Lunchtime edition part II:
There are so many underlying assumptions that I’m not quite
sure where to start, particularly if I don’t want to get bogged down in pedantic
details.
Let’s start by saying I want to improve our quality of
life. I like to think about things
holistically, try to identify which parts could be the underlying key to making
big changes. A tipping point, if you
will. I think (in a world of finite
resources) that we have to be smart about where we put our efforts. A combination of the inkblot
counterinsurgency strategy and Malcolm Gladwell’s tipping point.
That’s nice and broad, and you can apply that way of
thinking to almost any issue you care about.
You can also apply it internationally or domestically. (If I had the resources, I’d have one
department focus on each).
Let me narrow it down a bit, for now. I want to look at domestic (i.e. US) income
inequality.
Even bringing it down to that, this is a broad topic with
all sorts of different underlying assumptions and strategies. It’s all tied up with whatever your thoughts
are on capitalism, the free market, government intervention, etc. I think you’ve heard it all before, and
probably aren’t open to changing them.
I want to brainstorm/muddle through a couple ideas that
appeal to me.
First: Our Founding
Fathers believes in the importance of independent small businesses. Technically, farmers. Jefferson did the Louisiana Purchase in part
because he thought that large quantity of land would help ensure a large
quantity of small family-owned farms.
Those small family-owned farms had an independence hard to imagine these
days. Sure, they had to take out a loan
and buy seed-stock and farming equipment…but they weren’t some salaried stiff
working for a large corporation. With
the shrinking of farmers as a portion of our population, the growth of
corporations, etc…more and more Americans are dependent on other people to make
a living. By ‘other people’ I ultimately
mean the 1%. There is a lack of
independence that stifles us.
Second: There’s a competing worldview of competition and
scarcity versus abundance. That is – are
we fighting for larger portions of one small pie? Or trying to grow the pie so we all can have
larger portions? Does your success mean
less for me? Or more for all of us? Are we doomed to compete to be at the top of
the pyramid? Or can we invert the
pyramid so we can support a large portion of people at the top? (i.e. the truly wealthy can live off of
capital gains. Can we get to the point
where more and more people are living off capital gains…and if so, what would
that do to the economy? Would it cause
inflation, if we had four times as many people making a livable wage off of
investments? Or would it create an
economic boom as more people could afford to spend on various consumer items. There’s a lot more to this, but again I don’t
want to get dragged down into the weeds.)
Tied in with this – do we need fear as a motivator, to boost
productivity? Or are we more productive
coming from a sense of security? Are we
more creative when we’re forced to be, in order to make a living? Or when we know we can afford to take our
time and really come up with something amazing?
Third: People who aren’t wealthy often don’t know how to
handle a large quantity of money.
Lottery winners, for example, often wind up exactly where they were
before winning the lottery. Handling
wealth…well, I’m not wealthy so I can’t prove I understand this. But someone I knew once said that you should never
spend your principal. If you are lucky
enough to get a windfall, you should invest it and learn how to live off that
6% (give or take) profit from the investment.
(By my calculations, you’d need at least $1 million in principal. Assuming you can earn 6% off that it would
give you a yearly income of around $60,000 to live off of. No…not crazy rich, though it sounds like that
to the vast majority of us who don’t have a million to invest. But that can make you pretty comfortable if
you don’t blow it all on expensive items.)
This, btw, is extremely hard to do if you don’t already have
money. Many people are living paycheck
to paycheck, and have a hard enough time setting aside money for their 401K
much less getting to the point where they can live off capital gains. What’s even crazier is that those with less
money wind up spending more (in terms of interest rates, etc) just because they
are more of an investment risk. I get the
free market principles behind why this is the case, and I understand that a
higher interest rate is better than the inability to get any sort of loan at
all. But it’s also kind of crazy when
someone has been successfully making their payments for years, and yet doesn’t
qualify for a lower interest rate. You’d
think it be even easier to make the
payments if they’re smaller than what they’re currently paying! If they’re able to pay their current bills,
and aren’t late, then why would the system consider them a risk that justifies
a higher interest rate? There’s
something kind of screwy about that…
And finally, for this post, number four: How does the growing rate of automation and
industrialization affect all of this?
The low-skilled jobs are going away.
It will be harder and harder to make a living if you don’t have the resources
to become high skilled. Can we
transition to an economy full of higher skilled individuals? Or is it inevitable that more people are
going to fall out of the economy, with all the consequences that entails? And if that does happen, how much will that
lead to future instability, as the have-nots get shut out?
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