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Redistribution of Wealth

Redistribution of Wealth

    I hear a lot of chatter about the rich getting richer. That sort of talk is a generalization of course, since obviously there are rich people who get poorer, some go bankrupt, and a few do the full Madoff. But as generalizations go, it’s true enough.

    I wonder how people would feel if instead of saying “the rich are getting richer” we said “the smart are getting richer.” Would it be just as true, as far as generalizations go, and would it make you feel the same when you heard it?

    Capitalism rewards hard work, risk taking, luck, and intelligence. But are all of those elements equally important?

    Hard work is common to all income levels. I would argue that hard work has the weakest correlation to wealth because it rarely does the trick on its own. You also need intelligence, risk taking, and luck.

    Likewise, risk taking generally only works in combination with intelligence, hard work, and luck. In fact, you could argue that risk taking is just a facet of intelligence, especially when it works.

    Luck and intelligence can each work alone to produce fortunes. But after the initial fortune is made, only intelligence helps grow it. Luck reverts to the mean. People who win lotteries rarely continue to get richer. But smart people routinely parlay small fortunes into larger ones.

    So if we are looking for the best substitute for “the rich are getting richer,” I would argue that your best fit is “the smart are getting richer.” It’s a generalization, of course, with plenty of exceptions. But it seems true enough. The interesting question is whether it has the same emotional impact as “the rich are getting richer.”

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