To be impressed by this article: Ability to withstand financial shock as a measure of wealth

[Firesuit]

shift.newco.co/your-financial-shock-wealth-4845e6dc1d2f

It starts off as if it's just a commentary on personal finance, then gets deeper, and explains the almost inevitability of financial strength leading to greater strength, and financial fragility being a slippery slope where a single slip may make a subsequent slide more difficult to avoid. (My metaphor.)

Read it, and start saving, if you can.

I know people don't always read links, so I'll chuck in a few quotes to tempt you.

This number is probably the truest measure of a person’s real wealth: What is the largest unexpected financial shock you could sustain without the cost of that to you suddenly becoming ten times the original cost or more? That number isn’t something easy to calculate; it depends on whether you have a family that can help you out, on your income, on whether that shock involves losing your job (and thus your health insurance, if you live in the US), on whether you have access to any other sources of security (including public assistance).

and

If you want to understand economic class in the Western World today, here’s a simple rule of thumb: There are people for whom a shock that’s reasonably likely to happen within a year — a car breakdown, a lost job, and so on — would be catastrophic, and there are people for whom catastrophic events happen much more rarely. Those are your two social classes.

and

Each financial shock will knock some set of people down a social class, destroy part of their wealth, and redistribute the rest among everyone else. Successive shocks will hit different groups of people, but ultimately everyone will be hit by a few, so the only people who won’t get knocked down are the people who have enough “shock wealth” to survive them.

This is the plain and simple way that income inequality can be created in the absence of any external forces on an economy. No new gold rush has to open up and make a few people rich; no explicit banditry has to happen. Just one financial shock after another.

I like "no explicit banditry has to happen." I think lots of people on the left feel there's a conspiracy against the poor. Forces do work against the poor, no conspiracy needed.

Just re-phrasing and stating the obvious.

Isn't this the same as the old 'emergency fund'? its a rule of thumb to have at least six months of savings to cover all your expenses if you lost your job. Gives you time to find a new job without your life and standard of living going down the toilet.

Yes, this is stating the obvious.

And indeed this is what the welfare state and the NHS are for: creating compulsory insurance (via taxation) to allow people to live through what would otherwise be catastrophic shocks whether or not they are rich or have rich relatives.

That's why the welfare state is called a safety net.

The shock of being evicted from a rental property because the landlord wants to sell, meaning you need to find removal costs, agency fees etc is a huge financial shock for many people, takes a long time to recover from, and can happen another six months down the line.

That's why the welfare state is called a safety net

Shame it doesn’t really exist anymore. Due to the time it takes receive benefits now you will probably already be in debt/rent arrears and will receive the absolute bare minimum to survive. That is no protection from a financial shock.

I don't really understand your comment "Forces do work against the poor, no conspiracy needed."

If someone is trying to reduce the effectiveness of the safety net, then they are working against the people it protects from catastrophe. Doesn't matter whether its openly or in secret.

Similarly, different regulatory regimes (eg employment law, H&S law) change the likelihood of shocks occurring to various groups, and change the probable severity of the shocks if they do occur.

There are indeed people who lobby for changes to regulation which are likely to negatively impact certain groups and make them more likely to be poor.

"ultimately everyone will be hit by a few"

But in practice shocks aren't usually evenly distributed. Particular groups will be hit by many more shocks than others. Eg A formerly working woman without wealthy family and who doesn't own a home outright, who has a child, becomes disabled and is left by the child's father, will be vulnerable on a lot more fronts than the bloke who's swanned off to the house bought for him by his parents and a guaranteed job in the family firm.

Sorry OP, I can't see what point you were trying to make. Could you say a bit more?

I mean, I understand the article you've quoted.

But I can't pick up where you want us to go with it?

Perking, that was exactly the point of the article - the bloke would be richer than the disabled woman not able to withstand a small shock, eg boiler repair.