Piketty’s r>g and the “Residents of r”: Wealth and Income Diversification

One of those was something called“ the residents of r.” So what is that, basically?

It comes from Thomas Piketty’s… The“ r” in r greater than g, that r is what

we call the rate of return on capital, and g is, um, the return on labor,

basically the growth rate.

In short, as the financial markets grow like this,

the speed at which the capital markets expand and the growth of wage earners’

income levels… Looking at the past one hundred or two hundred years,

the story is that the rate of return on capital has always been higher.

So, in the end, there is a limit to trying to get rich through wage income.

I see, so you bet on things that will grow from here, properly lock in profits,

exit, and keep reinvesting, over and over.

Huh, I see. I called that“ the residents of r” in my own words,

and those people, in the end,

are the kind who can just sit around drinking tea in the afternoon like this.

They are incredibly wealthy even though they are not exactly working,

right? To put it simply, even if you aim to be a high- salary office worker,

you ultimately cannot win against them. Instead, you start a company,

own some of its shares yourself, grow that company big, and then sell it off,

things like that. Those are the residents of r,

and that is not the path of going to an ordinary university, getting a job,

working hard to build a career,

and aiming to be an elite salaryman.

People in the world do not know that, so I said that in the video.

And now that the cinnamon roll has arrived, the talk is over.

Huh, it is already over? That is it, I was talking about

something really important. And that is exactly what you, Mr. Yoza,

are doing, right?— Right, right, right, right, that is what I am doing. I am always

saying this: do things that give you leverage, and you have to have something,

some kind of system,

that keeps working even while you are asleep.

And also, there’s this thing called multiple incomes.

A lot of people still rely on just one source of income. I don’t have that anymore,

so in terms of income sources,

mine are probably split into like ten, right, Mr. Yozawa? Yeah, yeah, that’s good.

Because then even if one part isn’t growing, you can just be like,“ Oh well.”

I see, so even that real estate landlord, whoever it is,

is technically also one of the residents of R, but— Oh, yes. Just that alone

already scares me. I see. You really have to diversify your income,

even if each source is small.