Why the True Capitalists Want You to be Rich

In the media, “the rich” are depicted as self-centered, uber-greedy scoundrels, and while individuals like Gordon Gekko (“Wall Street”) certainly do exist, the vilification of the rich is not exactly warranted.  Many successful–and indeed, rich–entrepreneurs use the law of compensation to further expand their businesses and stream of wealth. And because it is you, the average consumer, who consumes his products, it is in their interest for your disposable income to increase, as well.

By definition, a rich person has more money than a poor person. Their disposable income is generally channelled towards more consumption and investments, which in turn stimulates production levels, economic growth and business opportunity for everyone. The higher the percentage of rich or economically “comfortable” people there are in a nation, the greater the general prosperity of a nation. (Will explain this further below)

When taxes are raised, however, the general population has less disposable income and will be obliged to consume less (or else further itself into debt). Job creation and overall economic growth are not stimulated in such environments. Yes, governments will have more of our money and will be able to create more social programs; it will do this at the expense of the general prosperity of the country, as your after tax revenue is less. Furthermore, by the time this new found government revenue trickles down the arms of government bureaucracy its affect to the economy will often be diluted and cause even more inefficiencies in our economy and the need for more money at a later date.

How a Nation Becomes Rich

When individuals own businesses, for instance, and introduce a product or service that brings value to a consumer, they are able to so with an efficient production capacity that beats their competitors. For this beneficial situation to happen, there must be low burdensome government regulations, for regulations generally serve to hamper new business activity and in turn, the lack of competition causes market causes corporations to work less for your money. (Think Monopolies vs Free-market Industries). When taxes and regulations are low, this provides incentives for entrepreneurs to create products and services, thus creating value and wealth for a nation.

One of the greatest repercussions of cumbersome government regulations is that only the biggest corporations will survive; the mom and pop shops usually succumb under such pressures. This eliminates organic and local sources of competition, and a lack of competition is death for the true capitalist market. Simply put, businesses need to work less hard for your money. These businesses may charge higher prices for goods with impunity, for there are little to no viable alternatives for the consumer. When the prices of essentials (i.e. food) increase, the population as a whole suffers, because their combined disposable income decreases without any compensation or benefit. They have less disposable income to consume and invest, and there is less impetus for job creation. This is not real capitalism.

China Currently has More Millionaires than Any Other Country

Reuters recently announced that Asia–and not North America–is churning the most millionaires, and that millionaire wealth in the United States and Canada fell 2.3 percent to $11.4 trillion in 2011. And while still the wealthiest region in this respect, we must question whether this is a mere economic fad, or a glimpse of what the future economy will look like.

What is the magic ingredient in making Chinese millionaires? Strong economic growth, of course. This tremendous economic growth “in China and other markets increased the ranks of millionaires across the Asia-Pacific region by 1.6 percent to a total of 3.37 million, as Asia vaulted past North America as home to the most millionaires.” (Reuters)

China has much less business regulation than North America and, therefore, is able to be more cost-effective. Every time we purchase goods from China (which is extremely often), we are stimulating the Asian economy and helping their entrepreneurs become wealthy. In turn, the prosperity of China and their standard of living is increasing. Are we to become jealous or spiteful of their success? We should not, for part of their success and wealth is due to our very own decisions, such as burdensome rules and regulations that do little to nothing to incite efficiency in production. The more rules we impose on our markets and the more we increase taxes, the more wealth will be transferred to China and other countries that lack such regulations.

At the end, our world is dynamic and constantly changing, as stated in a previous article “The flow of money” wealth is neither created nor destroyed, only transferred. Just this time around it seems that wealth is flowing much more towards Asia than North American. And it is no wonder that many rich Americans are now chasing other dreams abroad, as more and more are leaving the country and renouncing their citizenship “As many as 8,000 US citizens are projected by immigration officials to renounce in 2012, or about 154 a week, versus 3,805 in 2011, or about 73 per week. High-net-worth individuals are making decisions that having a US passport just isn’t worth the cost anymore.” Read more: http://www.nypost.com/p/news/business/more_citizens_vote_with_their_feet_CTshpQumBXMZmUXsfw6OTM#ixzz23B6hGfRk

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