What are some myths about making money
Money and Morals: 7 Myths About the Stock Market and Capitalism
Capitalism is ruining the planet ...
The stock exchange is nothing more than a gambling den ...
Money brings out the bad sides of people ...
What is the truth of such and similar claims that are often made by people with a left-wing alternative view of the world?
In this article, I debunk seven myths about the stock market, money, and capitalism:
Myth 1: Money spoils character
Numerous studies prove: Money influences our social behavior and our thinking.
Fascinating experiments in this area were carried out by the American scientist Kathleen Vohs.
She deals with the psychology of money and her hypothesis is:
Just the thought of money means that people tend to be more self-sufficient. That they keep their distance from others and are less interested in cooperation.
Because money makes you independent and enables people to achieve their goals. Without having to rely on the help of others.
The psychologist Paul Piff comes to the conclusion in his studies:
Doesn't such research confirm the myth that money spoils character?
In contrast, there is a quote from the former French politician Edgar Faure:
"Money only spoils the character that is already spoiled."
And the author John Steinbeck occurred to this question:
“Maybe money spoils the character. In no case does lack of money make him better. "
money can thus have a negative influence on the character, but it doesn't have to be.
Whether money makes you a worse person or a better person is up to you.
We are ultimately responsible for our thoughts and actions and can influence them.
For me one thing is certain:
There is no reason not to want to become wealthy. At least not for fear of being a bad person because of it.
Myth 2: Because the rich get richer, the poor get poorer
The prosperity of mankind is just a zero-sum game - what is the truth of this claim?
The problem starts with the definition of rich and poor: When is someone poor?
Poverty can be defined as both an absolute and a relative quantity.
Absolute poverty is when vital needs of people such as food, drink, clothing, a roof over their heads and a minimum standard of sanitary facilities not given over a longer period of time are.
And so the health and life of those affected are threatened.
According to the World Bank, absolute or extreme poverty is when less than USD 1.90 per day is available to live on.
In 2015, however, this affected “only” around 10 percent of the world's population, after extreme poverty has declined significantly over the past 20 to 30 years.
In China in particular, living conditions have improved for many people as part of the country's economic boom. The aim of the United Nations is to completely eradicate absolute poverty by the year 2030.
In parts of Africa, however, development is stagnating. And the situation on site is enhanced by that unrestrained population growth likely to remain critical.
If you look at the concept of poverty that is used in western industrial societies, you see a different picture:
Absolute poverty does not (really) exist here. Instead, the concept of relative poverty is at the center of social debates.
At risk of poverty is anyone who has to live on 60 percent of the average income. Expressed in euros, the poverty line in 2013 was EUR 940 per month.
The question of how much inequality in income and wealth is acceptable and to what extent a redistribution from top to bottom should take place depends on the political perspective.
But to what extent does the situation of the (relatively) poor worsen when - as is often claimed - the rich get richer and richer?
It changes: Nothing.
And that is due to the (sensible) use of the median as a statistical quantity. This is used to determine the average income.
“If, on the other hand, the median is used - as is the case with the EU method - then changes in income for people whose incomes are above or below the median before and after the change have no influence on the median and the poverty line. How the incomes of the top earners (more precisely: the incomes of the approx. 49% higher earners) develop is therefore irrelevant for the poverty line. "
Myth 3: Capitalism does more harm than good
In western affluent societies there is an astonishing tendency towards self-mortification. By assigning capitalism to the role of the sinister villain.
This is astonishing in that its positive effects on human development are considerable:
In 1950, the probability that a newborn would die before its fifth birthday was still 23 percent. To date, this value has fallen to 6 percent on a global average.
A major reason for this is one better nutrition.
The overall positive development of the average income enables parents, even in poorer regions, to give their children sufficient food and good quality.
A higher sanitary standard also contributes to the positive development.
In 1950 there were 1.5 deaths per 1,000 people in developing countries from contaminated water. This value has fallen to 0.4 per 1,000 to date and should halve again by 2050.
Well, what does capitalism have to do with this development?
The connection is relatively easy to see:
The higher productivity leads to more tax revenue. Provided they are not embezzled by corrupt public servants, these can be put into a better state infrastructure, for example in the health system.
A better equipped health system - to which the general population has access - in turn leads to a higher quality of life and life expectancy.
Capitalism is definitely not a perfect or "fair" system. Obviously, to this day, it is the economic system that functions least badly.
Myth 4: Economic growth is destroying planet earth
Economic growth is now seen as the spoiled child of (evil) capitalism.
After all, eternal growth cannot work. Because the earth's resources are finite, this is the thesis of the growth critics.
In his essay Sustainability - Renunciation of Growth or Moderate Growth? says the financial and folk scientist Ulrich Busch with reference to the 1972 report of the Club of Rome:
“The message of the Club of Rome has often been interpreted as if it were about limits to economic growth. In fact, the report deals with the limits of population growth and the finiteness of natural resources.
By dealing with the occurrence and finite nature of natural resources, the «report» addresses, in economic terms, input variables. Economic growth, however, is an output variable, the result of economic activity.
There are perhaps limits to this that can be discussed, but these are not to be equated with the limits of resource consumption. "
Busch sees the problem in the growth debate in the fact that ...
"Many discussants assume that there is a direct, more or less proportional relationship between economic growth on the one hand and resource consumption on the other [...] and consequently draw conclusions from the limitation of resources on the limits of economic growth."
But it's not that simple. Because with this conceptual "short circuit" several aspects are neglected:
More products can therefore tend to be manufactured with the same or even decreasing use of resources.
For example, the resource consumption of large service companies is likely to be within a manageable range. Their contribution to the gross domestic product, on the other hand, can be quite significant.
The development of raw material consumption in the Federal Republic of Germany can be used as evidence of the qualitative change in economic growth:
This has been falling annually by around 1.4 percent since 1978, while the gross domestic product is growing by around 2 percent after adjustment for price.
Ulrich Busch concludes from this:
“Economic growth must therefore neither be equated with an increasing consumption of resources nor with an increase in the production of material goods. Consequently, not per se with increasing environmental pollution and destruction of nature. "
Myth 5: Entrepreneurs get rich at the expense of their employees
Are there any companies that pay their employees dumping wages? Wages that you can hardly make a reasonable living on while the bosses of entrepreneurs drive big carts and live in luxury?
Yes, such companies certainly still exist today.
But deduce from this that in principle all Enriching entrepreneurs at the expense of their employees is a little too much of union propaganda.
Let's put ourselves in the role of the entrepreneur:
Employees inevitably have to generate more value with their labor than they get paid with their salary. You have to sell yourself “below value”, so to speak.
That may sound unfair.
Otherwise, the company cannot make a profit from which the entrepreneur ultimately pays for himself.
And why should someone run a business and employ people in it if it doesn't pay off for him or her at the end of the month?
Myth 6: Interest and compound interest are morally reprehensible
The accusation of the interest rate critics: Interest and compound interest cause society to drift apart because the rich get richer and richer and inequality increases (see myth 2).
But how does the compound interest effect actually work?
The principle is like a snow globe that you roll through the snow.
Starting from a fist-sized snowball, the ball grows slowly at first, but then gets bigger and bigger from rotation to rotation.
However, the decisive factor for this process is that the snow sticks.
Because the compound interest effect only occurs if the capital gains are not withdrawn but always reinvested.
If you do this, you literally let your money work for you.
And opinions differ on this idea. While for some it is the ultimate pipe dream, others consider this notion to be morally reprehensible.
To be honest, I don't know what is morally reprehensible about compound interest.
At least as long as you agree on the following point of view:
It should be up to each investor to decide what to do with the interest income. One spends it, the other puts it on again.
Would a ban on interest and thus the abolition of compound interest really be a suitable means of closing the gap between rich and poor?
After all, who would want to grant loans then? Without credit - or more precisely: without money being created by the banks - economic growth would come to a standstill.
Because companies without outside capital invest less and could therefore grow much more slowly (if at all).
It would certainly be easier to use tax measures to create the desired margin between rich and poor ...
Myth 7: Small investors can only lose on the stock market
Even if you have already had bad experiences with stocks, the stock market was not invented to poke at unsuspecting small investors.
Nevertheless, there is a grain of truth in this myth.
Because it all depends how As a private investor, you tackle the topic of securities investments.
If you try active investment strategies, such as trading individual stocks, the probability of losing is very high.
The average real return on the global stock market has been about 6 percent per year over the past 200 years. This figure has already been adjusted for inflation, so a real increase in value.
By investing in exchange-traded index funds (ETFs), you can easily participate in the long-term average return of the stock market.
There is a simple method with which you can make provisions for old age and build up a lot of wealth thanks to a return of 6-7% p.a. …
- without to spend significant time on it
- without to take too big risks
- without Getting addicted to the bank or a financial advisor
- without To have to go into debt up to your ears for a property
Click here to read more.
- Why is China an international trading giant
- When was paper invented?
- Which is poisonous but cannot kill people
- Who are the best MIT math professors
- Why do we use social media marketing
- Freelance digital marketing is difficult
- How do I steal
- Can Mars be pulled from Earth
- Operating rooms are noisy
- Have you tried the Plant Paradox Diet
- How useful is a webinar for marketing
- Where can I buy cannabis online 1
- Why do people have personal blogs
- Where could Ethereum go
- What challenges are there only for tall people
- Buy too much food
- Who are the leading cancer researchers
- What are the interview questions for HP technical support
- Who called the ladybug
- Increasing the RAM increases the VRAM
- How effective are WordPress SEO tools
- Why don't I feel happy?
- What are the characteristics of stoic people
- Loyalty is a virtue