better world · Real Life Economy

The vicious cycle of our new economy – Part 4. The multiple income model

The “single income model” and “The multiple income model”, are two extremes that do nor require each other to survive. Nevertheless, they are representing very clearly two layers of out society. In my last post I talked about the Single income model. As we saw, the model is describing the lifestyle of the masses around the world.

Living based on this income model is economically problematic and fragile. As it bound its user to a single source of income, which make them bound the the will of their employer and position them in a complicated place when negotiating terms and salaries.

The logic is quite simple and do not require advance mathematics. Moreover, in an economy that constantly growth and is attached to a inflation (around the 3% a year), an individual will be required to increase his income for the sake maintaining the same lifestyle over the years. This is one of the foundation of the model that keeps the poor this way.

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The rich from the other side, understood this principal. They are using a completely different model for their income.  Their model can be called “The multiple income model”. It works on the same mathematical logic, allowing the rich to get richer.

The fascinating thing about this model, is that it does not require that the majority of the population will not use it. the existent of the single income model in a market just makes the user of the multiple income model more efficient and promise extreme stability in the long-term income.

As you potentially have guest from its name, this model requires to create for one multiple income from difference sources. The traditional way of doing so, is by investments in multiple platforms. For example, stock market shares, direct partnerships in a private business, investment funds, bonds, ownership of properties etc.

To start using such a model, a person that start without riches, will be required to maintain a constant job and slowly create himself other sources of income.

the multiple income model
It is important to mention that in this model; more sources of income exist less dependence will have the individual on a specific source.  Using this model, give flexibility and security to its users, as it is not bound to a specific market nor to a specific employer.

In the case of the rich, the amount of fix expenses is lower as they normally do not have to rent a property or take loans for survival, which automatically allow them to create more profit.

The switch of the masses to such a model is crucial for the creation of a better society and a better world.  As I mentioned in my book “Back to ourselves” – Today, it is known and agreed that we have enough resources to maintain humanity as a species, while promoting the well-being of the planet and all its inhabitants. The reality we are still living in, exist mainly because the rich do not want the masses to get out of poverty, as it allows them to keep their power. Educated masses can get out of poverty without the approval or help of the rich. They just need to chose the right model of income.

How do you create your income? do you have ideas about how to switch from one model to another?

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Awareness and open conversation are the key for the creation of a better world.

better world · Real Life Economy

The vicious cycle of our new economy – Part 3. Single Income model

The economic structure ruling the western world have a very simple set of principles. Promising the survival of the system and its rulers. In many ways, the only way the elite could promise the continuation of such an unequal mechanism, is to maintain a certain level of ignorance in the masses. For the sake of truly understand why the rich get richer while the rest stay poor, I believe it is time to open our eyes to some simple and logical principals. As I’m limiting myself in the length and complexity of each posts, the subject will spread on a few posts

The foundations of our current economic system require the existence of 3 different models, functioning simultaneity and supporting each other. “The Single income model”, “The multiple income model” and “The socio-economic separative model”. At this post we will concentrate in the first one.

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The Single income model can be defined in the following manner – A model in which an individual is supporting his existence by the creation of only 1 source of income while be committed to a multiple channel of spending. As you could figure out yourself, the majority of the population is surviving based on this model.

This kind of living is unstable and fragile. To start with, the income of the individual is the only mean of survival. While a massive imbalance exists between the channels of income/expenses. In many cases, the commitment of an individual (by contracts) to rents, bills and services put a high minimal price tag on the monthly required income of the person in questions.  In case a mathematical equilibrium exist between the income to expenses (Income= expenses). The need to maintain a specific job, will be required for the sake of not defaulting the obligations. In such a model, the worker become oblige to continue his employment regardless of the terms he will get.

single income model

As you can see, I did not add many trivial costs. As free time hobbies, alcohol, cigarette, kids, vacations unexpected expenses and so on. The fragility and inflexibility of this model is clear. Logically, to maintain such a system for a long period in a safe manner will require the income to constantly be higher than the total expenses. Moreover, it is crucial that the employment itself will be secure, for all the period of the individual life. A reality of employment that do not exists in our generation.

Looking on the market of our days, the capacity of an individual to keep his job for a long period is limited. The general expenses are constantly rising due to inflation and our growing need for consumerism. In the reality, in such a model the capacity to save money is very smallIn many cases, a person will require a life time to save enough money for being considered rich. The idea of taking a loan is not a solution. The only thing that it does, is adding a momentary income for the sake of paying it back with interest. Which is another expenses in the balance.

This model promise survival, as one will manage to live in many cases comfortably as long as he cooperates with the system. From the other side, it is exactly this long-term cooperation that is needed for the sake of promising the survival of the elite and maintaining their enrichment.

Does it make sense to you? Can you identify your self-working based on this model?

This post is part of series, describing in simple world the economy of our days.

Share with me your thoughts. Awareness and open conversation are the keys for the creation of a better future.