A friend just forwarded me an article from Business Insider. The article, by Joe Wiesenthal, talks about the World Economic Forum in Davos, Switzerland. He talks about what seemed to preoccupy the conferees this year. What is apparently preoccupying them is the impact of technology on increasing the concentration of wealth. This concentration of wealth is a problem because, well, I'll quote an economist by the name of Nouriel Roubini whom Wiesenthal quotes:

".......inequality is rising. This is not just a 'moral' issue but also an issue of too little consumption too little savings that is bad for global growth. So it becomes vicious cycle. It's a bit like the old Marxist idea that if profits grow too much compared to wages, there's not going to be enough consumption, and capitalism is going to self destruct."

The article is quite short:  http://www.businessinsider.com/rich-tech-fears-2014-1#ixzz3KBvzBBXU

I haven't read much Marx, though what I have read (or been taught in classes) I've tended to admire, not the Romantic utopian stuff which I think can get a bit naive but the economist stuff, the analysis of what's driving economies, how, and why, and their effects on politics, which I think is brilliant, often startlingly so. I've independently reached conclusions from observation that apparently predate me by more than a century.

This has been the trend that scares me: Income Polarization. It's also been what I talk about politically, in that I've said repeatedly that the secret to reversing both the economic trends and Republican political trends is to recruit business to liberalism on the grounds that Republican policies are ultimately bad for business. Reductions in taxation and regulation are convenient for business but they tend to erode the customer base. The profitability and viability of businesses is ultimately determined by how business is, by how much they can sell, more than by the tax and regulatory climates. The advantage to Democratic policies for business, even though those advantages are unintentional, is that they support the growth of the customer base while Republican policies shrink it. 

It has driven me nuts that Democrats have never taken advantage of being better for business to recruit business support, which could tip the national political balance leftward both by recruiting talented people and by shifting to whom money and time are donated. Without that, I've been afraid that current trends are unstoppable and that the world is going to get continuously worse, with growing poverty, growing tendencies toward revolution, and growing oppression as surveillance increases (see NSA and American and world phone records) and police forces militarize (the enormous shift of military hardware to American police forces in recent years along with alarming tendencies to deploy it where not necessary has been widely reported). We were given a bit of a preview of how those in power would react to those without money when we saw how cities around the country handled their Occupy Wall Street protests.

The news from Davos is that the people who really run things may be waking up on their own. If enough of that population takes this seriously, we have a shot. The problems I've outlined are not only American problems, they're worldwide problems. A while ago, I posted about how a British newspaper estimated how much money was hidden in banking havens that don't report to governments, where the wealthy hide their money to keep it from being taxed, places like the Caymans and Switzerland. The amount they estimated was greater than the combined GDP's of the European Union and the United States. 

http://oursalon.ning.com/profiles/blogs/offshore-money

If the hyperwealthy take this seriously and act, that could in itself quite literally save the world. 

Views: 166

Comment by JMac1949 Today on November 26, 2014 at 10:17am

"...If the hyperwealthy take this seriously and act, that could in itself quite literally save the world."

I'd amend that sentence to read "...quite literally save humanity."

"The world" was around a helluva long time before we left the savannah, and it will be around long after we're gone. R&R ;-)

Comment by Arthur James on November 26, 2014 at 2:18pm
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Comment by koshersalaami on November 26, 2014 at 10:27pm

Well, to give you a slightly different answer than I gave you on OS, the problem is "current" business operation. Henry Ford deliberately overpaid his workers so his workers would be able to afford his cars. We need to revisit that philosophy. 

Comment by Arthur James on November 27, 2014 at 11:54am
`
blogs
broke?
no work?
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Comment by Arthur James on November 27, 2014 at 11:54am
`
blogs
broke?
no work?
`
Comment by koshersalaami on November 27, 2014 at 3:01pm

Arthur,
The blog appears to work.

Jan,
You get what you incentivize. It's that simple. People mainly do what's easy. 

I'm not arguing for the morality of Henry Ford. Don't be silly. In fact, the contention that he was immoral helps my case rather than hurting it, because it says he was acting out of self-interest rather than out of any sort of moral enlightenment, and yet he still did the sensible thing. 

It's not a question of minor adjustments. It's actually a question of political realignment on the grounds that their current course of action is bad for business. Unlike a lot of other people, I am not assuming that business people are inherently nice guys. However, I also understand that business people aren't inherently devils either - they're guys trying to make money and adhering for the most part to prevalent norms - not laws, but norms. They're also trying to stay competitive, which means that they tend to sink to the lowest common denominator to do that. The trick is to control that denominator. In that respect, competition works very much like warfare does. When common practice in warfare is too awful, you see treaties controlling the worst things, like poison gas and flame throwers after WWI. 

So what happens if some top competitors conclude that continuing extreme polarization is too destructive? (In point of fact, it is; it's just that most people have been and still are really abominably slow at realizing that.) If they collude, they could conclude that the status quo is too dangerous for everyone and that they've got to agree to change things for the sake of stability and future earnings. Even if they view the public as prey from an economic standpoint, an intelligent society manages its prey as a resource to ensure continued access to it, like stocking lakes with fish. Oddly, in this case that model could work, because making money off of people doesn't kill them. Under the right circumstances, it won't impoverish them either, which is my point. 

Earlier today I watched a video made by a guy who's written a book called The Death Of Money. He argues that the world's economy is going to collapse not far from now, probably for about a quarter century, and he outlines a bunch of reasons. One of them is a drastic drop in something called the Velocity of Money. His example is sort of like this: He grabs a cab and gives the driver a buck, the driver buys a cup of coffee later that day and tips her barrista with the buck, the barrista spends it on a newspaper on the way home. So the dollar was involved in three transactions very quickly. "Velocity" refers to the number of transactions in a given time period. Anyway, it's dropping to the point where the Fed can't turn it around. Let's say we care about velocity. The reason it's down has zero to do with the Fed and everything to do with concentration of wealth. The poorer someone is, the faster they have to spend the money they get. For the wealthy, they tend to hold onto it. As more and more money ends up in wealthy hands, more and more money hardly ever moves. If you want to fix the velocity problem, you need to redistribute money into the hands of more people, particularly people with less money. 

I'm not talking about altruism here at all. This is about self-interest, about functioning in an economy that continues to function. 

The political problem we have is that the Democratic party, when functioning in a less distorted way than it's functioning at the moment, doesn't take political advantage of the fact that their policies are better for business because they are looking for altruism or at least some form of morality. That pitch doesn't work on a population that borders on and sometimes crosses into Social Darwinism. So they do what they usually do:  They demonize. It's those evil corporatists. Well, it may very well be those evil corporatists, but how evil they are is only the point when that's all you have to work with. But it's not all we have to work with. Saying to the corporatists: "You're evil" won't do a Hell of a lot of good when they define Evil differently than you do, but saying "You're being stupid and shooting yourself in the foot" might because they don't want to do that, and "You're costing yourself money in the long run" will get their attention if they believe you. 

Comment by Zanelle on November 27, 2014 at 7:34pm

I'm reading all this thru a turkey dinner haze but I like the idea of saving humanity.   I don't have lots of faith in rich people doing the right thing tho.  But I did hear some news today that makes me think the future will be very interesting.   It was the invention of a transparent solar panel.  The thin piece of plastic can be molded onto anything.  Cars can be covered with it, even phones will be able to charge without cords.  High rise buildings will have windows made of it and produce their own energy.  I got really excited thinking that is what humanity needs.  When there were just horses people wondered what they would do with all the horse poop as more people were born...then someone invented the car...there is a future.  It can be good.

Comment by koshersalaami on November 27, 2014 at 8:49pm
I wouldn't count on rich people doing the right thing, this is about doing the profitable thing long term.
Comment by koshersalaami on November 27, 2014 at 10:29pm

Probably not. But the next question has to do with "humanity....not understanding that they had better start behaving with good sense or dying." Humanity is a big category. One of the things we've been finding in recent elections is that what the public wants is not necessarily what the public gets, even in cases where the public vote ostensibly decides things. That means reaching people who decide elections. 

Comment by koshersalaami on November 27, 2014 at 10:59pm

True, but the people who decide elections are the people who will have trouble making more money if there aren't customers to buy what they invest in. The question is how much they figure that out and how much they care. 

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