Let me begin by a blurting out the your first thought. Aren’t those 2 the same damn thngs. Being wealthy is being rich and vice versa right. Wrong. This particular insight was a result of my interaction with some guy at IMS ahmedabad in may. There is a sea of difference between them the implications of which will be clear only through a lot of analogy and possibly affect your life’s ambitions.
In plain simple terms, being wealthy is having solid assets while being rich is having liquidity. The change of state though understandable in scientific terms is lesser so in economic terms. However the beauty of these terms is that they apply to not just economics but to a whole array of different fields in which a hierarchy exists.
Let us start with the analogies. Consider knowledge as a means of hierarchy. Within the boundary of education there rich and there are wealthy people. Rich people are those that have a lot of knowledge within their heads i.e in their memory (clearest example most 9ptrs in svnit) and wealthy people are those that have a collection of sources of information i.e a library (nijeesh). In the real world scenario the “rich” people are best suited as experts in a specialized field to which their education is relevant (read technocrats). The “wealthy” people on the other hand are repositories of information. They are not limited to one field or area rather when needed can access broad level of information on broader topics.
Now if the basis of classism was “OIL”. The exhaustible energy would produce a societal demarcation similarly. A Person with a lot of oil would be rich whereas those with an entire oil field would be wealthy. Because oil is a conventional resource it is bound to finish. Needless to say the person woth the field is in advantage. However in the long run as Keynes as has said “all are dead”.
Further analogies can be made to extend this blog however I think this is enough. Now is the time for observations. In all cases though both parties are at some advantage, seemingly, in most cases the wealthy person is at a higher advantage as there is a potential to become rich more easily than vice-versa. However the recent global financial meltdown has elegantly displayed that in few conditions being wealthy is quite risky as well whereas a rich person would have managed without so much as a scratch. Also the asset is question continually loses value as more of it is created. It is like a fart which loses its strength :P . whereas the wealth increases its value. This kind of inverse relationship is especially true of capitalist demand supply markets. This indicates the possibility of vested interests in allowing some assets to fall in value. Also the “value” itself is generated by an estimation of the demand. Thus an abundant resource would not have as much demand as a scarce resource having immediate ramifications on value.
Let us now examine our daily life experience with this in mind. Assets are all around us : money, land, knowledge, gold etc, however their value today is through money. Our own body and mind are an asset. How else can you explain jeniffer lopez getting her butt insured. However most of us have only one asset i.e the brain. Also in the real world it works out nicely if you are wealthy person as the value of assets will go down as more and more comes in it and a producer of asset would naturally be valued higher. The impact of this functionary aspect on the society is beyond my temperament, but one must strive for the impact to positive on oneself atleast. Hence people let us assume ourselves wealthy as such and work upon generation of wealth rather than money. And im not taking of body parts and plastic as well as silicon surgeries. J
