Is it possible for everyone to be rich?
This really depend upon what you mean by “rich”. To begin, lets first dispose of the notion that poverty, lack of money, and working for low wages is necessary in a society or economy. I call the ‘poverty is necessary argument’ the ‘who is gonna dance in our strip clubs argument’. The premise of the argument is that bad parenting, abuse, mental illness – or in short – poverty like conditions are necessary for society. Who will dance in our strip clubs if we live in a rich and prosperous society? Girls with a future, options, and opportunities wouldn’t need to because they can afford an education, they can create talent, and will be able to invest in their future.
This argument is correct that poverty like conditions may lead to an increased supply of strippers, however it fails to grasp that the disappearance of poverty will not cause the industry to stop functioning or disappear. There will still be a demand for strippers, and so either the demand will get fulfilled in a different way, or it will have to pay a much higher price. The reduction of poverty will not kill industries, only change them. The demand that stripers meet is here to stay and we can conclude that poverty [or poor living conditions] are not necessity for society to function. Some people do not have to be living in poor living conditions.
So, can everyone be rich? Lets define what we mean:
1) What if we were to give everyone 10 million dollars?
Please review you economics 101 notes to see why this would be a bad idea. Although everyone would have 10 million dollars, it would be worthless because everyone would have 10 million dollars. In this case – no one would be rich, as the money would hold no value.
2) Is it possible for everyone to have the equivalent of 10 millions USD in their bank account without the money being worthless?
Yes. This could happen through technological advancement. Lets consider how we now enjoy more goods, services and information then ever before. Consider light:
“Today [light] will cost less than a half a second of your working time if you are on the average wage: half a second of work for an hour of light! Had you been using a kerosene lamp in the 1880s, you would have had to work for 15 minutes to get the same amount of light. A tallow candle in the 1800s: over six hours’ work. And to get that much light from a sesame-oil lamp in Babylon in 1750 BC would have cost you more than fifty hours work. If you compare today’s cost of lighting with the cost of sesame oil used in 1750 BC, you’ll find a 350,000-fold time-saving difference!”
“In the 1800s, going from Boston to Chicago via stagecoach took two weeks’ time and a month’s wages. Today it takes two hours and a day’s wage.”
With technological advancement even those in poverty in the USA have more access to more light then a king living in 1750BC. Extrapolate this to all other goods and services and you can see how technological advancement has made us rich compared to those living 1000 years ago. We can now buy 10 million dollars worth of goods, services and information for pennies on the dollar.
- Is it possible for everyone in society to earn close to the same amount – such that everyone is relatively well off or wealthy?
Yes and no…
We know that wealth distribution in society follows a Pareto distribution as described HERE – that the top 20% of the population will hold approximately 80% of the wealth. Money makes more money, and so long as this continues to be the case, wealth will always follow this distribution. This is called scale invariance. Pareto distributions are scale invariant, so no matter how much money there is in society, and no matter how much wealth there is in society, so long as wealth creates wealth, someone will always be much richer then someone else.
It is impossible for everyone in society to have the same amount of wealth. So long as our economic system uses money as a medium of exchange, money will always create more money, a Pareto-like wealth distribution will always exist, and some people will always have much more money then other people. Even in some of the richest countries with some of the worlds lowest Gini coefficients you can see huge differences in wealth.
That being said, money does not always have to be the medium of exchange, and thus, wealth distribution does not have to follow a Pareto distribution. Consider a star-trek-like society where money is no longer used, everyones needs are met, and technology has progressed to such a point where no one is living in poor conditions. If we were to get rid of money (without replacing it with something else), or progress society to a state where money is no longer necessary – wealth distribution within society could change from following a Pareto distribution to some other distribution – or perhaps it would no follow any distribution at all.