4 ms·
A important aspect that I think is overlooked is that democratized access to exponential growth (like an index fund or buying a house) mathematically creates a
by notShabu 3y ago
A important aspect that I think is overlooked is that democratized access to exponential growth (like an index fund or buying a house) mathematically creates a growing wealth gap.
E.g. if 2 people equally start with $100 and grow their money at 7% per year, the difference in wealth is:
100 * 1.07 ^ 10 - 100 * 1.07 ^ 5
This function is still an exponential function.
So even though the second person is always 5 years behind in wealth, the absolute wealth gap will grow exponentially and cut the latter off from being able to compete on anything that they both want access to within the same timeframe. E
- brap 3y agoAnother way to put it: for every dollar I have more than you, in t years I’ll have 1.07^t more.
- epolanski 3y agoThat correlates to wealth but not wages.
- rayiner 3y agoThat doesn’t hold over time due to regression to the mean. For example, over half of white Americans are today are descended from Italian, Irish, German, Nordic, and eastern European immigrants who came to the US in poverty. This was before skilled immigration—half of German immigrants in the 19th century came as indentured servants. Today, these groups are economically equal to British descended Americans, many of whom came here as affluent landowners and obviously have been here much longer.