This week's column is another fascinating article by commercial real estate expert, Don Zech, which I hope you find value in reading.
Cheers, JR
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What If We Run Out Of Rich People?
“There is no wealth but life.” ~ Ruskin
I assume most of you watched and enjoyed the Super Bowl a couple of weeks ago. It was interesting because most of these season finales turn out to be sort of ho-hum. This year was a nail biter to the end. On the other hand, I usually look to the commercials to see an expression of great creativity and humor. This year’s ads were frankly awful! I’m afraid that what we saw on the field was the result of incredibly hard work and flawless execution. What we saw between snaps was the kind of creativity you get when you phone it in while working remotely and collaborating by Zoom.
I think something has been going on in our society for some time and it has been exacerbated by the media, social media and COVID, etc. It is called Effort Shock. You can imagine millions of working types saying, “All right, I have NO free time. I work every day, all day. I come home and take care of the kids. We live in a tiny house, with two shitty cars. And we are still deeper in debt every single month.” So they borrow and buy on credit because they have this unspoken assumption that, dammit, the universe will surely right itself at some point and the amount of money we should have been making all along (according to our level of perceived effort) will come raining down.
Meanwhile, the rich get richer. The top 0.1% own close to 20% of all household wealth. The top 10% control about 77% of national wealth. The bottom 25% of households have a negative net worth. Income inequality may be a factor in the stagnation process given that a few wealthy people cannot drive an economy by themselves. In other words, the richest 1% might buy a lot of shoes, but cannot buy enough to keep all of the shoemakers employed. You need workers with enough money to buy shoes too. Karl Marx wrote that workers need to be paid in relation to the value they create. Speaking of value, do you ever question how Tesla can be worth 20 times more than Toyota? In 2018, there was a Canadian marijuana company that was...
