The Widening Wealth Gap in Taiwan
Hello everyone, I'm Zhang Xin, and I'm glad to be here to discuss a serious issue: the growing disparity between the rich and poor in Taiwan. This gap is creating a sense of class opposition and feelings of exploitation among those who are less fortunate. I want to share some observations from a Chinese Trust Bank report that highlights the wealth accumulation and investment strategies of Taiwan's high-net-worth individuals. The link to the full report will be in the description.
Defining High-Investment Customers
The report defines "high-investment customers" as individuals with over NT$30 million in personal investment assets. These assets include real estate (excluding their primary residence), stocks, and other investments that generate passive income. These are assets beyond the value of the home one lives in.
The Surprising Number of Wealthy Individuals
Taiwan has a population of approximately 23 million people. I was surprised to learn that about 350,000 individuals have over NT$30 million in investable assets. This translates to roughly 1.5 to 2 people out of a class of 50, exceeding my initial expectations. The report also indicates that this number has grown by about 14% annually over the past five years, showing the wealthy are getting wealthier.
The Growth of Wealth vs. Income
While the number of wealthy individuals is growing, their total assets are increasing at an even faster rate of 17% per year. This is in stark contrast to the average salary growth of 3-5% per year. This discrepancy makes it increasingly difficult for the middle class to bridge the wealth gap. As your wealth increases, even a percentage return amounts to substantial gains.
The Role of Inheritance
Another striking finding is that 28% of high-investment customers under the age of 45 acquired their wealth through inheritance and family fortune. This indicates that many young, wealthy individuals were "born with a golden spoon," highlighting the advantage afforded to those from privileged backgrounds. It's difficult to accumulate NT$30 million by the age of 45 through solely your own labor.
Contributing Factors to the Wealth Gap
I'd like to share my thoughts on what's driving this growing disparity between the rich and poor, because it does seem that something is pushing the rich further ahead.
Investment Thresholds
The current wealth and investment systems have inherent thresholds, both flexible and inflexible, that favor the wealthy. For example, minimum investment amounts in US dollars create a barrier for young people who may not have significant capital. Richer individuals can invest in appreciating assets like real estate, while those less fortunate struggle even to afford a home. These thresholds effectively prevent the poor from accessing the same opportunities for wealth accumulation as the rich.
Unequal Educational Resources
Educational resources are increasingly divided along socioeconomic lines. While exams were once considered a fair equalizer, the current system requires more than just academic performance. Success now relies on access to resources, interview skills, and extracurricular activities, which are often more readily available to affluent students. While we sometimes see news of a child overcoming poverty to achieve success, those stories are exceptional, not the norm. Richer students enjoy better schooling, environments, and tutors, giving them a greater advantage.
Employment Disparities
The information and resources available to rich and poor individuals in the job market also differ significantly. Wealthy children often have access to industry insights, networking opportunities, and advice from successful relatives, giving them an edge in securing better jobs and career paths. Poor individuals often lack these advantages, perpetuating a cycle of inequality.
The Impact of Financial Pressure on IQ
Research suggests that financial pressure can negatively impact cognitive function, reducing IQ by as much as 10%. This added stress can impair judgment and decision-making, making it even more challenging for individuals facing financial hardship to improve their circumstances.
Psychological Factors: Learned Helplessness and Relative Deprivation
Learned helplessness and relative deprivation also play a role. Individuals who feel trapped by their circumstances may become resigned to their fate, choosing to "lie flat" rather than striving for upward mobility. Seeing those around them living more comfortably can reinforce this sense of hopelessness.
The "Comparison Trap"
The tendency to compare ourselves to those around us can also limit our potential. Being the "big fish in a small pond" can create a false sense of accomplishment, hindering motivation to strive for greater success. In contrast, wealthy individuals are often surrounded by other successful people, which motivates them to continue pushing forward.
The Influence of the "Original Family"
Our parents' financial, employment, and educational ideas heavily influence our own choices. If our parents are not wealthy, their limited experience may inadvertently restrict our aspirations. It's important to be aware of these influences and consider alternative perspectives to avoid perpetuating a cycle of poverty.
Conclusion
The widening wealth gap in Taiwan is a complex issue with deep-rooted causes. While there is no easy solution, recognizing these factors and challenging limiting beliefs can empower individuals to break free from the cycle of inequality. While I may be older, I still encourage the young generation to work hard and seek opportunities to challenge their limits and maybe achieve something beyond what I've seen. By understanding these issues, we can perhaps foster a more equitable and just society. Thank you and goodbye.