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The Injustice of Wealth Inequality and the Abandonment of the American Worker

2018-01-14

People come in a wide variety of shapes: beautiful and not-so-beautiful.  There are dramatic differences in charm, as well as beauty.  Some people are gorgeous, and could charm the skin off a snake.  Most people are shabby-looking and unprepossessing in a mumbling sort of way.

Likewise with wealth: a few people have staggering quantities of dough, but most couldn’t scrape together a sandwich.  It seems natural (to many) that there would be staggering surpluses in the bank accounts of a few people compared to the persistent deficits in the accounts of those of the common herd.

The causes of such wealth inequality are potentially many.  Inherited wealth, inventing a patentable product, leading a corporation from bankruptcy to prosperity, those are some simple apparent causes.

What is the cause, in most cases?  Most important in a capitalist economy is the rental of capital (money) or real estate to others who pay for the privilege of using one’s assets, that is, using an already-owned item to produce money without labor.  Having inherited wealth makes this process easier.  Over the long term, this effortless accumulation of capital becomes boundlessly large.

The process of rental, when it produces more money than can be conveniently spent, will add money to the base capital every year, building upon itself automatically without the intervention of the owner, who cannot labor any longer because people clamor to do his work for him.  This process is known as “compounding.”

Rich people think they are better than poor people: scientific surveys have shown this is the predominant attitude of most rich people.  This perception is not true.  Rich people are simply the beneficiaries of the logic of capitalism: having money makes money.

On an unregulated field of business, larger companies naturally grow and smaller companies are subject to the vagaries of chance in their usually fruitless attempts to become big companies.  The example of Jeff Bezos, the world’s richest person, with about $104 billion in net assets, makes people want to buy that lottery ticket.  Jeff Bezos started his professional career on Wall Street in the computer science field, not with known large assets from his inheritance (although his mother’s parents apparently had a 25,000 acre ranch in Texas), built his wealth with his own efforts, then founded Amazon, which built the majority of his fortune.

The founder of an originally small company, Amazon, initially built his business with 18-hour days and intense concentration on expansion and service.  He also had a large element of good luck in his early choices.  Once his company became large enough, however, it began to benefit simply from the fact that it was big.  It became available for all needs, advertised to people that its advertising department selected as potential users, and delivered reliably and promptly.  The effect of ubiquity of availability is apparent to users of cell phones: Verizon, ATT, and Sprint dominate all markets throughout the US.  Another, more astonishing, ubiquity effect: the Windows operating system is available on almost all new personal computers and has captured 86.4% of the desktop computers in the world  (from statista.com, which offers a free basic account and a $49 a month premium account)– making the original licenser of the software (not the ones who wrote it) very, very, very rich.

To condense it into one sentence: the more money you have, the less likely you are to have earned it.  By “earn” I mean literally struggled, concentrated, worked hard, and devoted full time to something for a long time.  Large amounts of money naturally get larger without any human intervention.

So, from a truly Calvinist point of view, money accumulated in the capitalist manner is unjustly obtained and therefore sinful.  This sentence was meant for the Evangelical Christians among you, who feel that poor people deserve their fate.  Many people are poor, not because of a lack of “earning”, but because they have been unjustly treated by others: exploited, shortchanged, and otherwise cheated.  Simply because their parents or grandparents lived through a life that did not allow them to pass on their “earnings” to their children, many of these people are given a bad start to life, starting with inadequate nutrition and insufficient vitamin intake and continuing with incompetent schooling, then going on to an unstable job market that prioritizes skills learned in schools better than those that the people have attended and, throughout life, exploited by capital markets such as Quicken Payday Loans and constantly nibbled by Avon, Facebook, and Lotto.

Scientific studies have shown that feeling poor (whether you just feel poor or are actually, really, poor) interferes with your decision-making ability; in particular, it makes you more likely to do things like buy Lottery tickets.   The stress of being poor is destructive to one’s mood and outlook on life.  On the other hand, having large amounts of money (more than most other people, for example) does not do anything to improve your mood beyond a certain point.  Studies have shown that most people would be maximally happy if they were given only $15,000– giving them more doesn’t make them happier.  Thus, the man who still works 18 hour days after he has made a pile finds his work less and less rewarding, the more he makes.

Jeff Bezos understood this very early, and decided to use his pile as quickly and wisely as possible.  Under this compulsion, he started a company called Blue Origin, the results of which so far are a manned capsule capable of flying multiple passengers to the edge of space; this capsule has numerous large windows.  His companies have developed rockets that are capable of shooting this capsule a hundred miles up, and then landing softly to be re-used.  Uncrewed testing of this capsule is already in progress.  Plans for capsules that can fly to the moon and beyond are in active development.  These projects are completely private and under his sole control; NASA is making plans to use his rockets and capsules in cooperation with another private rocket company.

Mr. Bezos is doing the best thing possible one could do with one’s money: providing jobs to as many people as possible.  However, his attitudes and opinions do not match those of most rich people; the average rich person puts his money into investments and simply compounds it, spending whatever he or she likes on luxuries.  An extreme example of this attitude is now a person who will not be named in this article.

In order to reduce the effects of capitalism, which are essentially unjust, it is useful for governments to impose progressive taxation on rich people and to distribute the monies obtained to poor people through jobs and transportation (to and from work) and assistance with doctors, medicine, housing, food, and clothing.  When money is pumped into the economy in this way it supports basic infrastructure and spending on necessary goods moves money back into the system rapidly.  Thus, the benefits of progressive taxation are twofold: first, the money obtained and disbursed by the government stimulates the economy immediately; second, part of the money can be earmarked for building infrastructure.

Most importantly, progressive taxation promotes basic fairness, which is a critical perception that affirms or denies a positive attitude towards “the system” in general.  Scientific studies have shown that the perception of fairness is a trait that underlies a person’s willingness to cooperate with others.  Even primates like chimpanzees have a strong perception of fairness which motivates their choices.  We want people to cooperate in order to make the system run smoothly, whether it is a government or a factory, and in order to do this, people must perceive it as fair.

When a person is confronted with another who has clearly aggregated an unfair proportion of the spoils, so to speak, there is a reaction which we will call disgust, and the person is less willing to interact with the other.

To apply this reasoning to today’s America is to perceive the true problems that we are facing.  First, there is a basic unfairness in the way Americans are treated by large companies, who are unrestrained in their ability to disrupt a person’s life.  Many people who depended on their jobs for survival were left unemployed with no recourse when large companies shifted their factories, first from New England and the Northeast to the South (in pursuit of cheaper, more compliant workers who were not unionized), and then out of the country altogether.  These companies continue to shift their operations in search of cheaper employees and have wound up in places like Vietnam, the Philippines, and other distant impoverished countries.  Meanwhile, the people of America who lost their jobs were offered no meaningful new employment.  What they could find paid less and was less reliable.  These people (and there are probably 50 million of them, just guessing) are angry at their impoverishment, not by war or natural disaster, but by the economic choices of the companies who deserted them.  They have been unfairly treated.

Who is responsible?  The companies that left their employees in the lurch.  Who could have averted these personal disasters?  The federal government, in the end, could have forced the companies to find their employees new jobs, even if that required retraining them, or it could have developed the replacement jobs itself and charged the employer or the taxpayer.  Some efforts were made in this direction, but they were grossly inadequate and delayed.

Today the economy is moving along; for the last eight years, mainly under the previous president, the economy has expanded and jobs have increased every month.  Now unemployment among able workers is so low that disabled workers and marginal people like parolees are being considered for hire.  It would seem that things have come out alright.  New problems loom on the horizon, like automation, that may create new stresses on employment but certainly will increase productivity.

One symptom of the unfairness of our capitalist system is the distribution of gains resulting from increased productivity.  The increases are due to better machines, more efficient processes, better chemicals, and just plain innovations.  However, the gains in money terms are not being distributed to the workers whose productivity has increased; statistics show that, for the last forty years, the profits from increased productivity have flowed to owners and stockholders and wages have remained stagnant.

All of these problems with capitalism can be controlled with strong government, but a powerful government brings its own problems.  A good example is the government of China, an extremely powerful one that tries to control what its people see and hear, and which has been marred by corruption and personal oppression.

Even a strong government is under threat when it is confronted by today’s powerful multinational corporations.  One of the top ten companies in the world, with annual revenues of over $200 billion each and assets to match, can be a formidable counterparty to even the US government.  Therein lies the worst threat faced by governments today: the growth of capitalist corporations.

(Photo of “money shark” figurine courtesy of Pixabay and Alexas Fotos)

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