Some alarming stats on inequality, but a powerful insight into the wealth of the 1%
So the richer are getting richer.
That’s what the ABS reckons, but it belongs in the tell-us-something-we-don’t-know basket.
But why are they getting richer? Why is income and wealth inequality getting worse?
And this isn’t just a problem for Australia. It’s happening the developed world over. But Australia’s statistics are typical of the direction of things:
I wouldn’t be fazed by these numbers in and of themselves if we were moving in the right direction – towards more modest levels of inequality – but we’re not.
I think we really need to be wary of creating poverty traps here in Australia. That is something I think you definitely don’t want. Poverty is a bugger, but when you can’t get out of it, then it becomes an evil.
And I’ve made it my career and calling to help people game the system and get out of poverty and wage slavery if they really want to, but I know there are limits to what I can do.
Many of the fences that get erected around poverty traps are incredibly difficult to remove – poor nutrition, poor education outcomes, substance abuse etc.
So let’s not do that, hey Australia?
But the question I want to look at it is why this happening.
Now, as a known property buff, you’re probably expecting me to say the answer is property. The ones who are getting richer are the ones who are investing in property.
And there is some evidence to support that idea:
One factor driving the increase in net wealth of high income households is the value of property (owner-occupied and other property). For high wealth households, average total property value increased by $709,100 between 2003-04 and 2017-18 from $1.14 million to $1.85 million…
Stat about 90% of wealth property
But I’m not sure that this is about the rich getting rich through property. I think it’s more likely that property just becomes a fantastic, tax-advantaged place to park your wealth.
Property is also a fabulous way to make money, but until you’re in the top ten percent, you’re playing a very different game. You’re not doing what the rich are doing.
You’re not parking your money, happy to pick up whatever growth comes.
You’re creating deals. You’re actively, in-the-game, making stuff happen.
That’s how people in poor or ordinary situations can make money through property. But they’ve got to make it happen.
There’s always a lightbulb moment when people get this. They think they should just do what the wealthy do – buy up lots of property – sprawling estates in England and all that.
That’s a way to grow wealth and protect wealth. But it’s not a way to make wealth.
And until you’re in the top ten percent, your aim should be on making wealth, and that means getting active.
There’s no room for free-riders here. You’ve got to make this happen.
But I tell you this much too:
With each passing year, it’s getting harder and harder.