What happens to an economy when everyone wants passive income?

[Rain1620]

If everyone becomes landlord, investor and owner then who will become Doctor, engineer, teacher and farmer? There would be shortage of labor who give services and wages would spike for such jobs. Secondly if everyone own assets , the returns on those assets will drop. For example a house that give 8% rental yield would give 5 or 4 percent. So passive income will get harder. Thirdly if too many people sit out and let money work for them productivity will drop. The highlighted point could be if everyone is trying to collect rent then who will pay the rent. You can't eat just the ice cream someone has to make it first.

What are your thoughts?

I don’t think there is a big deal here, I mean, why worry about the impossible. If we should analyze this, passive wealth is earned i.e you work for passive wealth leaving you in the work force while trying to get there. This is a natural phenomenon that everyone who wants to get there must pass through. Now you may be thinking about those who grew into already existing wealth, these people still have some Job to do to maintain the continuity. When comfort is prioritized they might as well end up at the work force where it becomes even more difficult.

Now let’s assume everyone acquires this wealth, labour definitely will become scarce and in turn will attract more cost. This will get to a point where only the very wealthy can afford to live off rent, and when this happens the average one’s that seemed wealthy falls back into the work chain.

We can only live by assumption to ever get to an era where everyone acquired passive wealth. But the reality is the phenomenon can’t be changed, there will always be levels to ownership.
We still have the lazy, the desperate, the procrastinators, the ones with creative mindsets and so are goals different.
Reality cannot escape the phenomenon niether can we live by assumption. So to a high extent, this idea is impossible.

[eightdots]

Either everyone has passive income or there will be all categories of people, like doctors, engineers, or scavengers. On the other hand, everyone in the world won't have passive income together. If everyone has enough money to let the money work, then productivity will reduce, which would lead to struggling in life.

If such things happen, then inflation will increase; people will start moving their professions for the money. Where more people are, they will start to move; it doesn't matter what the profession is. Because at the end of the day, we have to be alive; we need to fulfill our basic needs somehow; we have to survive at least. Everyone won't earn the same way from the economy; otherwise, the economy will not be stable.

Economic equilibrium has a different order, and this order has taken years to form. The idea that everyone has passive income or that everyone does the same job is impossible. There must be diversity in the economy, such as rich and poor, workers and employers. That's how the system works.

When such things happen, not only inflation but many other things can change. The economy is a concept that charts its own course over time, and it always finds its own path.

[programmer3666]

If everyone becomes landlord, investor and owner then who will become Doctor, engineer, teacher and farmer? There would be shortage of labor who give services and wages would spike for such jobs. Secondly if everyone own assets , the returns on those assets will drop. For example a house that give 8% rental yield would give 5 or 4 percent. So passive income will get harder. Thirdly if too many people sit out and let money work for them productivity will drop. The highlighted point could be if everyone is trying to collect rent then who will pay the rent. You can't eat just the ice cream someone has to make it first.

What are your thoughts?

If everyone is chasing passive income, the economy starts to run on empty. You need people who actually produce things, grow food, build houses, teach children, heal the sick. Without them, all that easy money does not mean anything because there is nothing to buy or enjoy. Take my country Nigeria for example, you will see a lot of young people jumping into online hustles, crypto, forex, affiliate marketing, hoping to make a quick buck. But many overlook the value of real skills. The country can't run on trading alone. Someone still needs to fix the generator, drive the truck or plant some crops. Passive income should be like a bonus, not a replacement for hard work.

[slapper]

Either everyone has passive income or there will be all categories of people, like doctors, engineers, or scavengers. On the other hand, everyone in the world won't have passive income together. If everyone has enough money to let the money work, then productivity will reduce, which would lead to struggling in life.

If such things happen, then inflation will increase; people will start moving their professions for the money. Where more people are, they will start to move; it doesn't matter what the profession is. Because at the end of the day, we have to be alive; we need to fulfill our basic needs somehow; we have to survive at least. Everyone won't earn the same way from the economy; otherwise, the economy will not be stable.

Humans discover what they can do when it comes to productivity. The doctor who has practiced so much he is extraordinary. The engineer who studies a problem relentlessly until he finds a solution that no one else was able to come up with. Those individuals are not just doing that for the money. Humans construct meaning for themselves by doing difficult things.

If passive income grows with everybody, then work can be optional in the sum, you do not only get inflation. You get a civilization-level crisis of purpose that economists do not have a line item for.

Now, your observation about inflation is correct. If everyone is drawing income without producing, you get more money chasing the same goods. Classic-Demand pull but with a badass twist. For, the collapse of the supply side will be voluntary. This is new and there is not historical precedent for that at scale. There is the rich aristocracy that never worked. But they existed above an enormous laboring class. But what happens when the laboring class disappears as well?

I think the answer is, it does not go away. Produces reconstitution under pressure. A need has a force and that force is gravity.