What happens to an economy when everyone wants passive income?

[Mpamaegbu]

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.

I don't like seeing such from the perspective of gloom. I like to see it from the possibility that it exposes us to more career choices. A lot of us here have more career choices and skills than one. Someone can be two or more of the above listed careers. Nothing says it's an aberration. In my country, there are lots of people like that. For instance, one of the top crypto influencers in Nigeria I know is a trained medical doctor. I don't see any shortage there.

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.

That's an obvious fact. It's the forces of demand and supply that create price balance in the market. Where supply is greater than demand, naturally price will back down; vice versa.

[suhadi88]

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?

It's like saying, "Why go to school anymore, when everyone already has a president?" But honestly, this is quite an interesting discussion. Everyone has potential and abilities, but not everyone has the maximum support of resources, whether it's capital or governance capabilities, whether they're in the same item or not. There are things called palm lines, gifts, and of course, each person will be different.

[mirakal]

It's mathematically impossible for an entire economy to run purely on passive income. If everyone is just extracting yield, the actual production of goods and services grinds to a halt.

The market would eventually make asset yields crash to near zero, and wages for actual labor would skyrocket. At the end of the day, your passive income exists because someone else is out there actively working.

But without people who actively work to generate passive income, then the idea of passive investment will not come to succeed.

Balancing passive and active income is also essential because it will benefit the current economy. Otherwise, if everyone focuses only on creating passive source of income, the flow of income that is supposed to run the economy will vanish, thus putting the economy into higher prone of failure and eventually collapse in the long run.

[junder]

The economy will shut down. It's highly impossible for everyone to focus on passive income because the whole point of active labor force will be useless. Or let's say passive income will no longer be possible if there are no people left actively generating an income. So if possible, there should be a well-balanced between active and passive income.

Active income can exist without passive income, as most people have been relying entirely on their wages and salaries full time or part time. But passive income is impossible to exist without active income, although it may but it rarely exists.

that's right, the balance between active and passive income needs to be considered. And the similarity of the two is that everyone wants but not everyone can have both.

Everyone struggles to live by having to meet their needs and this refers to active income which is certainly desired by everyone because it is impossible for there to be people who do not want to have active income. Another thing that must be considered is that everyone will try their best for himself, including having these two types of income.

[Kelward]

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?

There will always be the poor in every society so the question whether everybody will be equal and nobody will work for another person is not realistic in our present world, besides a rich can become poor while a poor person can become rich. An egalitarian society is a myth that cannot materialize because by human nature we are competitive beings who likes to be better than their neighbors which makes us to want to work harder so that others will be under us.

It is not easy for one person to satisfy all his needs, there will always be an exchange, if you're a farmer you will want to have a phone for effective communication and the phone manufacturer needs to eat. So if you look at it we are interdependent on one another either directly or indirectly and people who produces more goods and services would be richer than those that producers lesser. There must also be those who don't have the capacity to produce anything and they will labor for the producers and service providers for a paycheck.

[AuchanX]

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?

It is absolutely true that passive income ultimately depends on someone's active labor and production. But not everyone can be a wealth owner. It is not that they wake up and become the owner of huge wealth. And the biggest thing is that being a wealth owner does not mean quitting work. In fact, most of those who invest do it alongside their regular jobs or businesses. If there is a shortage of people in a profession, salaries will increase, new people will go there and organizations will use technology. If you think about it, you will understand that passive income is not a problem, but rather the expectation of earning income from the value created by others without contributing to production.

[Dr.Bitcoin_Strange]

Passive income is usually being built with money, money made from your labour, right? What does that tell you? It tell you that while someone has worked off their ass to build a passive income for themselves, there are still other who are working to achieve that goal too and there will always be more people working and trying to improve to that level.  People always go from being an employee or self employed to the stage were they are not earning passive income, however, in the early stage, the person worked to earn the money they used in investing on an asset that now gives them passive income. So, it's never possible that we will have an economy where everyone is earning passive income.

[justdimin]

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.

I don't like seeing such from the perspective of gloom. I like to see it from the possibility that it exposes us to more career choices. A lot of us here have more career choices and skills than one. Someone can be two or more of the above listed careers. Nothing says it's an aberration. In my country, there are lots of people like that. For instance, one of the top crypto influencers in Nigeria I know is a trained medical doctor. I don't see any shortage there.

On top of that, if you make X amount of money from being a landlord, then why not be a landlord AND a doctor that makes 3X? That's the main reason. Not that the whole world could have passive income, that's not how math works, so the question in itself is wrong, you can't have this. There isn't enough money in the world that would make it possible for the 8 or so billion people ALL to have capital to put into something where they all make passive income, it's impossible, there isn't enough money, math doesn't check out.

But even if we assumed that it's possible, and lets say not all make it based on homes, because if we all owned homes, then who would rent from us? Let's say it's stocks with dividends, or bank savings accounts etc etc. In the end, some of us would make X amount, and others would want to start a business or work to make more.