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70% of people in the USA and 70% of the people in China depend on wages to survive.
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48% of people making more than $100k annually in the USA are living paycheck to paycheck, according to PYMNTS Intelligence.
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The remaining 30% of the population is in the “ownership” class where they own businesses, assets, stocks, and basically live off of passive income or low-touch income. They barely, if at all, trade time for money.
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Mathematically, most of the working class will not accumulate enough capital to enter the ownership class. Roughly only 10% of the working class (7% of the total population) can make it to the ownership class and it requires: high income and shrewd investing.
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Conversely, 20% of the ownership class (3% times 2 = 6% of the total population) falls from ownership class to working class. Think of heirs who sell the family business and nix the passive income stream, possibly inadvertently because they don’t understand it.
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This means that annually roughly 7% of the population can rise to the ownership class, while 6% of the population will fall into working class.
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The scenario is very bleak.
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Even in communist countries, where the idea was to “save the exploited” by giving the working class the means of production, in theory elevating them to “ownership class,” we see that 70% of the population is working class.
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This means that communism not only doesn’t do what it’s supposed to do, but it ends in a similar/same outcome for wealth distribution as capitalism, except that there is no way to enter the ownership class.
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Basically, capitalism is a cage where the door is barely within reach and open, and only 7% of the population can access it, while in communism the cage is completely closed and has no exit.
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These are just facts, an aggregate analysis of how many people there are in the different countries compared here (namely USA and China) and what ratio of the populous is working class / dependent on wages / salaries for survival.
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A crazy idea: boost everyone in America into the ownership class.
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Is it possible? In theory, yes.
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How would it be accomplished? Everyone would be given some sort of stock ownership, like stocks that bear dividends, or index-funds, at birth. The amount they have would compound (as in “compound interest”) over the course of their life.
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In many decades, just about everyone could have massive, generational wealth that they could then:
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Give to their heirs. Borrow against. Basically never touch the principal and use it to further their investments.
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Of course, without financial education and a rigorous understanding of compound interest, the possibility of many falling into the working class even after all this is significant.
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But in theory, everyone in the United States could become part of the ownership class.
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Best part: it can happen in one generation.
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A one-time multi-trillion dollar investment into these new savings accounts of the population would set everyone up for ownership class status in their lifetime.
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Hourly work would become entirely elective in 1 generation.
“TRUMP accounts” are a real-world example of this concept currently being implemented. Babies born between 2025-2028 receive a $1,000 seed deposit from the Treasury, and families can contribute up to $5,000 annually (employers up to $2,500) Gallup. According to the Council of Economic Advisers, assuming maximum contributions and medium returns, these accounts could yield $303,000 by age 18 Gallup. With maximum contributions, these accounts would reach $7-9 million by age 65, with market returns of 7-8% annually. However, critics note that TRUMP accounts primarily benefit families who can already afford to contribute thousands annually, essentially “subsidizing the transmission of intergenerational wealth for those that already have wealth in the first place,” Gallup rather than addressing the structural problem outlined in this article.
China is technically not “communist” because the people do not own the means of production. Rather, it is a capitalistic country ruled by the communist party. Although all land in China is owned by the state or collectives, individuals can own buildings, businesses, stocks, and obtain land-use rights for up to 70 years.
One way to give people ownership of the “means of production” is to give them stocks that cover the whole market.