Income inequality and wealth inequality are emotion-laden topics discussed in great detail on public radio, in universities and various economic forums.
Why are these topics suddenly so popular?
Economic growth is stagnant in western Europe – which is teetering on recession – and tepid in America where the labor participation rate has fallen to 62% (a low rate not seen since the mid 70s when women were a much lower portion of the labor force). If economic growth was strong people at all income levels would benefit and there would be very little discussion of income inequality.
In spite of dismal economic growth, those in the top echelon of income earners – so-called fat cats – are doing just fine with very solid growth in both income and wealth.
What is the solution? Become a Fat Cat.
Average workers, whose primary source of wealth is a paycheck, have limited options towards acquiring wealth because they can leverage only their time: there a limited number of hours in a day; and, if they are not at work, they don’t get paid. Worker bees rarely become fat cats!
Fat cats, on the other hand, leverage capital and earn the majority of their income and wealth from capital rather than labor. Unlike time, capital is potentially unlimited. For more detail on trends of capital and labor, take a look at capital and labor inequality.
Here is the good news. Inventors have the opportunity to become fat cats!
An inventor creates a new, innovative product or service. If the inventor works very hard and smart and is able to develop the new product and commercialize it successfully, he or she may earn a lucrative living from capital, rather than labor. To become a fat cat, you must leverage capital by getting someone else to sell the product in large quantities for you.
Shekels while you sleep!
Not just any “someone.” You need to obtain access to distribution channels that sell to a large segment of consumers including HSN, QVC, retail stores, DRTV, and manufacturers who would license your product. Millions of dollars of product can be sold via such channels. In the case of HSN, QVC, and retail stores, you are manufacturing and selling at wholesale to them and leveraging their large repositories of consumers. With DRTV and manufacturers, you license rights to your patent(s) in exchange for being paid a small royalty on all sales. By leveraging large sales volumes, a small royalty percentage may produce a lucrative income.
If it were easy to become a fat cat through inventing, everyone would do so. It is obviously not easy, but it certainly is not impossible either – I know from personal experience it can be done if you are strategic, persistent and patient.