What happens to an economy when everyone wants passive income?

[Fragrance1122]

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?

[BlackHatCoiner]

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.

[ZAINmalik75]

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 not possible for everyone to earn passive income because not everyone can have the resources to do that. It's not like one day everyone wakes up and they suddenly have enough money to buy land and properties and become landlords, or they become wealthy and be able to start their own companies or make large investments so that they can sit back and enjoy life while their businesses and investments will work for them. Real life is not like movies where things happen just within hours or days, for one to actually be able to earn passive income, they will have to sacrifice a good number of years of their life in struggling to make it.

So basically, there will always be people who will strive to fulfill any employment position, in fact, there are less opportunities and more people waiting in line to get a place to work, this is why unemployment is so high in so many countries, and those countries where more physical labour is required and there aren't enough employees, they then start recruiting people from other countries and allow them to come and work for them and that balances things up to an extent.

[uneng]

If production and services providers become automated, people won't need to work on the same intensity they do right now. Robots and AIs can replace many of the jobs people do, so these people will have to find something else to practice. They can occupy their time with more leisure oriented activities. Money shouldn't be an issue in a world where automatons do the biggest part of the tasks.

However, in order to reach that stage, massive and drastic changes will have to happen in society. Those who are in power positions won't want to give up on their luxuries in order to share with the rest of society. There will be conflicts in order to reach that stage, but I guess it's inevitable on long run.

[gracreavix]

Everyone earning passive income is not realistic. If you look closely, passive income depends heavily on active workers. Society cannot survive if everyone switches to passive income. You mentioned rent, which is a good observation. The people paying the rent are active workers.

Right now, there's a lot of negative talk about people who work actively, which is not right. The economy cannot function without active workers. But the economy can survive with or without passive income earners.

[Perfectbaby]

At first things doesn’t work the way you may think about how the economy functions. There must definitely be someone who would be there as they said not everyone who would become very wealthy in life. Of course there are people who are burn with silver spoons, so there would always be those who would work and the more skillful you could the more chances you creates employment opportunities for the society out there.

[Odohu]

I don't think this is possible because it will lead to collapse of the economy as people will not be willing to do real work that provide the right services. Imagine an economy without professionals like teachers, doctors, engineers and so on, that is already a catastrophe.  Everyone cannot rely in passive income, there should be those working to earn active income, that is how a healthy economy operates.

[Fortify]

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?

In my view there are simply too many people with short term economic ideas, they'll go out to work for a day to earn $100 and then spend $30 on a delivery for dinner or $300 on a pair of trainers. So many people load up credit cards with debt because they are so poor with money management and don't plan for anything beyond tomorrow. I was like that too and it can be hard to act any other way if you're scraping by on minimum wage type jobs, people want to feel a little bit of luxury in their lives but get carried away. Many people struggle to save more than a hundred dollars a month, if at all, and it can see almost futile if you are putting aside such small amounts each month but it does get you into good habits in the long term.

[salad daging]

It is impossible for everyone to have assets, if everyone you mean has everything then no one will want to work or do something, this is impossible.

There are still many poor countries where citizens do not earn passive income, they just work odd jobs to make a living and do any job to get a decent wage, so it is rather impossible what you skenariokan.

It could be that everyone has passive income, the economy will not work well, many goods and services will stop because they have a lot of money.

[Pi-network314159]

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 is no how everyone will be equal in the society. There must be inequality among them to balance the theory of life. If everyone is wealthy, then who will buy from each other? If everyone is rich, who will repair each other car, cut hair, teach or treat? Of course it will be very difficult, thats why life is naturally fix or put people where they belong to make it more accommodating, comfortable and easier for us to leave. And moreover the value of money is scarcity, when everyone is rich then their is high tendency for the currency to reduce value. So it's not going to be possible. Lastly people behavior are different when it comes to financial decipline, some people will still go broke even if you give them half of the money of Elon musk.

[freedomgo]

I guess this will only remain a dream, its hard to expect everyone turns out relying on passive income to survive, otherwise the whole country's economy will experience a collapse of the labor force, since there should be an active labor force so that the country's productivity rate will remain high and active to constantly generate goods and services for the people to benefit.

But in real life, not everyone is given the privilege or opportunity to be a passive income earner, that's why majority only stick to their corporate job and perform their job description actively so that they will receive their salary pay.

[Synchronice]

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?

Compare house prices to what they were 10, 20, 30, 50 years ago and you'll immediately find an answer to your question. It's impossible for everyone to become a landlord, investor or owner of the company or something valuable. There will always be rich people and poor people. Maybe, poor person today would be considered a king 10 centuries ago but things change, everything developers, innovations are coming. It's impossible for everyone to be rich and it will be impossible forever, there will always be a gap. When the wealth of every people increases, so does increase the price of houses and so on. Someone has to be a doctor, teacher, farmer, you said it correctly. That's why the wealth gap will be forever and someone will have to work these professions. In the end, there are rich people and working class and it will always be like this.

[Natalim]

To make passive income work, the other person should also do continuously daily effort. So there should still be a balance. Its impossible that all of us will become passive income earners because who will does the job then to bring passive income to the owners or operators when everyone is just waiting effortlessly for their passive income to be realized.

Also, the whole economy will freeze and stop its production if no one stays to do the job, so it would be very unhealthy for the country's economy if ever everyone turns into passive income and stop relying on their active income.

[rat03gopoh]

I don't even think anyone can build that kind of money-making machine. Every day, we're still faced with people willing to work full-time for completely inadequate pay.

You only see the rental property business running, not how the owner built it over the years and finally handed over the business operations to someone else. In this case, passive income is an opportunity, not a certainty.

[slapper]

If you do arrive there, what will you do? Portfolio throws off enough cash, you do not need to show up anywhere Monday morning. Then what. At that time, people get there, and nothing happens.

Someone has to make the thing. But, more important, somebody has to want to make the thing, right? An economy where everyone is trying to position themselves above labor produces labor that nobody cares about doing well. This is how you already feel in like, customer service, construction quality, how everything is a little bit worse than it was before. When the culture is one in which work is seen as a punishment to be optimized as a way out, that is the natural conclusion.

This separation between "living" and "making a living" is so recent. Like 200 years maybe. We created wage labor and began to dream of getting rid of it.  Perhaps it is not passive income after all. Perhaps it is the job that does not make you count the hours till you can leave.

[tabas]

We know that it's not going to happen at all. That's why there's rich, average and poor and the gap is so huge with all of these classifications and different statuses of life. If we're all businessmen and no one wants to work, then all of these businesses will have the impact to themselves it's either cheaper prices or higher. We don't know because we haven't seen this. And that's why this isn't going to happen even if we assume that everyone becomes to be part of economy and have their respective passive incomes, it all lies with how we're going to spend it through our basic needs. Because building one is going to cost a lot and not everyone doesn't have that good beginning.

[Dogedegen]

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.

I don't think that the user understands that actually even this is ruled by the laws of supply and demand. So to continue with your point, if we have an oversupply of people who are trying to live from rent money this would reduce the number of productive services and money being generated with others method. That would decrease the money supply that is looking to rent places as people have less different money sources to chase the apartments and homes being rented, and from the other side you may even have an increase in the number of available places to rent. It is actually the similar reason why everyone can't become a doctor or IT professional. Even if they wanted to do that, as more people crowd that market they would push down the wages for those jobs to the lowest possible wages. That is what happens when these is an oversupply of something and it works with everything really.

We know that it's not going to happen at all.

The question was not whether it was going to happen or not, he is asking about a hypothetical scenario and what would happen in that case if it is a possible scenario at all.

[Unknown Op]

People mostly go for passive income sources along with their careers that is not replacing the productive work, there are many doctors engineer's teachers farmers who are investing huge amount in stocks or businesses and real States, while they are also putting their hundred percent into their career continue to contribute to the well being of the society. if the technology is working at the same pace time will come when many sectors require very few workers that will allow people to earn from their passive sources like investment without reducing over all output. Maintain a balance between productive work and investment and a good economy need both workers who can create values and the investors who can help and provide the capital that can help business to grow.

[Fragrance1122]

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.

Exactly! Passive income only works because someone else is doing the active work and passive income isn't free money, it's just a cut of someone else's productivity.

Someone has to bake the bread

[X-ray]

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?

You forget the fact that assets are limited and property don't have infinite supply.

We don't live in a world where everybody can simply decide to become landlord and get the property to rent.

If everybody want to become landlord or have passive income in this matter, the price of assets will become high adjusting to the market demand and supply.

The workers will always exist because assets is finite and the owner of assets are the top 10% wealthy people.