Scarcity vs. Abundance and Income Inequality

Foreigners. This is Vermont Senator Bernie Sanders and you're listening to Freedom Fast Lane. It's also immoral and unethical in this country that you 1 percenters control 99% of the wealth while the rest of America suffers.

That wasn't really Bernie Sanders. It was me.

I so got you. You thought it was. You thought it was burning. It was me. Hey, fastlaners, Ryan here. And we're not gonna get too overly political in today's episode, but we are gonna talk about this idea that is being spread particularly hard in the media right now, somewhat because of certain politicians who are running, but also by individuals who have bought into the idea that when one person or a group of people have a large amount of something, that it prevents other people from having the same thing. Bernie Sanders has kind of been the champion of this idea of it being immoral and unethical for the top 1% or the time 5%, the millionaires and billionaire class to own the vast majority of wealth. And it's important that we ask why. Why is it supposedly immoral and unethical that a small group of people controls a large amount of wealth? And if you ask any of his supporters, if you ask Bernie directly why this is the case, why is it immoral or unethical for a small group of people to control a large amount of wealth, they will say that it is because it is done on the backs of mainstream Americans or on the backs of hard working people.

In spite of or at the expense of other people. If we look at now that sounds sexy, that sounds like a problem. That sounds like something that would need to be addressed. And that's why this idea has grown legs and has spread and why people are talking about things like income inequality, which we'll talk about, and why they have talked about the 1% and why now the 5% apparently is getting so much even more demonization than has been in previous years, even during the time of Occupy Wall street, which is all about the evil 1 percenters. Here is the fundamental flaw in this thinking. And this is where the argument breaks down. And if you say this to any supporter, if you say this to, to anyone who argues this point, you will watch them shut down because they cannot argue at this point what they are assuming, what someone assumes when they say that's unethical for someone to be that rich, what they are saying is that there is a scarcity, there is a scarcity of opportunity, there is a scarcity of dollars, there's a scarcity of money, a scarcity of Wealth. Let's propose a scenario here. If there was infinite abundance, meaning if there were hundred dollar bills filling up 3ft, 3ft deep throughout your entire house or apartment, and every time you picked it up, every time you picked up dollars, they were just replaced by more dollars. So if you got a bag and you filled them all up somewhere in the floor, more money just showed up. More $100 bills went to replace those. Let's just, let's just play here for a second. If someone came into your house and they filled up their bag with $100 bills, would you care if you knew that they were going to be replaced by these magical $100 bills that showed up? No. You'd be like, dude, I have magical replacing $100 bills. Come get as many as you can. Let's go out. And that you would both get your bags and you'd fill them up and you'd watch them refill and no one would care. You would not feel, you would not feel bad if someone came to your house and filled up a whole bunch of bags and had collected more than you at the end of the day, because you can go out, you can get as much as you want. In the same way, if someone takes a big breath of air.

There is still just as much for you. In fact, I can plant some trees and by me taking that breath of air, they're better off. And then by them taking a breath of air, they're going to produce, produce more oxygen. And so we're creating opportunities between me and these magical plants that don't exist. So if there was infinite abundance, if there was no limit, would there be any problem to someone having.

Hundreds of billions of dollars or trillions of dollars or quadrillions of dollars, would it matter at all.

If there was truly infinite abundance? The answer would be no. If someone having more than you did not prevent you from having the same thing, or even more, then no, it would be encouraged that everyone get as much as they can, that everyone acquire as much as they can. That would be the case if there was infinite abundance. On the other hand, if there's a scarcity, if there's a limited number, if there's a fixed piece, if there's only ten hundred dollars bills and one of us is gonna get some and the other person's gonna get some, and we've got to figure out how we're gonna divide them up. Now we're gonna fight over it, because if that person gets eight and I get two, I'm gonna resent him or her for taking my dollars, I should have at least three of those dollars. There should be a level playing field. This is the mindset. This is the difference in mindset that determines how someone views wealth. And it is this mindset that determines if someone is going to be successful or not. If you hear someone argue that the evil 5 percenters are 1 percenters, if you hear someone argue that it's immoral for someone to be absurdly rich while other people suffer, they are making the point. They are arguing that there is a fixed amount, that there's a fixed pie, that there is scarcity, that there's not enough for everyone, that there is not abundance. Well, we can squash this argument pretty quickly because this idea, this mindset, crumbles under scrutiny. All we have to do is imagine the economy on a much smaller scale. So if we were to imagine that a hundred people got stranded on an island somewhere, the lost plane crashed on the island somewhere, and they weren't gonna be rescued for a few years, at first, you'd have everyone scrambling and you would have people freaking out. And when the dust settled, you'd realize, you'd see that the society would succeed if people started specializing in certain areas. So one person goes out and gets the water. One person goes out and they start raising crops. Another person goes out and starts sewing clothing. Another person hunts.

And there's two ways of doing things. One, that person can throw everything into a pot and everybody divides it out evenly and that community is going to starve. Or you can create some sort of a production system, a capitalist system on that island, which means that someone who hunts can then trade their game. They can trade their meat for other food, for the clothing that the other person's making, for the water that the other person is gathering, for the shelter builder who's making everybody houses. So if that person can just specialize in what he or she does best and go out and get as much meat as possible, everyone is better off. Everyone's better off because that person is going to be producing more meat or more grain or more corn or more coconuts or more of whatever can be produced. What can be created. And food can be created, clean water can be created. They are renewable resources. So as a result, when you have someone who is producing something in the economy, everyone is better off. If the person who is going out and hunting and producing the most meat dies, it's worse for everyone. Everyone is worse off because now we have less of a resource and somebody else has to leave, leave their plow, leave their clothes and Go out and start hunting to make up for the shortage. So what we have here, when we look at it this way, on a small scale, we realize that the more producers you have, the more wealthy everyone is.

The more food that gets generated, the more water that gets boiled and cleaned, the more shelters that can be built, the wealthier everyone is. Everyone's standard of living starts to rise. The same is true in a world economy. In a world economy, the more producers you have, the wealthier we will get. There is nothing to suggest that there is any sort of scarcity now. Some people will say, well, there's only a certain number of dollars that exist in society. There are only a certain number of physical dollars that can go around. So of course there's scarcity. And that person has a point. Because we don't live in a barter economy. We live in a real economy that trades dollars as a representation of value.

So let's suppose that person's right. He's not. But let's propose that that person is right. Let's just assume that there is indeed a limit on the number of physical dollars that exist in the world. So if one dude in this group of 100 has 90 of the dollars, 90% of the dollars, and there's only $10 left for everyone else.

What happens then is the purchasing power of each individual dollar goes up because now there is less, fewer dollars in circulation. So the purchasing power, the value on each dollar, is now worth more. That dollar buys more because there's more goods and services being produced, which drives down their costs. And there's no more dollars being produced. So the value of the dollar goes up.

When the United States was founded, the founders actually believed that there would be a perpetual increase in the value of the dollar. And the dollar was pegged to gold, which is a scarce and fixed resource. And this was logical for them to think. So there was actually another piece of currency that was a half pence. It was a half penny because they believed that in time, even the penny would be going up in value and you would need more deviations of currency. Which is kind of funny, seeing what happened. The opposite happened. Not because their philosophy was wrong, but because we went with a central banking system. We got off the gold standard. We now can produce as many dollars as we want. That's why the person who says, well, there's only a fixed number of dollars is actually wrong, because we're creating more dollars all the time. Now, if we didn't create more dollars, we'd be fine, because the value of Each dollar would go up, which would allow you to buy just as many goods and services. In fact, if you were to keep your do later, it would purchase more. The value of each dollar would go up in time, not down. We have the opposite. We produce more dollars. So each dollar loses value over time. But when we have producers in the economy, when someone comes in and they produce something new, whether it's an iPhone or a new job or a new company or a new idea that they then market and sell, when you're a producer and you're creating something in the economy, everyone is wealthier. Everyone is wealthier. We have to. If we look at this from on an even more micro scale, if we look at two people making a transaction, two people making a trade, if you are selling something and I have dollars and I want to buy it, and I give you the dollars for it, we make a trade. I value the thing that you gave me more than the dollars that I gave you. And you value the dollars more than you value the thing that you gave me As a result, because we both have increased our perceived value, we are now both wealthier, we are now both richer. We now have more value than before the trade happened. Now, where was it before? It wasn't sitting on the sidelines. One of us did not lose in the transaction. If we're both with the transaction, then we're both wealthier as a result of participating in it. And this is what is happening billions of times per day. When you shop at the grocery store, when you buy online, when you get a paycheck. And each one of those transactions makes the transactors wealthier. Unless there's fraud, and that would be the role of the government to come in and enforce a contract. But when we have billions of transactions each that make their participants wealthier and even make you wealthier indirectly, it's easy to see why GDP has skyrocketed in the last hundred years. Why there's more opportunity than ever. Why more people in the world are fed, clothed and housed than ever before in history. Or why there's more diseases being cured and solved, why people are living longer, why people are healthier as a result of people getting wealthier, everything else gets better. And when you see areas of lack, you see pain, because you see disease, you see starvation. So the cure to everything that we do, the cure to all of the world's biggest problems, is not by taking from those who have and giving to those who don't. It's by getting more producers who make the pie bigger. Because there's already enough for everyone. And when you have more producers, you have even more abundance for everyone. There is no limit to the amount of wealth, to the amount of money, to the amount of enjoyment you can experience. There is no limit because there is no pie. It's just a figment of our imagination. And it's getting bigger all the time with every transaction and every producer who creates something new.

Now, what about income inequality? What about this idea of the fact that income inequality has gone up many times over in the last two decades? Isn't that a problem? The answer is, yes, it is a problem. But it's not a problem for the reason that most people think it is. Most people will argue that income inequality is a problem because he who has something prevents me from having that thing. And that's not true. We've covered that. There's infinite abundance. So that person having a billion dollars actually makes it easier for you to get the billion dollars.

But why has it gone up so much in the last 20 years? And why do I say that it's a problem now? What's a problem now? Because of how it is being done in a vacuum. In a perfect world, there would be no problem. In a truly free market, capitalist driven society, In a producer driven society, there would be no problem with there being vast differences between rich and poor. In fact, you can look this up. This is not rhetoric. These are, these are studies. As the rich get richer, so do the poor.

Because of increased standards of living for everybody. So why do I say income inequality is a problem? Here's why. Because in the same time, in the last two decades, in the last two decades, income inequality has skyrocketed. And what has also happened in the last two decades, in the last two decades, the Federal Reserve, the bank of last resort, has kept interest rates historically low. Historical, historically under their market value. And for a good portion of those two decades, they've been under 2%. Not the whole time, but for a good amount of that, they were under 2%, which is historically unheard of. It only happened for a brief time in history, one other time, and for a very short time. We've kept them there for years.

What that means is that the rich, those who know how to properly utilize debt, go out and they buy apartment buildings, they buy businesses, they put a lot of money into the stock market. And these are all good things. Investments are good things. But at the same time, those who have savings, those who are on fixed incomes, those who have bought government bonds and similar assets, they're getting less on their money. Those who are on the lower end of the spectrum financially tend to.

Have more of those fixed assets. They tend to have more rely more on savings and retirements.

While the rich, those who have deep pockets and know how to leverage debt, tend to know how to borrow and use it to their advantage. At the same time, when you have all of this new money being created, this very low cost money, it has 2% or less. Interesting. When you have very little risk, you get more speculation and you get asset bubbles. So if someone can borrow at 2, 3, 4% and put it into the stock market, that is getting 8, 9, 12%, they're incentivized to borrow and then invest into these assets. So you get inflation in those assets. You get a surge of money into these assets and their paper value skyrockets. That makes.

Everything that.

Middle class Americans buy at the supermarket, on the stock market, it makes their houses, if they want to buy a new house, it makes that price go up, all of these prices start to go up. So what you have is the rich being able to borrow, speculate, invest, and then you have people on fixed incomes, people who want to retire, people in the middle class paying more for their, the things that they want to buy every day. Do they pay more for their goods and they're making less on their investments. So now you have this gap. In a capitalist driven society, you wouldn't have this problem because all these market rates or all these interest rates should be set by the market. We don't have that. We have the government setting interest rates. And they say they're doing it to maximize employment. They say they're doing it to boost the economy, but they're creating the inequality, they're creating the mismatch. When the government artificially creates income inequality, then you have a problem. When someone produces something and they get wealthy, there's no problem because they're doing it by producing, by creating. Everyone is better off as a result. But when you have the government getting in, manipulating the market, then you have haves and you have have nots. That's when there's a problem. So I find it very ironic in today's world that there is this demonization of wealth. And the very thing that they hate is government created. And their solution, their solution for the problem is more government. It's not to turn it over away from the people who created the problem, is to take away from those who would make the economy boom and create more opportunities and hand that power back over to the very people who are creating the problem.

Government is the problem, it is not the solution. It is, however, your responsibility.

To maximize your producing potential. You owe it to this world to be a producer, and you have the ability and the know how to be one of those producers. When you start a business, when you get a new customer, when you hire a new employee, you are producing. All of these activities produce, they create. And even when you buy new things, you are helping the economy to expand. You are rewarding a producer or creator. And when you remember that there is indeed infinite abundance, that you can literally scoop down and pick up more dollar bills and put them into your bag, you are freed up to live your life however you want, knowing that you can always go out and generate more because there is infinite abundance. There's a very specific divide in mindsets of scarcity versus abundance, and it determines everything about the way you see the world. If there is truly abundance, it doesn't matter what someone else has.

It doesn't affect your ability to go out and create more at all. In fact, it makes it easier. If there's scarcity, then you have to resent everyone and everything that everyone has, because it prevents you from having what you need. If you don't have what you want and there's scarcity, it's someone else's fault. But if there's abundance.

And you don't have what you want, it's your own damn fault.

So if there's abundance, if there really is abundance, you can have anything you want and as much of it as you want, and you can enjoy it to its fullest. In fact, it's your duty to do so. It is your responsibility to create and enjoy as much as possible. What a world. If that was the case, what a world if it was your responsibility to enjoy everything to the fullest, to create as much as possible. On the other hand, what a world.

If it's not. What a world if it is scarce. What a world if we have to resent one another because someone else's means.

Hurts my ability to have the same. What a terrible world. The evidence says the fact that we have more abundance, that we have more creation, we have more wealth than ever before, and it's only gone up.

And it's only going up in faster and faster rates. The fact that we're solving more problems, curing more diseases, living longer, inventing new things, saving more time, coming up with brand new ideas, the evidence is clear that it's a world of abundance. Yet so many people still continue to live their life as if there is scarcity. What a terrible world it would be if there wasn't abundance. It's your responsibility to enjoy that abundance, to add to that abundance, and to create as much as possible for yourself and for everyone around you.

It's your responsibility to be rich.

You don't have to be.

You'Re not required to be.

But if you want to be, it's your responsibility. And all you need to do is scoop down and pick it up.

I'd love to hear your thoughts. I know some of you disagree with me and I'd love to show you where you're wrong. Let me know at the show notes@freedomfastslane.com as always, keep on changing the world you can when there's abundance, because all you have to do is create something. And that's why when you can change the world the fastest. I did a video recently where I said everybody wants to be Elon Musk. Everybody wants to be the dude inventing and creating new things. You can only do that with an abundance mentality that by you creating something new, you make the world a better place.

So keep on changing the world. Thanks for listening to Freedom Fast Lane and I'll see you on the next show.