I recently read a post on Financial Samurai questioning whether wealthy and powerful people are trying to keep the middle class down. After going through the comments, I was shocked that most people responded with a firm “of course not!” and only a few tentative “maybes,” mostly suggesting that the rich just want to keep their social circle exclusive. The reality is, they absolutely want to keep the poor down! I’m surprised that I seemed to be the first to say it so clearly, but maybe because it’s much more obvious in Guatemala.
Think about it – if there were fair minimum wages and strong work ethics, how could you afford to employ a full-time staff of five? How would you build a mansion if labor costs were high? And more importantly, how would your company maintain the benefits that fund your lifestyle if your workers earned double their current wages?
Not only does paying decent wages mean less money in your pocket, but it also gives workers the freedom to work less because they’re earning more. This means they might not want to work for you very long, threatening your entire company and leisurely lifestyle. In Guatemala, the rich enjoy a much better lifestyle than the average U.S. millionaire, primarily because of cheap labor. Even an upper-middle-class family can afford a maid, a nanny, a driver, a handyman, and even bodyguards if needed. Services like daily salon visits and having the car washed every morning are commonplace, all for under $1,500 a month. Naturally, you’d never want your maid to get rich!
I had a well-paid job and quickly did the math to reach financial independence, saving enough to quit by age 29. Since then, I’ve made more money without producing anything tangible that benefits the economy. I’ve enjoyed passive income from rental properties and the stock market and spent my time writing whatever came to mind. If everyone lived like me, the world would have no economy. Poor people are the backbone of our society.
Another clear example in Guatemala involves the coffee farm workers who used to be paid in tokens each week. These tokens were only valid at the farm’s shop, owned by the farm owner, meaning most of the money paid to workers ended up back in the owner’s pocket. Workers could exchange tokens for real money, but after buying essentials, there was little left. This system was close to slavery, and the average low-class worker today isn’t much better off.
Poor people often rely on lotteries, gambling, alcohol, and cigarettes, which make them more docile and desperate for employment. Easy credit and attractive advertisements make them crave expensive items, and the resulting monthly payments keep them tied to jobs they dislike. They consume what they produce, generating profits for the rich. Families need to be maintained, and kids want trendy gadgets and clothes, leading to more financial strain. This is why many now struggle to get by compared to one-income families in the 1950s: we desire too many things we can’t afford.
Financial Samurai also talked about child tax credits, which I believe encourage raising future workers who will pay taxes, fund pensions, and produce goods for consumption. The initial $1,000 tax credit pales in comparison to the long-term economic benefits.
In the end, the rich can only maintain their wealth and lifestyle with a steady supply of middle-class workers willing to work at various salary levels. Guatemala’s high society often tries to outdo each other with displays of wealth, like the biggest yachts or grandest weddings. Yet, there’s a hidden group of millionaires who silently pull the strings, buying public land and constructing affordable housing with governmental incentives. They make unimaginable sums of money and are just as hesitant as the flashy rich to welcome newcomers into their exclusive club.
This is why I believe the rich have a vested interest in ensuring the lower and middle classes don’t advance too much. They need an affordable and compliant workforce. While they might tolerate the occasional individual achieving financial independence, they don’t want to spread the idea that upward mobility is readily achievable, as it would mean they’d have to work harder themselves.
What do you think?