5 Myths About the Rich That Will Keep You Poor
For some, the mega-million dollar lottery couldn’t have happened at a better time – the day before April Fools’ Day. You probably heard of the prank about the rich lottery winner.
According to the spoof, one of the winners was a Wall Street baron. He is described as an incredibly disdainful man.
The commentary about the rich lottery winner sheds much light on how society views the rich. More specifically, it highlights how wrong the myths are about the wealthy.
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Just to make it clear, we’re not blind to the abuses of a few. We briefly touched on the difference between financial capitalism and entrepreneurial capitalism recently. Wall Street and K Street often collude at the expense of Main Street and the public at large.
How does the public react? Many people lump all the wealthy together. Like any stereotype, it’s not helpful.
Sure, perhaps 1% of the 1% are like the wealthy winner in the prank. But that leaves 99.99%. What are they like? It’s clearly mapped out in great books like The Millionaire Next Door and The Millionaire Mind, by Thomas Stanley.
We feel it is so important to discuss these myths with you because they are dangerous. You can pretty much guarantee that you will never be rich if you adopt these attitudes.
As bad as that is, these myths hold back our whole economy as well as the economy of the world. You can’t create wealth for yourself or anyone else until you understand how wealth is created.
With that background, let’s look at the myths perpetrated in this spoof.
Myth #1) Ill-gotten gains
The caption to one of the pictures says the winner had been arrested for stock fraud several years ago. Let’s ignore the fact that there’s a huge difference between being arrested and being indicted. And there’s another difference between being indicted and being convicted.
Let’s get done to the real killer. Many people think that the only way to get rich is to harm others. The reality is that most people who amass wealth of any significance do so by adding value in the lives and/or businesses of others.
The article quotes a Wall Street colleague of the winner. This peer is describing how the winner got so wealthy. “He basically buys up a company, fires everybody, puts them all out on the street, then when the stock price goes up he sells everything and just walks away. He’s such an asshole. We all just love him here.”
It begs the question – are rich people destroyers of companies? Yes, in some cases. If the assets of a company are worth more separately than they are as a bundle, then the company should be broken up. Most likely, companies like this are in industries that are experiencing significant disruptions. More jobs and more prosperity will be created if the capital invested in companies like this can be allocated to more productive companies who are capitalizing on the new technology.
But once again, the percentage of people who get rich doing this is incredibly low. The reality is that you’re much more likely to get really rich by building companies up rather than tearing them down.
Myth #2) Mega money
The article says that this rich winner made $900 million last year. How many people in the world have ever made that much money in a year? Almost none.
The reality is that the wealthy are your next door neighbor. They are business owners who most of their neighbors may describe as upper-middle class.
Myth #3) Conspicuous consumption
Yes, some wealthy people do consume conspicuously. The article describes how the winner picked the numbers:
“I went with numbers that have a special place close to my heart. I currently own two Bugatti’s. I have four mansions. I own twenty-three different multinational corporations. I spent thirty-eight million dollars on my last yacht. I own real estate in forty-six different countries and my girlfriend is twenty-three.”
And adds what he will use the money for: “This will help me fix up one of my estates in the Cayman Islands that I’ve kind of let go in recent years. I’ve also been thinking about buying a couple more Gulfstream G550 jets.”
If you want to get rich, the reality is that you will likely have none of those. Thomas Stanley’s recent book, Stop Acting Rich, asserts that the main reason more people aren’t rich is because they act rich before they get rich.
If you want to build a fortune, you will need to spend frugally while you build your business. You won’t live in a mansion. You won’t drive a hot sports car. And you probably are married and have never been divorced. So, even the girlfriend doesn’t fit into the equation, despite popular misperception.
Myth #4) Not sharing fairly
According to the spoof, this hideous winner only paid 2% in taxes on his $900 million of earnings last year. It says that he’s bummed because he won’t be able to escape the full tax on his lottery winners. He says, “I guess for a moment or so I’ll have to join the ‘regulars’ and pay my fair share.”
According to research from The Tax Foundation, the top 1% of taxpayers in the United States earned just under 17% of all income. But they paid nearly 37% of all income taxes.
So, the reality is that the wealthy do earn a disproportionate share of income but pay a much more disproportionate share of income taxes. Wouldn’t we all be better off by focusing on lifting everyone one up rather than constantly demonizing the rich?
Most people want to get rich. So let’s focus on creating prosperity for all. We can do it. We need to make the pie bigger rather than worrying about who has the biggest slice.
Myth #5) Disdain common people
One of the quotes by the wealthy winner talks about the “riffraff behind the counter.” In other words, rich people have a disdain for the common person. It’s a myth.
The reality is two-fold. As we saw in Myth #3, most wealthy people are common people. They live in the same neighborhoods. They drive the same cars.
In addition, the truly rich often sell their products and/or services to common people. In other words, common people are their customers. And they love their customers!
So to be truly rich, don’t act at all like this fake lottery winner. Don’t buy into the myths about the wealthy.
You’re not likely to win the lottery. However, you can create wealth. The most proven path is by owning your own business, watching your finances, and building relationships with people. It leads to BIGG success!
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