The hollowing out of the middle class in Western countries is driven by factors such as credit, low interest rates, flawed inflation measurement, and tax laws that favor the wealthy, leading to stagnant living standards and declining purchasing power for the middle class.
Impact of Economic Factors on the Middle Class
Rule emphasizes the importance of educating and guiding young people to help them succeed and grow their wealth.
The middle class, in an unfettered performance dispersal curve, should ideally make up around 60% of the population, indicating a balanced distribution of achievers and contributors to a function.
Credit and artificially low interest rates favor those with financial knowledge and access to credit, creating an uneven playing field.
The ability to use credit and access to low-cost capital played a significant role in the speaker’s accumulation of wealth over 40 years.
Inflation has led to a hollowing out of the middle class, with working people needing to work more hours to afford basic necessities like housing and vehicles.
The rising costs of government impact the middle class more than any other social or political strata due to their lower economic surplus, savings, and access to credit.
Automation and redundancy have negatively impacted the middle and lower classes, with real wages for working people in the US remaining stagnant for 60 years.
Wealth Inequality and Redistribution
The hollowing out of the middle class is a complex issue with differing perspectives on whether it is good or bad depending on one’s position within it.
The speaker argues that developed economies are more redistributive than creative, leading to a decrease in wealth for the middle class.
Buying a U.S 10-year Treasury guarantees that the government will make you poorer by two percent a year compounded for ten years.
The tax laws are constructed in a way that benefits the wealthy, leaving the middle class to contribute more to the “Commonwealth.”
