401ks, RRSPs and pensions, but their proportion of financial asset ownership is small. However, asset price inflation has not improved the lives of the median household.
  • What we’re left with is a divergent economic experience: “the many” lose because they’re made redundant and don’t own assets to a large extent while “the few” accumulate the gains generated by technology and asset price inflation. This has increased wealth inequality over time and will continue to do so.
  • Society increasingly becomes polarized and susceptible to charismatic leaders who promise solutions without actually addressing the fundamental problem. Often these leaders stoke the smoldering fires, causing people to turn on each other. Then they may turn on ‘outsiders’, however defined. The end result: revolution and war.