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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
Groundbreaking Research That Unravels Economic Disparity in Our World Today
Imagine a world where two neighbors, Alice and Bob, both plant apple trees in their respective gardens. Alice’s tree, mature and deeply rooted, produces an abundance of apples year after year without much effort. But Bob’s tree is younger and produces fewer apples. Even if Bob tends to his tree meticulously, the natural advantage of Alice’s mature tree means she’ll always have more apples.
In this allegory, Alice’s tree represents capital – assets that yield income without labor. Bob’s tree, on the other hand, represents the general economy. And this simple observation leads to a profound understanding of modern wealth dynamics.
Throughout history, the “trees” representing capital have generally produced a greater return than the growth of the overall “garden” or economy. This difference in growth rates – where the return on capital outpaces economic growth – is the essence of the r > g principle. As time progresses, those who start with more – like Alice – find their wealth accumulating at a faster rate than the economy grows.
The implications of this are vast. Think about a society where a few have deeply-rooted “trees” that continuously bear more fruit. Over generations, this initial advantage becomes more pronounced. While some may argue that wealth is earned through hard work and merit, the reality is that the capital from long-standing “trees” tends to compound and concentrate. This leads to a society where inheritance, rather than innovation or effort, plays an outsized role in determining one’s economic fate.
In such a landscape, the chasm between the haves and the have-nots isn’t just about numbers on a bank statement. It shapes political influence, access to opportunities, and the very fabric of our social contract. It poses a question: In a world that values meritocracy, how do we reconcile with a system where the scales tip in favor of inherited wealth? The starkness of this disparity beckons for solutions, for ways to bridge the widening gap and restore balance to the “garden.”
Capital in the Twenty-First Century (2013) offers a deep dive into the historical trends and dynamics of income and wealth inequality. Drawing from centuries of data, it examines how capital concentration perpetuates inequality and proposes bold solutions to address this growing divide.
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Start your free trialBlink 3 of 8 - The 5 AM Club
by Robin Sharma