"Dad, why is there so much inequality?" My son asked as a poor man begged for money to the driver of a luxurious Mercedes Benz in front of us.
I felt shivers with his question. I could feel his concern as what we had just witnessed was a very impacting scene and we couldn't get it out of our head.
I thought for a minute how to explain this issue. "We're in a new economy," I said, "Inequality is growing, and sadly will continue to rise because of two reasons: Leverage and ignorance."
"Leverage?" He asked, "What do you mean dad?"
"Leverage is the root of inequality," I said.
"I don't understand dad."
"Let me give you and example." I paused thinking for a moment and asked him, "How much will you pay someone to cut our backyard lawn?"
"About $35 dollars, would be a fair price," he answered.
"Agreed, sounds like a fair price," I continued, "Now, think about this, the person we hire to do this job can deliver the promise with no tools; with scissors; with a manual reel-lawnmower; with a motorized lawnmower, or even with a mini-tractor. Correct?"
My son was processing what I had just said when I asked him, "Do you care HOW these person will cut your lawn in exchange of your $35 dollars?"
"No!" he said with a spark in his eye, "I only care for the end result."
"Exactly! Now, that is the delivered value!" I explained.
"Okay, it makes sense," he said.
"Now, think about the difference these various tools make. We pay $35 for the end result. Some will do the job fast and others slow. It will depend on the technology each individual has access to. All the methods to cut the lawn I mentioned above deliver the same value, but with different leverage."
"I get it... that's leverage!"
Poverty is lack of leverage.
"Everyone has the same 24 hours in a day," I continued to explain. "How we deliver value to the market will mark the difference between one person and the other. This is capitalism."
"Knowledge and data are the source of power and wealth in the Digital Age."
"What's the problem with that?" he asked.
- "In the Middle Ages, the source of inequality was weapons and physical strength."
- "In the Industrial Age, the source of inequality was machinery and technical skills."
- "In the Digital Age, the source of inequality is information and knowledge."
Ignorance will be the number one source of poverty in the decades ahead.
- Hector Quintanilla
"Education is the most powerful source of hope to change people and countries. You need to become a global player of the New Economy. There's a huge challenges ahead for your generation son."
"That doesn't sound easy," he said concerned.
"It's more critical than ever before to anticipate change, trying to adapt to change is commonly too late." I said.