Tuesday, December 05, 2006

Income v. Wealth - What's more important?


You may be making 100,000 dollars a year and your grandfather is living off social security, but who is really wealthier? You grandfather is because he's already made his money, and he has land and other assets to serve as insurance. If a depression hits, your grandpa can still chill in Aruba, but you are left scrambling to find a new job.
A study by the UN shows 2% of the world population own 50% of the wealth. "The poorer half of the world barely own 1% of global wealth" (BBC News). Usually studies done on wealth take into account people's income. In this study wealth was determined by assets - land, buildings, animals, investments. Rich people are not always wealthy, once you take their debt into account.
What significance does this serve? It shows how having a high level of wealth in a nation, financial backing is available for business growth. In developing countries where wealth is least prevalent, its hard to generate funds for business investment. It continues to leave them in a cycle of poverty.
As a the US is the highest donor in the world, they are probably contributing more to the poverty than helping them. Money is sent for relief and recovery, but not reform (investment).
Do we intentionally do it? Probably.

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