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How does a person become rich? You mentioned shareholders, so that's one example we can explore. They get richer off the work I do by selling what I make/provid

How does a person become rich? You mentioned shareholders, so that's one example we can explore. They get richer off the work I do by selling what I make/provide for more than they pay me to make it. If they paid me more and kept the exchange value of the produce/service the same, then the shareholders wouldn't profit as much while conversely giving me more money. By the shareholders exploiting my labor less, I can be richer. If I have enough wealth, I could start a company as you suggest. I could be like the shareholders where I pay my employees as little as I can get away with and selling for as much as I can. This would help me and my shareholders turn money into more money. But again, it is only through the exploitation of others that this is possible. Another example of getting rich is owning property. If I have enough wealth, I could own not one, but two homes and charge rent to people who need a place to live. As they toil away at whatever job they're doing, I get this "passive income" that greatly increases my wealth while stunting wealth growth of my tenants. We all want to be rich, but not all of us can be rich at the same time, otherwise, none of us would be rich. It's in the definition of being rich: to have more than others. But to have more than others, you have to exploit them. And, tying this all back to your first comment describing one of the basic features of our society: using capital to generate wealth. You can imaging that this basic feature of our society makes it such that wealth clumps together. The more wealth you have, the easier it is to grow that wealth; it's like a positive feedback loop if you're into systems engineering or a massive object if you're into space. And having no money or no wealth is actively bad, and you can probably model a negative feedback loop of that, with the ultimate outcome of death (there's probably some good charts showing life expectancy vs wealth/class out there that illustrates this). This is just an observation of the society we live in. It might be obvious to you, but it's cruel to me and many others who toil paycheck to paycheck living in fear of running out of the little money we have. > If you make safe diversified investments in Robinhood, your money isn’t being taken away. Sure, Say I invest $1200 over a year. How much would it "grow"? Also, that's $120/month.. what if I need the $120 immediately and can't invest that much. I guess my question is, How much money do you need for RH to be worthwhile?

ghaff 6y ago
I would probably not use Robinhood, but it's fairly common for people starting out to open an account and do a modest recurring purchase of some index fund or other "boring" fund with low management fees. It takes time but it does grow. >Say I invest $1200 over a year. How much would it "grow"? Depends on the investment and depends on the market. Figure a few percent, which isn't a lot but save $1,000/year and it starts to add up.
- EarthIsHome 6y ago
  Investing presumes you already have money. This may not even be feasible for the majority of Americans; according to [0], 69% of Americans have less than $1,000 in savings. Let's say that I can save $1200/year for 10 years with an interest rate of 8%... After 10 years, it would have grown by about $5k. Some CEOs make that much in a day or week off of the exploitation of their workers. I would spend ten years, a whole decade!! And this assumes that it goes smoothly with no emergencies, no medical expenses, and wage growth keeps up with cost of living.. All these things that don't happen in real life. After all, everything that's required to live (the bare necessities) costs money, which eats away at my savings while making someone with already a lot of money even richer. If you take reality into account, I think it's a pipedream for people of lower socioeconomic statuses to be able to climb the economic ladder into a higher class. Again, I'm trying to illustrate how there's very little positive vertical movement for the majority of people. [0]: https://www.gobankingrates.com/saving-money/savings-advice/americans-have-less-than-1000-in-savings/ https://www.gobankingrates.com/saving-money/savings-advice/a...
  - outworlder 6y ago
    Yeah. So your investment has increased by 5k in the first 10 years. You only contributed $100 a month, which is doable for a lot of people, and go 5k for 'free'. In 20 years, it will have grown by 30k on top of your contributions. Again, assuming you never adjust your contributions. Try the same calculation, but now with $500 a month. Although 8% is optimistic, compound interest is really powerful. It is indeed difficult to get ahead if you are paycheck to paycheck. It can be impossible if you can't even pay for your basic necessities. But many people are not in that situation. They buy stuff they don't need. They buy new cars on credit - which is a depreciating asset with interest. They buy phones they also don't need - sometimes in multiple installments too. Instead, try throwing anything extra you can scrape in investments. If you are aggressive about it, you can retire much earlier than you would be able to, normally.
shajznnckfke 6y ago
Your assumption that wealth is zero-sum is incorrect. If I run a homebuilding company, building ten homes with 10% profit margin so I can afford to keep a home for myself, I haven’t deprived anyone of that home. I used the price of nine homes to buy a bunch of wood, concrete, and human labor and turned those inputs into ten homes. It’s not zero sum - the amount of wealth in the world actually increased. Nations with economies that encourage capital investment don’t just distribute wealth differently - they actually generate more wealth. It’s possible for everyone in that nation to be richer, if the government uses taxation to redistribute some of that wealth.
- EarthIsHome 6y ago
  I'm not following your example on the homebuilding company. It all seems nebulous to me. Could you help clarify? Where is the 10% profit coming from, and how are you able to afford a home for yourself from the ten that you built? Are you using the profit off the other 9 homes to fund your own home? (i.e. the profit is the 10th home?) Maybe the root question to all that is: What do you mean by "the amount of wealth in the world actually increased?" I don't truly understand that. The only way you have profit is by not paying the laborers their worth who built the homes. If you have a profit margin of 10% then you're paying your workers 10% less than what they should be getting paid. Now, taxes and wealth redistribution sounds like a huge caveat to me. You tax the profits from the home building and redistribute it. Why bother with the whole home building thing in the first place? It seems like extra steps Why not just build and give people homes and skip the the intermediary step of money? Another question for your homebuilding example: Why do you think you deserve a house for essentially free using your "profits" while other people have to pay for the house? What makes you better than them? (This is not directed at you, but the hypothetical homebuilder. If it's reading as adversarial, I don't mean for it to be.) Your home building scenario with profit margins is a great example of how profit totally distorts motives so that the problem you're solving isn't meeting people's needs, but instead meeting the need of making more money. In the US, we have a housing problem. We have lots of homeless. We have the technology to build people homes (even efficient, dense housing), but since it's not profitable, it doesn't get done. For anything like that to get done in our society, it must be profitable. You can see this in action with how much of our public services are struggling.

ghaff 6y ago

I would probably not use Robinhood, but it's fairly common for people starting out to open an account and do a modest recurring purchase of some index fund or other "boring" fund with low management fees. It takes time but it does grow. >Say I invest $1200 over a year. How much would it "grow"? Depends on the investment and depends on the market. Figure a few percent, which isn't a lot but save $1,000/year and it starts to add up.

EarthIsHome 6y ago
Investing presumes you already have money. This may not even be feasible for the majority of Americans; according to [0], 69% of Americans have less than $1,000 in savings. Let's say that I can save $1200/year for 10 years with an interest rate of 8%... After 10 years, it would have grown by about $5k. Some CEOs make that much in a day or week off of the exploitation of their workers. I would spend ten years, a whole decade!! And this assumes that it goes smoothly with no emergencies, no medical expenses, and wage growth keeps up with cost of living.. All these things that don't happen in real life. After all, everything that's required to live (the bare necessities) costs money, which eats away at my savings while making someone with already a lot of money even richer. If you take reality into account, I think it's a pipedream for people of lower socioeconomic statuses to be able to climb the economic ladder into a higher class. Again, I'm trying to illustrate how there's very little positive vertical movement for the majority of people. [0]: https://www.gobankingrates.com/saving-money/savings-advice/americans-have-less-than-1000-in-savings/ https://www.gobankingrates.com/saving-money/savings-advice/a...
- outworlder 6y ago
  Yeah. So your investment has increased by 5k in the first 10 years. You only contributed $100 a month, which is doable for a lot of people, and go 5k for 'free'. In 20 years, it will have grown by 30k on top of your contributions. Again, assuming you never adjust your contributions. Try the same calculation, but now with $500 a month. Although 8% is optimistic, compound interest is really powerful. It is indeed difficult to get ahead if you are paycheck to paycheck. It can be impossible if you can't even pay for your basic necessities. But many people are not in that situation. They buy stuff they don't need. They buy new cars on credit - which is a depreciating asset with interest. They buy phones they also don't need - sometimes in multiple installments too. Instead, try throwing anything extra you can scrape in investments. If you are aggressive about it, you can retire much earlier than you would be able to, normally.

shajznnckfke 6y ago

Your assumption that wealth is zero-sum is incorrect. If I run a homebuilding company, building ten homes with 10% profit margin so I can afford to keep a home for myself, I haven’t deprived anyone of that home. I used the price of nine homes to buy a bunch of wood, concrete, and human labor and turned those inputs into ten homes. It’s not zero sum - the amount of wealth in the world actually increased. Nations with economies that encourage capital investment don’t just distribute wealth differently - they actually generate more wealth. It’s possible for everyone in that nation to be richer, if the government uses taxation to redistribute some of that wealth.

EarthIsHome 6y ago
I'm not following your example on the homebuilding company. It all seems nebulous to me. Could you help clarify? Where is the 10% profit coming from, and how are you able to afford a home for yourself from the ten that you built? Are you using the profit off the other 9 homes to fund your own home? (i.e. the profit is the 10th home?) Maybe the root question to all that is: What do you mean by "the amount of wealth in the world actually increased?" I don't truly understand that. The only way you have profit is by not paying the laborers their worth who built the homes. If you have a profit margin of 10% then you're paying your workers 10% less than what they should be getting paid. Now, taxes and wealth redistribution sounds like a huge caveat to me. You tax the profits from the home building and redistribute it. Why bother with the whole home building thing in the first place? It seems like extra steps Why not just build and give people homes and skip the the intermediary step of money? Another question for your homebuilding example: Why do you think you deserve a house for essentially free using your "profits" while other people have to pay for the house? What makes you better than them? (This is not directed at you, but the hypothetical homebuilder. If it's reading as adversarial, I don't mean for it to be.) Your home building scenario with profit margins is a great example of how profit totally distorts motives so that the problem you're solving isn't meeting people's needs, but instead meeting the need of making more money. In the US, we have a housing problem. We have lots of homeless. We have the technology to build people homes (even efficient, dense housing), but since it's not profitable, it doesn't get done. For anything like that to get done in our society, it must be profitable. You can see this in action with how much of our public services are struggling.