Remedy: is it being less poor or being richer?

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By FERNANDO NOGUEIRA DA COSTA*

In Brazil, the great enrichment factor among the majority of Individuals was to obtain income from work with the salary of those who have higher education qualifications throughout their active professional life.

Remedyed is the one who remedied himself. Her financial situation is not very comfortable, but it allows her to meet her expenses. There's something of hers: a house, a vehicle... It's me! I only saw two billionaires, I saw many poor people – and I moved away from poverty.

After all, in this country, it is not good form for anyone to present themselves as rich. At most, some obsessive billionaires warn: – “Bill Gates, I'm coming…” Nouveau riche or “celebrities” show off as compulsive consumers – until the money runs out.

Individually, I cannot give medicine to someone who is sick. I can, however, compose, correct, and arrange the lives of those who ask for advice on Personal Finance.

I'll say it right away: the greatest source of enrichment is not the capital market, but income from work. Financial investments protect the purchasing power of this earned income. Only in the final cycle of financial life should interest income exceed income from work, in this case, it is usually from retirement.

If the person does not prevent it, or avoid falling into poverty on their own, it is difficult to help or help those who do not make the effort to study. To provide yourself with the essentials, starting from childhood, it is necessary to invest in education up to higher education, perhaps postgraduate studies.

Economists call human capital accumulation the gradual increase in personal earning capacity. It is the knowledge (and/or skill) acquired and capable of providing you with income until death, without physical or mental incapacitation due to dementia.

A Alzheimer's disease is a progressive and fatal neurodegenerative disorder. It is manifested by cognitive and memory deterioration, progressive impairment of activities of daily living with behavioral changes. This disease, although it is a result of increased human longevity, still has no cure. It would be a priority to research her preventive medicine or a medicine to cure her.

Em social situation of poverty, is it possible to help yourself, to look for the resources you need on your own?

“Whoever you are, I have always depended on the kindness of strangers.”. This phrase from the play (and film) A Streetcar Named Desire, authored by Tennessee Williams, is confirmed in everyday life, when we come across someone with empathy.

She has the ability to identify with another person, to feel what she feels, to want what she wants: to get out of a difficult situation. Altruism is a type of behavior found in human beings with voluntary actions for the benefit of others.

A empathy involves improving three components. O affective component is based on sharing or understanding the emotional states of others. O cognitive component refers to the ability to deliberate about the mental states of other people. A regulation of emotions deals with the degree of empathic responses.

If you are not lucky enough to find people with these virtues, the best way is to resort to public policies – education, health, security, housing, etc. - as the right of citizenship. To do so, it is necessary to carry out politics, that is, collective actions in search of them.

Poverty is indigence, penury, lack, scarcity, precision, tightness, dwindling, pauperism, lack of resources, shortness of means, helplessness, necessity, pindaíba. This one miserê leads to anguish, deprivation, Franciscan poverty…

The problem is a lack of money. Staying in hardship, in difficult circumstances, is a shortfall in survival. With an empty purse, one should not resort to begging, but rather to social policy.

Taking care of yourself in Health Centers (SUS) is a struggle, but there is no escape, when even a “remedial” Health Plan does not offer everything that one of those who live in princely or nabobesque wealth. Public schools, colleges and universities were – and still are – offering the best quality of education. I give my personal testimony for having always attended these establishments without ever paying for the tuition.

After all, who in this country is a capitalist, nabob, plutocrat, (multi)millionaire, billionaire, billionaire? How many are full of money, full of money and belong to the aristocracy of money, plutocracy, elite, Class A? Who are the big ones, the holders of riches, the possessors of colossal fortunes?

The public image of being rich is swimming in money like Scrooge McDuck, rolling in wealth, having a well-stocked purse with the means to live comfortably. To be a well of money, to gush money for the thief, to be a man of many possessions, to live in opulence, to make millions, to win worlds and funds, to wash the mare, is to have the destiny of the “luck of the cradle… of gold”?

Not always, although many billionaires on the Forbes list are heirs of dead billionaires. The way to get rich, become wealthy, become rich, become wealthy, become opulent, is not to get rich by earning illicit money. To arrange a life, become impoverished, worship the golden calf, not everyone can obtain a large marriage dowry.

Is the proverb “where gold speaks, reason remains silent” true? Now, it is more appropriate to use reason to escape having one hand behind and the other in front, with no threshing floor or edge...

Another proverb suggests “poverty is not vileness, it just makes the money in your pocket scarce”. Hence the broken, poor, disgraced, destitute, dispossessed (like a former slave), because he feels helpless, should he resort to credit or trust in the card he received?

Opening a current account and having credit cards have become almost universally accessible in the digital world of fintechs and neobanks. At the end of 2011, there were 78,4 million credit cards and 84,9 million debit cards activated. At the end of 2022, there were already 208,8 million credit cards or 2,5 times more. 172,3 million debit cards were activated, more than double in these eleven years.

But debt is an obligation, commitment, responsibility. Delay, if not a default, leads to one in every two revolving credit debtors being in default. The righteous person pays for this sinner, because banks cannot lose other customers' money. Hence the unpayable interest… It looks like usury, usury, but it is an obligation.

Search of Brazilian Banking Yearbook 2023 on the profile of bank customers reveals the social stratification of the population served: half (53,7 million) had low income, 40% (43 million) medium income, 9% (9,7 million) high income, the richest 1% it was made up of 1,1 million people. When considering the mass of income, the 50% of low income had 11,6% of it, the 40% of the middle income, 23,4%, the 9% of the high income, 17,4% and the 1% of the higher income. , 47,3%. There concentration within the top!

These numbers explain the feeling that those who do not belong to the 1% do not present themselves as “rich”, but rather as “well-off”. But that is income stream received, another concentration is found in stock of accumulated wealth (financial, real estate, automobiles, jewelry, etc.), according to DIRPF AC2022.

Among the declarants, the 100th centile, alone, appropriates 32% of the total assets and rights. Adding up the top 5 centiles, they have 50%, that is, the centiles from 95 to 99 have 18% of the total. The top 10 centiles concentrate 59% of national wealth, therefore, centiles from 90 to 94 have 9% of the total. 

Here, earning above five minimum wages (R$7.000) is already included in the richest 10%, above ten (R$14.000) in the richest 5% and above thirty (R$42.000) in the top 1%.

In Brazil, the great enrichment factor among the majority of Individuals was to obtain income from work with the salary of those who have higher education qualifications throughout their active professional life. By planning his financial life, those who knew how to use real interest policy, in fixed income, a substitute for monetary correction, to protect your purchasing power in the long term.

Between 1995 and 2000, the monthly nominal interest were above 2%. In recent decades, there have been cycles of 2001-2008 (16,8% average annual interest rate against 7% inflation rate), 2009-2013 (9,6% against 5,9%), 2014-2017 ( 12,2% versus 6,6%), 2018-2021 (4,9% versus 5,7%) and 2022-2023 (12,7% versus 5,1%).

After the initial cycle (2001-2008) of average annual real interest of 9,2%, the last one (2022-23) was the highest (7,2%). It even surpassed that of the “coup cycle” (2014-17) of 5,2%.

Similarly, in December 2023, the Traditional Retail, High Income Retail and Consulting each accumulated almost R$2,2 trillion, adding up to a total financial volume of R$6,5 trillion. However, there were 143 million, 16 million and 159 thousand customers respectively. The proportion of financial wealth per capita was close to R$ 13.000 in the “retail”, R$ 130.000 in the “remedied” and R$ 13.000.000 in the “rich”: ten times more among the former, a hundred times more among the latter, that is, a thousand times between the two extremes. Does being “remedied” mean being less poor or being richer?

*Fernando Nogueira da Costa He is a full professor at the Institute of Economics at Unicamp. Author, among other books, of Brazil of banks (EDUSP). [https://amzn.to/3r9xVNh]


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