Why is a high distribution of wealth bad?

I wrote this in response to post 3 here: https://www2.blogger.com/comment.g?blogID=9180336887368545697&postID=7364210996393889742

Due to the length of my response and that it included much of what I want to say I have included it as a separate post.

You raise to my mind something that I should have done initially. Define the metrics that gauge the effectiveness of a society. I will think about other metrics and comment on them.

To me in this case the metric in question is: effort equals reward. I believe this is one of the core metrics of a society. If people believe they will be rewarded for their effort they are more inclined to put it in. Also it is right that people get what they deserve irrespective of beginning. I think the more fair a society the more this principle can be seen.

For example we can use this metric to analyse feudal aristocratic societies. There is the vast majority of people making up the peasants putting in huge amounts of effort and getting little reward. Then there is the rich middle class putting in moderate amounts of effort and getting a high reward. Then there is the ruling class putting in a small amount of effort and getting massive reward.

This unfairness shows a huge flaw in such a society. Nowadays we are better but there is still great imbalance. In our society there are the majority of people putting in a large amount of effort and getting little reward. Quality of life is better than feudal peasants but they still get a small ratio of reward compared to others, which is the true way to use this metric. There are a moderate amount of people putting in a moderate amount of effort to a large amount of effort and getting a moderate reward.

I put myself in this category. I work, but I don’t strain myself and I get paid well and over double the minimum wage. I am not only saying that computer work is less physically straining than say construction work, but also the hours are predictable and easy. And sure, some people no doubt like working out on the job as you get with construction but taken in aggregate I would say those that do it would consider it more straining than computer work. Which is not to say they are all smart enough to do my job, just that they on the whole work harder and get less.

Lastly there is the significant minority, the middle-upper class that put in a moderate amount of effort and get a huge reward. In this equation it must also be considered that say someone that rises to CEO of a company, or starts his own business and hits it big may work hard initially. But eventually they can retire and live off their riches doing nothing at all. This equation must take into account the work of a person’s life compared to their reward.

Note that risk does not equal effort. If some guy bets on the stock market and wins big, the fact that he risked a lot doesn’t mean he deserves anything. This kind of random gambling is destructive to a society and results in bunch of winners and a larger bunch of losers.

Unfair distribution results in resentment and struggle. In the case of most of the world the poor are working extremely hard and live in fear of failing to survive in the case of 3^rd world countries, or in the case of first world fear of spiraling into debt.

In the united states the bottom 40% own less than 1% of the wealth. I don’t know but I predict that these people are fearful about money and worried about their future. This lack of wealth I imagine would be a constant pressure on them. You and I can buy expensive computers and eat what we want and not worry. Imagine counting every dollar that you spend, ever fearful of funds or mortgage repayments.

You could say, they got what they deserve. They should have worked really hard in school and got a scholarship to a good university. It is true that this is possible. But the fact is it is much more difficult for someone from a poor household in a poor neighborhood going to a crappy school. Further more it is rare that if your father is a labor and your mother a waitress that you would have the motivation and inspiration to become very successful in our society.

This is not a bad thing. We need laborers and waitresses and it is faulty to think of them as less valuable than a scientist. IBM is quite effective in this way. Management is not a promotion for a programmer or a tester or whatever. It is just a job that requires a different skill set. In this way, we all have a skills and talents and the world needs all kinds of people. The problem in this world is that a laborer or waitress makes a small amount of money despite a large amount of effort.

A particularly damaging effect of this difference in wealth is the clear and different classes we have. In our society when we meet or see someone we automatically estimate their class and income. People who are significantly below us are less interesting and essentially scary. People who are significantly above us are either seen romantically or with resentment. I am of course generalising but these are the tendencies.

Imagine a world where everyone can afford to buy the clothes that they like and are not restricted by money. We would lose this instant evaluation to some degree and everyone would be more open. I'm sure there would still be tendencies in dress, but the clothes would not be better or worse, just different.

In our current world someone can have everything they could possibly want. They can live in a mansion, eat exquisite food, drive an expensive sports car, etc. Distributing the wealth more evenly will also take away this potential. This will also serve to remove the different classes we currently have. The difference between peoples possessions would be more a matter of preference (do I want a big house, a fast car or to always eat delicacies etc) and not seen as an indictment. This ties in with the level of social integration which is another important metric of a society. I will elaborate on this later.

My plan is that people will get what they deserve. I will go into this later as I want to focus on the deficiencies of capitalism for the moment before I move onto my vision for society. But basically, those that work hard get paid well and everyone has enough money. The excessive amounts of money that is currently going to the rich will be distributed to everyone. This is not to say effort equals reward is the only metric. People still have to be effective. For example a person who studies art and works really hard painting for 2 years but if they suck at it and no one wants their art, they can’t be a painter. People still have to create value for society in their effort.

> Would this order of magnitude difference be illegal in your society?

It would not be possible as everyone gets paid by the government.

> What would be the consequences on the AFL and Australian culture if football players were prevented from being payed 10 times what I earn?

Not much I don’t think. It is still a very enjoyable job and does not involve huge effort. The elite level of sport in my society would still get paid more than normal people as they have put in a large amount of effort to hone their skills to reach this level.

Here is some more good reading.

http://en.wikipedia.org/wiki/Distribution_of_wealth

The nature of what will follow

As the primary purpose of this blog is to express my ideas, I am not going to get bent out of shape getting every fact right or researching hugely. If there is statement that I am 90% sure in and it is difficult to check I will include it, most likely with a comment stating this need to check. When I come to writing the book I will then make sure every statement is correct.

So there may be mistakes and it wont be perfect. I also hope to develop my ideas as I go and improve my conveyance.

I am excited!

What is wrong with capitalism?

By capitalism I refer to the popular iteration as seen in countries such as Australia, USA, etc. I am including democracy in this.

Capitalism is largely the most successful iteration of a society the world has produced. In Australia for example, the majority of people have enough to eat and are by and large concerned with matters not crucial to their survival. This system is obviously superior to the largely weak and corrupt governments in other parts of the world.

Capitalism provides everyone with an incentive to strive as by doing so they can increase in personal wealth and power. This goal fuels society as most people focus and thanks to the fruits of science by in large have plenty.

Class still remains and is inherent when you see someone, yet almost all people don't go hungry. Even the homeless who are from a societal point of view complete failures don't really have to fear for their lives (need to check).

Through strong penalties "wrong doing" is prevented making people feel safe. There is a lot of good in this and a quality of life that has not been experienced in ages past.

The exclusion is some smaller tribal societies who have a mini version of the society that I seek to create. However, larger collections of people have inevitably led to a separation of class and exploitation of the weak and poor.

So the question, why change it? What is wrong? If it aint broke, don't fix it!?

1. Capitalism is not for the people

In a capitalist society the fundamental driving force is the generation of capital, not the enrichment of the people's lives. It is a side-effect that capitalism tends to result in the majority of people being relatively comfortable. In fact, it is more due to government control that the majority of capitalist societies retain humanistic elements. For example, the minimum wage helps stop exploitation and is needed as businesses are largely amoral, especially the bigger ones. | Considering that 50% of americans work for 1 of 10 large corporations this is very important (I heard this but have been unable to confirm without paying for an detailed analysis. I will keep searching and update. Either way I don't think it is far off.) |

This protection of humans is at constant war with commerce. Neither will ever win, commerce cannot exist with a government that is seen to look after the people and socialism cannot completely control commerce. This protection of the people is certainly a good thing, yet it doesn't resolve the core issue that society is run by entities looking to exploit.

A very classical example of the problem with this capitalism socialism war is the environment. The protection of the environment is too distant a concern for the short term focus of the masses. As such businesses get away with a lot of destruction and socialists can't protect it. The destruction of the environment is very bad for the people, but just in the long term.

2. Under capitalism resource distribution is uneven

That people tend to live pretty well is just a side effect of capitalism. Ultimately the spread of resources is very uneven which is unfair. For example, the average salary of the highest payed executives in the US is 4.7 million and the minimum wage is approximately 11,000. These executives make about 427 times the wages of minimum wage workers. Such executives may be specialised people, but it is unreasonable to say that they deserve 427 times the remuneration.

Further more, wealth not income is not the biggest indicator of money distribution. In the US the top 1% of people own 38% of the wealth. Further excerpts from the previous link:

Wealth provides another dimension of well-being. Two people who have the same income may not be as well off if one person has more wealth. If one person owns his home, for example, and the other person doesn’t, then he is better off.

Wealth — strictly financial savings — provides security to individuals in the event of sickness, job loss or marital separation. Assets provide a kind of safety blanket that people can rely on in case their income gets interrupted.

Wealth is also more directly related to political power. People who have large amounts of wealth can make political contributions. In some cases, they can use that money to run for office themselves, like New York City Mayor Michael Bloomberg.

And

The top 5 percent own more than half of all wealth.

In 1998, they owned 59 percent of all wealth. Or to put it another way, the top 5 percent had more wealth than the remaining 95 percent of the population, collectively.

The top 20 percent owns over 80 percent of all wealth. In 1998, it owned 83 percent of all wealth.

This is a very concentrated distribution.

The bottom 20 percent basically have zero wealth. They either have no assets, or their debt equals or exceeds their assets. The bottom 20 percent has typically accumulated no savings.

Obviously the US is quite extreme in this regard compared to most other capitalist societies. However the principle is basically the same, a select number of people owning a very large amount of the wealth and the majority of people without much wealth.

This is a faulty principle of capitalism in which the rarities of a person's skills and the demand for those skills has staggering effects on their quality of life. There is a correlation between effort and reward but it is weak.

Added to this unfairness is the issue that some people despite working hard, just don't have the money to rise to wealth in society.

3. A capitalist government is weak and self-serving

It acts as the arbiter between commerce and socialist forces and is ultimately reactionary. For a particular policy it decides if the people are more important or the commerce. If it is the people it is likely that the policy is a particularly public one as there is a limited amount of negative press a party can receive before it is deposed. If it is the commerce it is likely the policy has a large monetary impact on the industry (Need to check and get examples). As good for industry is good for the capital of the country. The fundamental metric of the performance of the economy will always be applied to the government.

A capitalist government always has the knife of the people to its throat and the knife of industry pressed against its back. The party in power performs an elaborate routine to keep all parties satisfied. This does result in some good, but is not instigative which for some problems is necessary. Like for example Global Warming (I am going to act as if this is a true and accepted phenomenon), the US government needs to ratify the Kyoto treaty and significantly cut greenhouse gas emissions. A strong government would impose this immediately as we are talking about gains for industry now that may be regretted for thousands of years. To scientific analysis this issue is crucial and we must act and yet nothing happens. The government will not cross industry this badly when the people don't really care.

4. The people don't really have power

The generally perceived quarter stone of capitalism is the peoples ability to change the government. This creates the illusion that people have power as any party is at the mercy of the peoples choice.

But what choice is there?

Typically there are two very similar parties and it is inevitable that one of them gets voted in. People can largely choose between and apple and an apple. This is a meaningless power and the real power/wealth remains in the hands of the rich regardless of the result. It is like being able to choose which mouse to drop into a deadly maze with not much cheese and many traps. Yes there is choice but the game is the real problem.

Secondly the people don't know about politics. Why should the opinion of a factory worker on the government be as valid as a political analyst? This is especially a problem when you consider there are vastly more factory workers than political analysts. Further more a factory worker's vote is generally up for grabs to the party with the biggest advertising budget. Yes the people have choice but they are largely ignorant and easily manipulated.

The truth that they are still the ones who ultimately decide and vote wont mean much for societies a 1000 years in the future working to undo our environmental damage.

Conclusion

Capitalism is an iteration of society that is ok. It isn't great, it isn't bad and it is a lot better than many other societies around the world. Despite these qualities it is far from perfect and with our amazing technology and knowledge we can do much much better.

Introduction

Welcome

I am a communist with a vision for how the world should be. I have thought deeply on this and have decided that it is my lives work to try and institute this vision. Honestly I don't have much hope, but I will not ignore what I see as the chief step we humans must make to become effective at happiness and survival.

These are the steps I will take:

1. Document my vision

It is necessary that I flesh out my ideas by at least semi-completely documenting how my society will work. I have thought long on this, but do not know every implementation at this stage.

2. Write a book

Without getting the word out what hope is there of my vision coming true? It is my plan that the book be freely available on the internet and sold in book stores (if I can get it published) to achieve maximum distribution. However, it is possible that I exclusively sell it if I think the money from this will be helpful in instituting my vision.

3. Begin institution

How I do this I do not know. I have dreams of starting a non-profit organisation who works on the institution and refinement of my vision. Or perhaps it will simply be an online volunteer community. In all likelihood this phase will be more promotion on my behalf in an attempt to spread the word on my beliefs.

Why start this blog?

This blog will act as a notebook for my thoughts, a way promote interest in my ideas and hopefully provide lots of feedback.