why do the rich get richer

The rich get richer due to systemic advantages like compound wealth growth (investments generate passive income), access to better opportunities (exclusive networks, education, and low-risk ventures), and political/economic leverage (tax loopholes, lobbying). Wealth begets more wealth: assets like stocks or real estate appreciate over time, while the poor rely on stagnant wages. The “Matthew Effect” describes how initial advantages snowball—capital gains often outpace labor income, widening inequality. For example, the top 1% own 45% of global wealth (Credit Suisse, 2023), as their money works for them, while others struggle with debt or inflation.

Additionally, technology and globalization disproportionately benefit asset owners (e.g., tech billionaires), while automation threatens low-wage jobs. Inheritance and tax policies (e.g., lower capital gains taxes) further entrench dynastic wealth. Psychological factors like risk tolerance and financial literacy also play a role—the wealthy can afford losses and reinvest.

In short, wealth concentration is self-reinforcing:

Capital over labor: Returns on investments > salary growth.

Structural bias: Systems favor existing wealth (e.g., credit access).

Network effects: Rich connections unlock high-reward opportunities.

Without redistribution (e.g., progressive taxes) or systemic reforms, this cycle persists.