Gini is rising. Naturally. Side effect of the capital system. A simple formula can break down the conundrum. Capital and labour produce everything in the economy. How productive capital is used and how many hours labour works determine the output. Now looking at the other side of the balance sheet. How is the output distributed? Who gets what? Capital owners aka the haves or the workers aka the have-nots? If yearly gains are evenly distributed everyone is sort of happy. The promise to all that tomorrow is better than today is intact.
But what happens if the capital grows more than inflation but the labour side gets only inflation or even less than inflation? What if the labour bargaining power has been eroded and splintered into a thousand factions and individuals are left to fight on their own against multinational corporations? Capital has been growing way above inflation capturing almost all of the productivity gains, the majority of the economic output. A minority owns capital and hence a minority has grown tremendously wealthy whereas the hordes of plebs have hardly kept up with inflation and fight among themselves for scraps. It's the immigrants, it's the old, it's the woke. Scapegoats. Distractions from the real issue. The root cause. Rich getting richer, the middle class is hollowed out, more and more people don't participate in the growth. It's a shame. No — by design.
So what do I do? Understanding the hidden mechanisms is the first step. Second, change the world! Third, once you realize you won't make a difference — do it personally. The broken system I decried before? My heart aches; society must change. But who am I? What power do I have? Activist? Vote? No. I defect. Therefore, I ride it. If capital captures the gains, become capital.
Accumulate as much (productive) capital as possible. Compound the heck out of it. Capital working as a multiplier. Leverage. A tireless household member bringing in cash day and night. 24/7/365. No holidays. No sick days. No unions. Ever. Stocks are probably the best choice. Broadly diversified, all regions, small/mid/large cap, low-cost ETFs. Market cap weighted. Bigger share of the winners, losers are shrinking. What a stock market represents is the innovative ingenuity and "the means of production" (hello Karl) of humanity. Owning a piece of it is your money invested in it. Simple — yet powerful.
If we keep populating this planet we will move forward, design/invent/make things. Money printing and new debt issuance put more fire on that innovation motor and propel us up and to the right. What you own grows quicker than your own hands and mind can make in a single day.
Investing is the key. Capital the lock. The opening door is freedom of your time. Optionality. Do what you want when you want it and where you want it. Achieved: personal expenditure < personal capital income. Once the chasm is crossed capital grows bigger and faster. Compounding. Escape velocity. Time to print T-shirts.