Matthew Effect/ Matthew Principle & The Pareto Principle
Wise Library 1985｜Margaret W. Lavigne
The Pareto Principle
The Pareto Principle is derived from the Pareto distribution and is used to illustrate that many things, including wealth, are not distributed evenly in society.
The Pareto Principle / known as the 80/20 rule
The theory was created by Italian economist Vilfredo Pareto who found that 80% of Italy’s property was owned by just 20% of the population. Also, the Human Development Reports has revealed that over 80% of all global wealth is owned by the top 20% of the population.
Wealth is shared unfairly in any generations. In 1979, the top 1% population of the US earned around 33.1 times more of the population of the bottom 20%.
Matthew effect/ Matthew principle in Economics
The concept believes that “the rich get richer and the poor get poorer” and those who have more will get more and those who have less get less. Matthew effects primarily focus on inequality of wealth distribution.
Margaret W. Lavigne: I would say, the rich get more money by earning huge amounts of interests from the bank and the poor have to pay for more interests for the bank and that’s how the circle starts. As you buy more, you get more discounts. Thus, the rich get more discounts than the poor. Besides, the rich have a greater capacity to invest their money in the markets or stock markets. Another reason is that the poor fail to purchase good stuff and they get cheap stuff and cheap stuff get broken easily and so they might end paying more money. Besides, the poor might take more job offers to earn more, including taking the night shifts. However, night shifts proved to be highly connected with many illnesses, such as diabetes and depression. In truth, many families get terribly poor for the sake of tremendous medical debts.
Nevertheless, there are billionaires who declare bankruptcy is real life. As people get a huge amount of money, they become prideful. Pride leads people to make bold and impulsive decisions. and they have more ambition and more desires. That how they ruin their life. According to the Bible, pride is the capital sin among the seven deadly sins and luck is the gift from God. No one can be permanently successful without luck.
Rich people lose all their fortune for different reasons, such as economic downturns and bad investments. The former billionaires Bernie Madoff, Allen Stanford, and Eike Batista have all served jail time for financial-related crimes, while others lost their billions because of other reasons.
#Patricia Kluge invested her settlement money from divorce into her own vineyard. However, the housing market crashed and she lost all. She was forced to sell her jewellery and pieces of art at auction. Patricia Kluge lost all her fortune during the housing-market crisis of 2008. Kluge met her second husband, John W. Kluge. The couple divorced, and Patricia Kluge received a $1 million settlement money every single year, along with the Albemarle estate.
# The airline and liquor tycoon Vijay Mallya lost most of his fortune after defaulting on bank loans. He is charged with fraud and money laundering. Vijay Mallya was a liquor tycoon known for his extravagant partying and high-flying lifestyle.
Sean Quinn was once the richest man in Ireland. When he applied for bankruptcy in 2011, Quinn claimed his assets was less than £50,000. Quinn was forced to hand over most of his $2.8 billion fortune for his bad investments in an Irish bank. Sean Quinn accumulated his wealth through investments in plastic, glass, and hotels. He was charged with contempt of court for attempting to hide his property assets from the bank in an effort to avoid paying back his debts.
Matthew 12: 29 (Bible Verses)
“For everyone who has will be given more, and he will have an abundance. But the one who does not have, even what he has will be taken away from him.”
Margaret W. Lavigne