investment we can make is in OURSELVES.
About a year ago, I watched an experiment on Youtube where a scientist placed flees in an opened jar. As one can expect, the flees immediately jumped out. But when the scientist placed a glass lid over the top of the jar, the flees couldn't fly out without hitting themselves and falling at every attempt of jumping. After a while, the fleas had been condition to the height of the jar, and despite removing the lid, the flees never jumped any higher than the jar again. | |
Similar to the fleas, there's a theory known as the crabs-in-a-bucket theory. It explains how a crab can easily escape out of a bucket when it's by itself. But when the crab is placed with multiple crabs, and it tries to escape, all of the other crabs pull it down. The analogy for humans is that, out of envy and conspiracy, we try to pull each other into the bucket because we fear that by having someone climb out, we are risking they achieve success beyond our own.
I was able to relate this theory to a concept Charles Wheelan mentioned: relative utility.
An experiment was conducted where you could choose between two "worlds." World A, where you would earn 110,000 dollars, while everyone else earned 200,000, and World B, where you would earn 100,000 dollars while everyone else earned 80,000.
Despite being richer in option A, and thus being able to afford more, the experiment showed that most people would be happier in world B because they would be wealthier in relation to everyone else.
As Mr. Wheelan mentioned, if the pie is growing, how much should we care about the size of the pieces? Is it fair that the rich get richer, while the poor get poorer? As a matter of fact, why is there such a large gap between the rich and the poor in the first place?
Through Naked Economics, I've learned that part of the cause for such a gap is that the rich have the resources to invest in their human capital, and our economy is growing in favor of skilled workers. For instance, many firms have moved towards the idea of using technology to make production more efficient. Although this benefits high skilled individuals who are tech savvy, as they will be the ones designing such technology, this could result as a job loss for low skilled workers. As a result, the poor get poorer, and the rich get richer.
One thing that continues to baffle me is the C O M P L E X I T Y of such a situation. What about the people who can't afford to improve their human capital? How are they suppose to develop "scarce" skills without any resources? How do we not know that the next Steve Jobs is not one of the thousands of people who can't afford an education?
In fact, I originally thought microcredit loans were given to allow people living in very low socio economic condition to start a small business. It turns out, however, that a micro credit loan is only given to someone thats had a small business running for at least 6 months. While I understand this is a rule the bank must have to avoid giving out loans that are too risky, I ask myself, what about the people who can't even afford to start up a small business? What are they suppose to do? Who's there to help them? Is it fair that their slice of the pie gets smaller and smaller?