I’ve generally viewed this discussion as an explanation not of why the rich are rich, but why the poor stay poor, i.e. the poverty trap. Dickens expressed a similar idea in another way:
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
The point is that below some threshold, it’s not possible to acquire capital (to save) and you’re constantly underwater financially.
I think much of the appeal of this theory is that it fits with what it feels like to be on the wrong side of the threshold. I was working-poor in America for several years, constantly falling behind in debt, having to choose which bills to pay and which to abandon, constantly choosing worse options that would cost me more in the long term because I couldn’t afford something that would be cheaper longterm but required capital outlays I didn’t have.
My guess is that the people who resonate with this theory most are on the outside looking in at what it must be like to be rich (or just not poor), it’s a reasonable (if, as you prove, not accurate) guess to assume that being rich must mean a reversal of the thing that seems to be keeping them poor.
I’ve generally viewed this discussion as an explanation not of why the rich are rich, but why the poor stay poor, i.e. the poverty trap. Dickens expressed a similar idea in another way:
The point is that below some threshold, it’s not possible to acquire capital (to save) and you’re constantly underwater financially.
I think much of the appeal of this theory is that it fits with what it feels like to be on the wrong side of the threshold. I was working-poor in America for several years, constantly falling behind in debt, having to choose which bills to pay and which to abandon, constantly choosing worse options that would cost me more in the long term because I couldn’t afford something that would be cheaper longterm but required capital outlays I didn’t have.
My guess is that the people who resonate with this theory most are on the outside looking in at what it must be like to be rich (or just not poor), it’s a reasonable (if, as you prove, not accurate) guess to assume that being rich must mean a reversal of the thing that seems to be keeping them poor.