Income inequality is just a symptom
It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.
— Warren Buffet.
When I hear about income inequality, I always picture a big fat capitalist waiting as a vulture for anyone to collect the paycheck to take it away as soon as possible.

On a more subtle level though, money’s journey towards the richest is always a chain of agreements, deciding where exactly the alleged theft takes place is like picking the right spot where a color becomes another in a spectrum.

Still, inequality is as real as ever and growing steadily. Or is it?
In the paper Income Inequality, researchers collected and analyzed a huge quantity of economic distribution data from pre-industrial level all the way to present days, and found that inequality reached a global minimum in 1980, then proceeded to increase again in USA and UK while remaining pretty flat in other European countries and Japan.

Quoting from the source:
The reality of different inequality trends within countries suggests that the institutional and political frameworks in different countries also play a role in shaping inequality of incomes. This means that rising inequality is most likely not inevitable.
Given that disparity is partly due to politics, it still needs acceptance from the low classes to fuel the earnings of the richest, so how does this occur? The obvious but tricky answer is knowledge. Since ancient times, knowledge brought the power to convince, coerce, overcome and disperse any foe of whoever held it. Not surprisingly, it has always been revered, sought and guarded, and represented the core of any lasting power, much more than strength or valor. After the industrial revolution though, and throughout the 20th century, the uplifting standard of living of the low and middle classes, powered by the same process that so worried Carl Marx about the future of the poor, paved the way towards an unprecedented distribution of knowledge in pretty much all industrialized people, and started the downward trend in the above chart. What caused the trend to shift once again was a pretty shady kind of knowledge that even the now acculturated average person failed to grasp, though inevitably colliding with it daily. That is, financial knowledge.
Financial knowledge is the true key to understand income inequality in present societies, and relies on the simple difference between assets and liabilities, the former being any possession that brings cash in, while the latter brings cash out. Despite the innumerable examples of how the two kinds should be managed, it is a very common mistake to see a home as an asset just because it typically (though not always) appreciates in value over time. Although being undoubtedly positive, appreciation is virtual, while home expenses are absolutely real and menacing, therefore the negative cash flow. Robert Kiyosaki’s masterpiece “Rich dad, poor dad” was centered around this very concept, and flawlessly explained how his rich dad proceeded to amass assets, while his poor (and actual) dad was focused on liabilities. Mind here that the second man was a professor, and never fell into alcohol or gambling, he simply lacked the financial knowledge to understand that money wasn’t simply earned to be spent, but could actually be grown.
“give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”
— ancient Chinese proverb
So this is what sets the rich apart. It now follows the question: are governments actively trying to instill financial knowledge in people? No. Plain and simple. Pretty much any government’s measure regarding economics is focused on the money itself, and it follows the same pattern every time:
- Try to do more than the previous government with less taxes.
- Realize that if it was possible they would have done so.
- Decide where to cut or who to tax heavier to at least partially fulfill the campaign promises.
It might seem oversimplified or that I have a grudge on governments (despite living in Italy, I don’t) but it is more often than not the case, not because politicians aren’t intelligent people (you see, no grudge) but rather have a short term oriented interest, and cannot tackle such forward thinking problems as changing a generation’s culture. It is much more akin to their goals (which is, keeping the majority on their side day by day) to simply institute welfare and social security to provide for who’s in need than it is to give said people the tools to lift themselves up. After all, if you’re starving, would you rather have an egg today or a hen tomorrow? Fortunately, the two are not mutual exclusive, and today it’s much easier than ever to research and develop financial knowledge, even if schools are not yet up to date.
