It doesn't take ten times the ink, to put another zero on the check.

LovePosted by Eskil Tue, August 23, 2011 22:08:07
The value of money doesn't scale linearly with how much you have. You see, some dollars are worth more then others. Having more gives you more negotiation leverage, it gives you economy of scale and means that the things we all have to pay can be covered by a smaller part of your income. The plane ticket to go to a city to sign a million dollar deal, is not any less expensive then a plane ticket you needed to go sign a billion dollar deal. The natural state of any unregulated economy is to give the rich a slight advantage proportionally to the poor. Sure, any one can win or loose, but like in a casino, this slight advantage will over a long enough time scale make sure the house always wins. You could say that "fair" as in equal for all, isn't fair at all. A worker earning half as much as an other will have less then half the financial freedom since they both need to pay for the same number of meals each day.

For a brief point in time in the 20th century, this imbalance was reversed and it led to the greatest development our history has ever seen. With the industrial revolution, the rich needed people to fill the factories, and that empowered the poor. Threw legislation, strikes, unionization, and the fear of communist revolt, the poor where able to negotiate a bigger peace of the cake and become richer. This new middle class created a vast new group of consumers that made it even more profitable for the rich to start more companies and hire more people. Everyone benefited.

However, the rich took a good look at their books and found that their main expenditure was the workers. Using machines, effectivization, and out sourcing they where able to cut that costs significantly. If one or a few companies do this it wont matter much, but if all of them do, there will not be enough consumers. Everyone wants someone else to pay their workers enough to buy the stuff we make, but no one wants to pay their own. Every country wants to export their way out of any problem hoping there is some other country who still pays their people enough to buy what ever we make. With such effective means of production, and with so few who can buy, all attention has turned to sales through marketing, branding, and PR. Making stuff is easy, its finding someone who wants it that is hard. Sales is the bureaucracy of capitalism, and our level of bureaucracy has long past any other system.

With no one to buy, what are the rich to do? If there aren't enough people to buy what is already made, why make something new? The only people who can afford to buy something expensive enough, for a rich person to bother to get out of bed is someone else who is rich. But what can you sell to someone who already has everything? The answer is value. Increases in value, side steps the messy business of actually doing something, and requires only that you can find others who agree that what you own is worth more then what you bought it for. Since nothing "real" can be worth enough to fulfill the trading needs of the very rich, they will eventually either invent something to trade, or over value real assets, leading to a value bubble.

It makes sense to invest in something large rather then something small, so the very existence of the ability to buy stock in an existing enterprise discourages investment in new ones. Who in their right mind would bet on something unproven and small, when they can just as well push a button to buy in to something already proven to be the most successful venture ever? And just to be clear, buying stock is most of the time not to invest in the company, but to give your money to the previous owner of the stock. Venture capital becomes fringe pet projects rather then the back bone of investment. As all rich fight over the few and large we get yet another bubble.

The last three decades, the rich have also tried to make up for the consumer defect by lending the money they can not spend to the government and the poor, to keep them consuming, but now Its leading to a disaster for the rich as well as the poor. Like any other bubble, it does eventually burst.

The further the gap between the few and the many, the inherently less stable the economy gets.

Can we repeat the success of the mid 20th century? Can we uninvent our effectivization? No, Why should we? The fact that increases in productivity has made a significant portion of our population redundant, is a huge victory for mankind. We just need a economic system that recognizes this victory and no longer requires everyone to justify their right to a dignified life through work. The economic system should not try to create business, but rather create customers for the things we need. Then business will flourish by it self. And lets be honest, the work deficit, has never been about things not needing to be done, but rather our economic systems failure to support what needs to be done. Why are we all fighting to make customers happy, when most customers already are? Shouldn't we solve problems that haven't bean solved? We don't need yet another home appliance, in fact out planet can hardly afford the ones we have, but that doesn't say there are no things left to do.

A recognition of the fundamental economical imbalance and what it leads to, should inform our political action. Corporations should have a progressive tax code just like people, and investment that goes to fund actual development, should be taxed lower then asset profits. We should not let the rich have any more then what they know what to do with, because beyond that point bubbles will emerge. The awesome computational power we have today, should make it possible to create a substantially more complex tax system without making it harder to use. Lets fill the customer deficit, by getting done the things we need to make the world a better place, rather then trying to make us buy things we don't need. Our victory over production should afford us to embrace everyones well being.

Some say we shouldn't punish success, but who says the future success will come form the rich? The future may not require the masses, but we will only find the few we need in the masses. Giving as many people as possible the chance to try and fail, is therefor paramount through education, encouragement and financial security for all.

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