Human Capital: With an Equal Distribution of Wealth, No One is Rich

Mackenzie Arcemont – Honorbound.

Bill Gates makes $11.5 billion a year, which factors down to $33.3 million per day [2]. Imagine having this much money. You could live in the house of your dreams, drive the car of your dreams, and have the life of your dreams. Doesn’t this life sound great? Most people would love to be as rich as Bill Gates. Now imagine a world where everyone lives in a 50,000 square foot home, drives a Rolls Royce, and jets to Paris on a private jet on the weekends. Doesn’t sound possible, right? If everyone made this absurd amount of money, what affect would it have on our society or our economy? In this hypothetical world, would anyone truly be rich with no one with less money to compare them to?

If everyone was given the same human capital as Bill Gates, they would all have the same chance to gain this wealth. Human capital is “the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor, even the ability to throw a baseball fast” [1]. Human capital is what is left when your job, money, house, and possessions are taken away [1]. This is what allows the richest of the rich to have an upper hand in economic gains, as like other types of capital, human capital can be used as “investments” to grow productivity, and therefore, increase wealth. In addition to improving a person’s finances, human capital can also improve a person’s values and virtues. For example, charisma is a valuable asset not only in business negotiations, but also in one’s personal love life.

If everyone received the same education, was provided with the same opportunities, and put in the same amount of effort, then everyone would have the same human capital. Theoretically, if we were all given the same human capital that Bill Gates and other similar figures received, we could all be as wealthy as them. This would benefit the economy in addition to the individuals, because it would create new technologies, new businesses, and new jobs. With an increase in overall wealth among a population, those earning this money would spend more, therefore increasing demand and growing the economy, as well as creating more opportunities for future growth.

In Naked Economics, Wheelan supports this, saying, “Economic development in not a zero-sum game; the world does not need poor countries in order to have rich countries, nor must some people be poor in order for others to be rich” [1]. For the economy to prosper, the zero-sum game holds true. However, if this were true, the term “rich” would be meaningless. Without this unequal distribution of wealth, the “rich” would be just like everyone else.

Overall, it is true that an unequal distribution of wealth is not necessary to support the economy, but it is necessary to support the rich, that is, the term “rich.” Without lower socioeconomic groups, the rich would no longer be rich, because it is the comparison that grants them that title. If we were all as wealthy as Bill Gates, his wealth would no longer be such a fascination and an aspiration for everyone else. If we were all that wealthy, we would all be Bill Gates.

 

[1]  Wheelan, Charles J. Naked Economics: Undressing the Dismal Science. New York: Norton, 2002.

[2]  “Do Rich People Need Poor People in Order to Remain Rich?” Quora. Accessed June 22, 2016. https://www.quora.com/Do-rich-people-need-poor-people-in-order-to-remain-rich.

[Image 1]  “Do Rich People Need Poor People in Order to Remain Rich?” Quora. Accessed June 22, 2016. https://www.quora.com/Do-rich-people-need-poor-people-in-order-to-remain-rich.

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