I often write on Quora.com, where I am the most viewed writer on financial matters, with over 340.5 million views in recent years.
In the answers below I focused on the following topics and issues:
- Why are rich people so often portrayed as evil in popular culture?
- What is a scam for wealthier people which isn’t for everybody else, or is that a misconception?
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Source for all answers – Adam Fayed’s Quora page.
Why are rich people so often portrayed as evil in popular culture?
Well, it is an easy and lazy way of looking at things.
We see the same thing with immigrants and many other groups. The media wants simplicity, and narratives like the 99% vs the rest sells.
This has only got worse in recent years. Look at some of the most popular TV shows of recent times.
Squid Games and the rich foreign VIPs with the bad acting!
Succession which is all about power and money:
And what doesn’t help is popular TV which isn’t “anti-wealthy”, but portrays wealthy people in an indirectly negative way.
Look at something like Sex and the City. Yes, it isn’t anti-wealthy per see, but it is based on a story of a bunch of upper-middle or high-class women, who seem to not live in an unproductive way.
You might say this is entertainment, and that is true, but various studies show people are surprised to learn some basic facts such as:
- More progress has been made in tackling poverty since 1945, and especially 1989 when the Berlin Wall fell than at any time in human history. In 1945, about half of the world’s population lived on $2 a day or less, adjusted for today’s money (inflation-adjusted). In 1989, it was around 30%, and now about 10%.
- Even in developed countries, inflation-adjusted income has skyrocketed since 1945. Whilst there has been a stagnation in some developed countries since the 1980s, 1990s, or early 2000s (depending on the country), household income has skyrocketed as more women are working
- The very richest today are actually not as rich, adjusted for inflation, compared to the early industrialists
- Income and wealth aren’t the same. I know plenty of people earning hundreds of thousands after-tax who are broke. Stats show that 78% of former professional footballers go broke in retirement. By the same token, there are some people who are worth $5m-$10m+ in retirement, despite the fact that they have never earned much. Often, they have just saved and invested from a young age and compounded.
- The top 1% pay about 29% of the income tax in the UK, and more in some other places. The top 10%-20% pay most of the taxes
- It isn’t a zero-sum game. When one group does poorly, often everybody eventually does. Inequality has gone down in places like Venezuela recently. It also went down a lot during 2008–2009, and briefly during the first few months of Covid until the markets recovered.
- It is a misconception that the wealthiest
Yes, there are issues. The richest people are corrupt in authoritarian regimes such as North Korea.
In a global and digital economy, moreover, inequality will go up. Top sports and business “stars” can sell online, 24/7, and move to Qatar for a big payday. That wasn’t possible in 1945 or even 1975.
What is more, there is a difference between inherited wealth and a self-made person who has taken risks.
Yet, it doesn’t help to see a group of people, whether immigrants, “the rich” or any other as a monolithic group that deserves negative stereotypes.
Self-made success in particular shouldn’t be considered a dirty thing. It should be admired.
What is something worthwhile for rich people but a scam for poor people?
The word scam, according to the online definition, is “a dishonest scheme; a fraud”. A fraud is the more traditional definition.
A fraud is “wrongful or criminal deception intended to result in financial or personal gain“, again according to widely available online definitions.
So, to say something is worthwhile for rich people but a fraud for poor people is misusing the word scam, considering it traditionally means to defraud people illegally.
Increasingly, the word is being mis-used to mean a whole set of things. Some people say that a 9–5 job, for example, is a scam, because many people can earn more being self-employed!
If we are going to use the word scam in this broader context, then I would list the following things:
1.Anything which saves time. If you are on an average, or lower, income, it makes no sense to get domestic help in the vast majority of situations.
If you are a private business owner who is earning the equivalent of hundreds of USD an hour, even if it is just an average, it makes no sense to not delegate some tasks.
2. Debt/leverage. You need to be careful with debt at any income level. I personally know one or two people who went from super wealthy (on paper) to broke quite quickly after Lehman. The reason?
They leveraged their gains in property and business. Then the banks stopped lending to them. That meant they needed to sell off stocks to pay the bills and staff, and a vicious cycle ensued.
However, in some situations, using debt sensibly in business and investing can work better for wealthier people.
For people at the other end of the spectrum, only mortgage debt can sometimes work out.
Even then it is riskier due to a basic fact – the majority of people on lower incomes have more unstable incomes.
Taking out a 30-year mortgage is therefore riskier in general.
3. Being over-insured. In many countries, insurance is a necessary evil. It can even be required by law.
You need to pay life insurance if you get divorced or get a mortgage in many places, whilst car and house insurance also tend to be compulsory.
However, for wealthier people, insurances such as life insurance, together with estate planing, can be good tools for passing down wealth.
For most people, the basics are good enough. Again though, it depends on personal circumstances and which country you live in.
If you can get a dirt cheap life insurance policy when you are 21, it is more likely to be a good deal compared to at 60.
4. Luxury goods. It makes sense to buy luxury goods if you are an entertainer. Often you get them as gifts and are even paid to wear them to influence your followers.
It can occasionally make sense for executives to buy them if the customer base is shallow – “oh he has made it driving in that car!”.
For the majority of people, they don’t make sense. A lot of studies have shown that many people buy these goods to be “like the rich”, when most richer people either don’t buy them, do it moderately or are paid to use them.
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