The monetary system is immensely complex these days, so as a thought experiment I like to imagine money away: ignore it altogether as it has no intrinsic utility itself. It merely directs the allocation of man power and resources, as a dictator might. But hopefully our system has more effective priorities: promoting the spread of useful innovations and keeping society healthy.
 |
| Moai - 'Easter Island Heads' are misnamed, they've been buried to their shoulders by time. |
A conservative/neo-liberal might argue that rich people are no problem because they spend more, putting money back into the economy via the people they pay for products and services. However, I think the real problem is with the specific things they spend their enhanced incomes on.
Someone with 100 times more money than the average Joe doesn't buy 100 reasonably priced cars. Maybe they buy twice as many cars, but each one costs 50 times as much. It's actually quite difficult to spend that much money, so they will tend to purchase luxury items across the board, either impractically expensive versions of everyday goods or totally exclusive items like super-yachts.
Gucci handbags, jewel encrusted gold watches, $200M private yachts, giant mansions, hand made super-cars and fancy soirées are all about as useful at stimulating an increase in societal productivity as were the standing stones of Easter Island. For those unfamiliar: Moai (right) were erected all over the small Island as an expression of ancestor worship by clans. Making the statues took a heavy toll; there was total deforestation and ecosystem collapse. The isolated population of islanders had plunged from 15000 to 3000 by the time Europeans arrived in 1722. A 500% decrease, in under a century, with cannibalism. Shortly thereafter the 900 statues were toppled.
 |
| The monolith erecting game is taxing indeed for the people of Nias Island, Indonesia, 1915. |
OK, so when the super-rich are investing their monies, to make more monies, they are buying stocks which fund businesses to grow (and bonds that help governments to invest in public infrastructure and the like) in theory. If all wealth were evenly distributed (like a satire of communism) there would be no one to finance start-up companies, et cetera (e.g. Google, Facebook). Well, perhaps just a central government, which would be way less efficient than a free market. (Perhaps micro investment by the general populous, via internet intermediaries could soon fill this roll. But I digress). The point is, the vast majority of redistributed money would be spent by the masses on minor luxuries, so there would be way less capital for investments. Far too little in all likelihood...
I am NOT at all advocating a complete abolition of 'the rich' (or even of City financiers); there could just be a far more beneficial distribution of incomes. After all, A luxury car market (£20k-£50k saloons, hybrids, etc) is good because it helps companies deploy new technologies profitably at an earlier time, reducing the cost barrier of innovating. A market for super-cars (>£100k, Bentleys, etc), on the other hand, does not directly benefit us with many useful innovations because they are deliberately inefficient products for a tiny number of buyers.
I think that, since the 80s at least, the UK has moved well beyond optimal income disparity to the point of damaging mass markets by restricting their money supply. I'm not sure that 'all the best things in life are free', but in consumer technology all the best things are affordably cheap. Mobile phones started life as incredibly unreliable bricks to talk into (when in one's yuppie mobile or Bentley), but now even kids on the dole can afford one, they work brilliantly, have built in cameras, surf the net and play high quality music and video.
The ironic thing is that the actions called for by movements like 'The 99%' would not just benefit the masses at the expense of the rich, they will ultimately save the rich from themselves too! For, however great a percent of a nation's wealth King Louis XIV owned, he could no more have bought antibiotics or a Wii than the poorest peasant of the time; the only route to the really important (and fun) improvements is through an economically strong and productive general populace.
More examples of mass market innovations befitting even the rich:
The coming of Ford's mass produced cars, with interchangeable parts, turned extravagant death traps into reliable transport. Similarly, post WWI passenger aircraft were pretty deadly until they reached a big market. Production line automation (for all these types of products) that is then applicable to a host of different domains too. Supermarket supply chains (providing a wide range of high quality fresh food) only exist in their fast, efficient form because they sell the quantities that they do. All the various computer manufacturing technologies that go into PCs: processor/RAM transistor count (Moore's law), magnetic storage density (HDDs), solid state RF transmitters/receivers (Wifi, 3G, etc), display technologies (OLED panels, etc), optical disc storage density, optical data transmission (fiber-optic backbone capacity increases, faster internal PC data transmissions), etcetera, etcetera. Battery technologies for hybrid/electric cars (overlap with PCs, all other gadgets and smart grids). Software - those programs that are most widespread are not only cheaper (often free to use), but they seem to work better than $1000 proprietary applications that are limited to very niche markets. This includes web 'software', services such as Google that are directly fuelled by the use of hundreds of millions, each on their own internet enabled computer. Pharmaceuticals - as Alex Tabarrok says in "How Ideas Trump Crisis" (at 4m50s) talking about why the rise of China will be a good thing: which disease would you prefer to have - one shared by millions or one confined to a rare few?; each treatment/cure will cost roughly the same to research/produce, but only the former has a profitable market.
One could rightly point out that there are still millions of iPhones, tablets, laptops, and cars flying off the shelf each month, right? So it's hardly like consumer markets are on the verge of extinction!...
It is quite possible that existing markets have been stressed, slowing the succession of innovations. I'm more certain that the size (and power) of these markets has seen significant demographic limitations: not only the increasingly poor majority of Western civilisation, also the international reduction of market participation due to 'developing' nations being kept poor through unpayable debts, corporate exploitation, trade barriers and unfair (subsidised) competition in food markets (to leave the past travesties of empire out of this altogether; China, India, etcetera). But of course, we can't know what might have been under more egalitarian conditions. Maybe the natural course of innovations themselves were the main cause of disparities, rather than pure flukes of human history.
Anyway... I had intended this piece to be brief, limited to the point made above. However, wealth inequality is somewhat of a hot topic at the moment, so I've been given to a rather more thorough treatment...
Sticking to Western domestic economic landscape for now, the richest 1% (in the US) control 1/3 of the wealth and receive 1/4 of current earnings. The top 20% own 87% of existing value (going beyond the 80-20 rule even). And if that sounds bad, stock market wealth is even more concentrated. Figures and graphics from http://inequality.org/wealth-inequality/.
Looking back at US incomes (which follow the same trends as in the UK and elsewhere), one can see that inequality was low and falling during the boom period of the 50s-60s (the 4th Kondratiev wave) and has persistently risen since the start of the 80s (at which time the 1% received a relatively reasonable 10% of all income). Interestingly enough, the 1%'s 2007 pre-financial-crash peak (of 23.5% of income) had only ever been higher on one occasion: right before the (first) great depression (in 1928):
 |
| From http://inequality.org/wealth-inequality/ |
Given that they only pay, on average, 22.4% on their total income to the tax man, while they receive over 20% of total income, the US (for one) government could easily levy a huge amount more funding from the super-rich alone. This would be far less painful for them than a very modest hike for most people. Doubling to an average of 50% (overall tax for the 1%) could raise ~ $700Bn/year (based on a total US net income fo $14Tr).
 |
| From here. |
 |
| From Wikipedia (Please click image for full size) |
 |
| Click above for readable size. (or direct from the Rugby Advertiser website) |
Poverty in the UK. It seems to be all over national and local news paper (see right). A debate on my local radio station's morning show had spokespersons from IFS, Save the Children, a sociologist professor and a local charity worker talked up a pretty bleak picture. One that shocked the initially blasé Prof.
Many families are struggling to afford sufficient heating and food. Coventry foodbank, has seen an unprecedented rise in it's provision of emergency food. The most shocking thing is that the majority of parents seeking help are in work.
This national piece (with Channel 4 video) talks about the US-style charity operations that have quietly and spontaneous sprung up in the last year, feeding working families in crisis when agency work suddenly dries up (for example). There are probably 1 million people employed this way (certainly a whole load in warehouses around Rugby, in my experience). Recruiting through agencies is a often used as a legal way for companies to palm off income variations/uncertainty on employees (to protect profitability). That this causes works significant stress, increasing disease incidence and shortening life spans, is one of myriad hidden costs that the poorer end of society pays.
After two successive governments committed to eradicating child poverty by 2020, we are now headed squarely in the wrong direction. The gains from the creation of child tax credits are set to be wiped out, with 500'000 more UK children falling into 'absolute' poverty, totalling 3.1Million by 2013 (that will be 1/4 of all UK children). This is down to an expected 7% total fall in the median income (over 3 years) and benefits growing well below inflation. From an IFS (Institute for Fiscal Studies) study.
Of the poorest 1/5 of UK children, 62% had too little money for a 1 week family holiday (anywhere), 18% said they could not afford to have friends around for a snack once a fortnight (from Child Poverty Action Group). The obstacles posed by low income are socially crippling, locking unfortunate children into a near inescapable rut of poverty.
Social mobility in the UK (and US) is appalling, even when compared to other equally developed countries. And even before the unemployment effects of the current crisis. It fell from the 70s to the 80s and has stayed in decline ever since. This is shown roughly by the UK data in the Gini graph and correlates with rising wealth inequality following the end of the economic boom in the 70s (shown in graphs higher up).
 |
| From the Guardian. "0.5" means 50% of the economic (dis)advantage is passed from a farther to son. |
"...one recent survey..., has concluded that teaching likely “accounts for about 15 percent of student achievement outcomes.” " (from TooMuch)By far the biggest influence on a child's learning is his/her socio-economic environment (including family life and neighbourhood). It seems that it will be impossible to lift children out of poverty solely through better education; children need to be freed of their poor environment before they can reach educational parity with more affluent peers.
Rambling Thoughts 1 - Some (callous soul) might say that 'chavs' have too many kids too young, perhaps worrying that in a several generations time the country will be overrun by fecund, jobless louts. But having children younger is a sensible reproduction strategy for the poorer demographics because of their considerably shorter life expectancies (can't find the reference right now). Life (and disability free lifespan) is indeed cut short by poverty in UK; there is a 17 year difference in expectancy for men between the two London wards of Kensington and Tottenham Green. The gap in the rate of infant mortality between top and bottom looks set to rise to 25%.
 |
| http://inequality.org/inequality-health/ |
What's more, relative wealth *is* a more meaningful measure than absolute: the costs of goods and services are the same for everyone in this country; food costs far more here (than in poorer countries). What is more, low social status in itself directly causes disease through stress (cortisol secretion). This is atop: inadequate diet, lack of exercise, smoking, poor pay, and job insecurity. Men in the poorest areas of the UK have life expectancies lower than the average in "Ecuador, China and Belize" (which have no NHS).
I think the big problem when talking about these issues is that human psychology starts comparing demographic groups (of millions) as if they were individual people. A complete lack of sense of scale is an important problem; No, they couldn't each drag themselves out of poverty if they just tried really hard; relative poverty is a trap that the poor are least well equipped to escape from. "The Pursuit of Happyness" (2006) was a tale of an extremely clever, unusually driven man who succeeded against impossible odds. But that's just the point, someone like that is a statistical freak; the larger the sample size one looks at, the more exactly everything will average out as expected, cowed by the many pitfalls: drastically lower education outcomes, worst general health with higher disability levels, greater chance of unmanageable debt, far higher percentage cost of basic utilities (gas/electric/petrol/public transport), least control over their environment (living in rented or council accommodation).
 |
| "The Spirit Level", A populist analysis of (in)equality, |
A forsaken 25% will take a heavy toll on the rest. More than welfare burdens, their lack of a stake in society will cause high crime rates and other negative impacts (like increased health care costs). They represent lost talent; most could be economically productive if raised from poverty early enough. Society is shooting itself in the foot with a false economy of minimal economic support for the worst off. It might be almost cost effective, in the long term, to just pay our fellow citizens out of poverty.
+ Other Angle to Wealth Inequality:
1) Another way of seeing the inequality problem is by thinking of trying to maximise the usefulness of each dollar in the system. Tyler Cowen pointed out in "The Great Stagnation" (covered by me previously) that each additional dollar spent by the government is, on average, less effective than the one before (diminishing returns). Similarly each additional dollar received by a rich person is far less effective at improving their lifestyle than the same dollar would be for someone at the shallow end of the pay scale, where the price of some genuine vintage, birthday bubbly might instead differentiate between: receiving vital medicine (vs illness), more nutritional food for the kids, petrol money (vs an additional hour on a bus each day), or a cheap laptop (vs near total disenfranchisement from the information age). Certainly it has been found that salaries beyond £50K do not bring increased happiness.
2) An apparent consensus on the detriment of inequality follows thus:
Bubbles (like the housing/credit crunch) were the product of too many savings chasing too few opportunities. As Branko Milanovic, "a Lead economist in the World Bank's research department" describes here. I.e. too concentrated wealth is directly a bad thing (destabilising).
The rich 1% already won the real life version of monopoly, but we are all expected to keep playing the same game forever, finding new ways for them to win even more to keep the game from coming to a catastrophic end. See the "Money as Debt" (narrated animation) at around this point http://youtu.be/Dc3sKwwAaCU?t=23m22s. Quote from the video:
"This is a staggering thought. We are completely dependant on the Commercial Banks. Someone has to borrow every dollar we have in circulation, cash of credit. If banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system." - Robert H. Hemphill, Credit Manager Federal Reserve Bank, Atlanta, Georgia'The City' (finance economy) is an industry paid for entirely by returns on existing savings. It's employees make nothing of intrinsic value, so their increasing revenue would have to represent efficiency savings through smarter distribution of investments, stimulating the economy to grow faster. But it hasn't been growing fast enough (not nearly as fast as their asset sheets indicate). To continue making money for their clients at the expected rates various impossible investment opportunities had to materialise. Basically unserviceable debts were created all over the place (from sub-prime to sovereign). Like the engineers and craftsmen employed to construct status symbol products, a large proportion of the finance industry is employed by the same people to undertake extremely clever, but equally useless, activities. (In fact they are worst that useless in being directly detrimental.) An ever expanding percentage of the brightest graduates seconded away to perform the finance dance of wealth worship.
Rambling Thoughts 2 - I do sometimes wonder how much our towers of metal and glass are modern finance's answer to the Pharaoh's pyramids... What percentage of their cost has no fundamental utility?
With reduced residential construction (see below), an increasing percentage of building has been commercial offices that do not contribute to increased standard of living (and productivity?) of the populace. What's more the tax free financial district that spawned Canary Warf only increased productivity of those concentrating wealth for the wealthy, and the construction didn't even generate public revenues.
“The man of great wealth owes a peculiar obligation to the state because he derives special advantages from the mere existence of government.” – Theodore Roosevelt, U.S. President (1858-1919).I.e. rich business owners should have to pay a sizeable fraction of their profits to government: to fund the various infrastructures that his facilities and employees rely on (roads, schooling, health care, etc). Even the benefit of law, order and national security should not be taken for granted. Particularly that government protects private wealth/property from the masses.
+ Expensive Houses Kill Our Productivity
 |
From "Why isn’t Boris coming up with any solutions to London’s housing crisis?" |
Social housing construction accounted for nearly half of new builds (and is another thing that coincided with the boom time of the 50s-60s) until it stopped dead at the start of the 80s (see graph right). Since then the remaining stock has dwindled (with the "Right to buy") and crumbled (council rented housing used to be a genuinely good alternative to the bad landlords back in the 50s, not a last resort). In addition, LSVTs saw many councils give their housing stock to private housing associations (which are technically not-for-profit), which now manage half of the affordable housing (see graph below).
 |
| A Parliamentary Publication |
When 70% of voters are owner-occupiers (UK) there is extreme political pressure to avoid negative equity, in fact, a housing bubble is great (until it bursts). So there's no incentive for centrally mediated mass building programs, in fact, this is probably the main reason for 'green belt' regulations (cynical green washing) and other limiting planning laws.
For the same reason inflation is bad, because it lowers house values. Higher interest rates can also cause many peoples mortgage repayments to exceed their house's value. That's largely why both are being set/kept down an absolute minimum since the crisis, even though a burst of inflation might redress the more fundamental wealth inequality problem. In suppressing interest rates and inflation, home owning democracy has (cleverly) created a situation where society at large fights to maintain the economic conditions for the 1% to become excessively wealthy.
Anyway... Private construction companies are in no rush to saturate the housing market with new stock either, as it is more profitable to sell a lower number of units at a high profit margin, in a slowed market or when there's little competition. I believe UK construction is predominantly owned by large monopolistic companies.
This lack of supply, coupled with excessive investment capital (from too few owning too high a percentage of wealth) caused the unrealistically spiralling property values that terminated in the bubble. To continue making loans (and profit), banks had to keep lending increasingly unaffordable amounts for residential purchases. This will have been enabled by lending investment banks/funds (as well as increased leverage). Also, significantly, our money supply is created as debt (in bank loans) so for it (and GDP) to continue to grow at the accustomed rate, banks had to keep lending more to keep the economy from falling over. But, of course, the increase in loans was not buying more houses, and a better standard of living for society, just more expensive houses. So the assets (the loans were used to buy) did not actually increase the productivity of society anywhere near as much as they value suggested. I would suggest that disconnects in this productivity/price relationship would be a way to spot major bubbles in the future.
 |
| From PricedOut.org. From a cybernetics viewpoint the graph shows clear evidence of excessive positive feedback mechanisms (and/or lack of dampening): price fluctuates increasingly wildly. |
 |
| Excessively costly housing exhausted savings, removing so much slack from the monetary system that it became brittle (and broke!). |
This whole, perverse situation is avoidable; there is no fundamental reason our society could not supply good quality, affordable housing for everyone. Innovations should be making the provision of the basic essentials for living (including houses) continually easier (i.e. cheaper to afford) and/or better (better comfort and utility). That housing costs had been shooting up well ahead of wages (and CPI inflation), should have been a stone cold sign that real living standards were dropping. Spending more of one's money on one's house is equivalent to having to spend more time and effort building it (having to go back to hand making each brick or something ridiculous).
Rambling Thoughts 3 - The artificial limits imposed on expanding housing stock (and real productivity) help transition the economy from positive sum towards a zero-sum (game). Here, one can only gain wealth at someone else's expense. We see that the majority of the value of property purchase is the land itself, not the useful product of human labour (the structure). Indeed, TV programs like Grand Designs often show the demolition of perfectly habitable houses to obtain land for a new build. This is an example of economics having the opposite effect of it's purpose. If it does this too much it is broken and needs changing. It is not a law of nature.
The value of the artificially scarce commodity (land) is dominating over the real resource of living space (infrastructure). 'Green belt' policy (for example) increasingly looks to me like just another convenient excuse to inflate land prices (to increase indebtedness and bank profits). 40% inheritance tax on houses prevents the vast majority of citizens from benefiting from their parent's productivity, forcing them instead to start almost from scratch, acquiring a huge debt in order to have a place to live. We have effectively returned to a societal model of peasants working to live on the estates of gentry. Albeit an illusive gentry who own the bank's profits.
Personally I am torn: I don't know if a system that keeps the majority poor (via inheritance tax, mortgages, etc) is helpful in the long term by forcing members of society to be productive...? I mean, if people were allowed to live on their (dead) parent's land for free they would need to earn/work a lot less to live (particularly now our population is roughly stable). Particularly the wealthy, better educated middle classes could afford to retire very early, or do 2-3 day weeks, or worst still not be motivated to train for highly skilled, better paid jobs. The GDP of a lazier society would surely increase slower, corresponding to less innovation: reaching the technological Singularity would take longer, or perhaps even be impossible?!
Abolish Inheritance tax (on houses/land), i.e. free houses for all:
For - People would still have to work to pay for utilise, food, new technologies (and council tax).
For - It might increase motivation to buy and invest in a good house knowing it would be passed on to children.
Against - Wealth divides would be even more entrenched.
Against - Government would need to make up the tax shortfall with other (more general) taxes. [about £4Bn/year]
Neither - Inheritance becomes increasingly irrelevant as people live longer and we approach the mathulselan horizon (where no one dies of 'old age').
Abolish necessary indebtedness:
For - Just like slave labour was inadequate for use in the (semi)skilled industrial revolution, maybe labour motivated purely by the desire for the basics in life will prove ineffective for our next societal revolution. For innovation we need people motivated by a fascination with their profession (science, engineering), just as no influential musician started to learn their instrument with the sole intent of riches. The heart needs to be in it.
For - The debt system creates many inefficiencies:
. The extravagantly wealthy waste efforts on producing luxury goods.
. Demolition of useful housing stock for financial reasons.
. People employed to administer the debt system.
. Brain drain from science/tech/arts to an excessively large finance 'industry'.
Against - De-motivation for work and innovation (societal laziness, as above).
Is money even becoming so rare for most people that it has started to loose it's usefulness as a medium of exchange. I read this somewhere but have no evidence. Artificial scarcity of resources tend to spawn black markets, so have there been widespread use of different (illegal) mediums for value exchange recently? Certainly this might drive alternative currency creation (like bitcoin, or even just Linden dollars, WoW gold, etc).
Could the wonders of the internet allow us to do away with our system of financing everything using the savings of the super-rich: Anyone could be an investor/trader, and with more investors there would be a bigger market for investment advice, more competition and hopefully better advice and a more diverse range of investments. So a society with near perfect equality might be more efficient at promoting innovation through investments than at current... Hmm, sounds dubious.
+ Profitable Genocide:
The investments scramble away from the collapsing housing market (in 2006) spread the housing bubble to food commodities (which have not long been deregulated). Grain and wheat shot up almost 100%, and rice 300%, forcing 200 million into malnutrition and outright starvation, causing mass food riots and toppling one government. All this despite increased production and slightly decreased demand (and negligible rises in non-traded staple foods). See links below for details:
Johann Hari: How Goldman gambled on starvation (Independent)
Food speculation: 'People die from hunger while banks make a killing on food' (Guardian)
The Financial Crisis and the Food Crisis: Two Sides of the Same Coin (Food First)
One may say: fine, so re-regulate the food markets if they are causing so many deaths. But of course, this is not happening. The US senate got bogged down (due to donations of successful speculators) and a Tory government is not going to restrict a London that became a trading capital of the world, especially as it was due to Gordon Brown's deregulation. Reducing the wealth disparity, to remove the excess investment capital, almost seems the more plausible here.
+ Hope For Redress?:
 |
| An OWSt assembly (by Nathalie Rothschild). |
At any rate, I find OWSt more promising. For unsympathetic coverage of the original OWSt protest see Nathalie Rothschild's piece, it perhaps misses the point (see below) but is pretty fair compared to various knee-jerk attempts to snipe it down (as woollie headed, hipster, socialist, nonsense).
It is a conversation, not a protest movement (thanks theAtlantic). If it were embodied as a movie trope it would probably be Agent Smith's Yang to Neo's Ying: in this case, the natural anti-force to the all conquering neo-liberal-capitalist-democracy behemoth that refuses to consider change, even in the face of near immolation. An amorphous ball of intelligent discontent that refuses to provide a solid target for politicians/old-media/corporations to batter down. The inevitable child of the under-paid, disenfranchised masses that have taken residence on the internet, becoming steadily more over-educated until the surplus has spilled out...
It kind of seems like this movement is the end product of a process of evolution; there have been many varieties of failed attempts to change the actions of the social/political elite: the UK election were decisive only in that all parties garnered mediocre interest, the massive anti-cuts march was ignored in favour of the violent periphery and the London riots achieved more attention but pressed for no mandate. This new movement thing feels different though, as if it's learnt from other's past mistakes. OWSt's crowd sourced human megaphone solution, to a ban on artificially amplified voices, alone is kind of inspiring (in a cringe-worthy, slightly creepy way).
It sounds an awful lot like the 'movement' is just sitting about trying to figure out how to govern *itself*, via consensus only. Douglas Rushkoff on OWSt (also, see his section at the bottom of this Guardian piece on the similarities between OWSt and the 'Tea Party' movement). A co-operative anarchy... Could it be the birth of Bank's 'Culture'?! (possibly AKA "The Conversation"). If this crucible for ideas on self government succeeds in solving enough problems preventing egalitarian societal organisation, could it replace our existing government(s)? Or just run in parallel, shoving things in the right direction when they get too far wrong? This movement may die out (and I fully expect it not to live in Zucotti Park *forever*; it'll move online and expand, perhaps quietly), but it could still be recognised (in retrospect) as the thin edge of of 'democracy 2.0', inspired by the same economic crash that brought us the Arab Spring of democracy (1.0).
OWSt has branched out to many other cities all over the world, including London as of today (15th Oct). Maybe it will stick first time: 15october.net/. And even though it is the well equipped middle classes applying pressure, as in Egypt where the poorest just could not afford such extravagances of behaviour, we should be fighting the corner of the most deprived in society too. Some of this almost brings an hopeful tear to my eye: "...'til all are one!... TIL ALL ARE ONE!"
 |
| Even in egalitarian, mild mannered, Japan there was a show of solidarity. Bless 'em. |
Solutions to Inequality:
- The short term answer, one that the economy seems to have produced by itself, is inflation. Inflation, in theory, reduces the value of all savings compared to earning power of those in employment (or receipt of decent benefits). It's a kind of automatic debt forgiveness. Though voters supposedly don't like it, and the central banks and politicians try to avoid it like the plague. They have been accused of 'disinflation' (forcibly reducing inflation below what it should be is akin to deflation, which makes the rich richer). Unfortunately, wage inflation (and benefits) are tracking well below consumer price increases (~5% vs ~2.5% at the moment), so this is currently making life even less affordable for those at the low end.
- A medium term answer might be something like a Robinhood tax on financial transactions. Yes that would make business models slower and less efficient, but that should be the main point!: Prevent capital from outgrowing real gains in productivity. But such schemes would be complex and frustratingly nuanced in their application to reality, so I'm not going back any particular stance on such things. I just don't know (yet), but maintaining the higher rate of tax, in the UK, and ideally increasing it further would be a fairly sure-fire, direct approach (that seems massively unlikely under Conservative rule).
Hopefully we don't forget the rest of the world in any new world financial order; it would be good if nullifying odious national debts run up by toppled dictators was as high up the 'international community's' agenda as doubling down Greece's unpayable IOUs.
- Long term, it seems pretty clear that our existing economic paradigm is drawing to a close; central currency just doesn't work in the information economy; it *is* going to go into decline, this may be the beginning of its end. So, it is time to start trying to make alternative currencies and resource allocation systems work instead (otherwise we will ultimately starve to death).
Unlike Douglas Rushkoff or Paul Grignon (Money As Debt) or other commentators, I *do not* want to aim for a steady state, sustainable economy, I don't believe that is even possible. I truly think that infinite exponential growth (through technology) is necessary. But they are right to an extent: real growth will not come at an arbitrary rate demanded by greedy finance, nor in a form that lends itself to traditional capitalisation.
In many ways I liked the idea of libertarianism, but knew that it is as flawed as the market systems it runs on, so government would still be needed, but ideally only in the capacity of regulating and redirecting the markets when they clearly fail to deliver true benefits to society. What we're ended up with in reality is almost the opposite of this: big government regulating everything in society except for finance. I wonder now if the libertarian utopian ideal is as unobtainable, in practice, as true communism (perhaps more so).
So, I am hoping against hope, that when the good citizens of the world finally get some control over their destinies, there is a perfect compromise between the incumbent economics of growth and the revolution of equality. There has never been a better time to set a direct course for technological utopia.
No comments:
Post a Comment
I'm very happy to see comments, but I need to filter out spam. :-)