The problem with this situation is badly misunderstood by both the "left" and the "right," and the ignorance surrounding this issue is appalling. The problem with "wealthy" individuals "owning" a disproportionate share of the wealth is not related particularly with "fairness." Frankly, it should suit any reasonable human being, if such a situation were associated with generally prosperous conditions, if one "social class" had a near-godlike status in terms of the percentage of capital they own. Any reasonable person should be content enough for there to be a "king and his subjects" as long as the subjects were fed well enough. The problem with this situation is that it doesn't actually do us any good in real-world economics...and a smart "king" realizes this.
The fact of the matter is that people are motivated to economic and creative output by what we call "upward mobility." By creating a situation in which high output promises an opportunity to advance in society, this creates a driving force for any individual to do well. As long as "climbing the ladder" leads to somewhere and the "sky is the limit," people have a working motive to try. If they can't make it that far within their own lifetimes, perhaps their offspring can take up where they left off.
However, what happens in a situation in which a large proportion of the population is incapable of crossing a threshold at which they can pull in as much wealth as certain others? Consider yourself to be a "rational buyer," only you are paying with labor and other kinds of creative output in exchange for social recognition. Not material gain necessarily...just recognition of some kind or another, whether it's a large number in your bank account or an audience to perform to. What happens when it is impossible to cross the threshold into "having won," your motive to do anything at all is dead in the water.
The secret recipe to a successful economy is to give people, in as many kinds of situations as possible, "a way to win." That's what causes the average person to keep "plugging away" to try to produce wealth. No special formulas are necessary, just a basic understanding of human psychology.
If you look at Maslow's Heirarchy of Needs, the...okay, the reason that I have you looking at Maslow's Heirarchy of Needs is that Abraham Maslow created his theory of human psychology by studying people who were particularly successful (unlike some of you, I paid attention during my 9th grade psychology course, and I remember this lesson in crisp detail nearly fourteen years later), and I think that this makes his theory particularly relevant to economics. Anyway...if you look at Maslow's Heirarchy, take a look at the second level down from the top. The second level from the top is the achievement of social esteem. What this means is that, in order for the animal Man to be able to advance to the pinnacle of experience, he or she must first be able to have a sense that their lives just might be worth something to others.
After we have established ourselves socially, we have the liberty to pursue the "ultimate high." We have the liberty to make that business venture we remembered dreaming about when we were 8 years old and never forgot. Suddenly, we have the luxury of taking risks where we could not have had this luxury before. Being at that second-from-the-top tier, where we have respect from ourselves and respect from others, it's actually possible for human beings to let go of all inhibition and pursue the depths and heights of their potential.
What the 1% boundary does, though, is put the pinnacle of an individual's potential success farther and farther out of reach. Now, with the 1% so far away from our possible experience as to be irrelevant to our own existence, those who reach a point at which they feel established are left to languish. This halts innovation. It halts enterprise. It ultimately leads to a situation of stagnation.
Therefore, the most economically successful strategy would be one that makes it possible for people who are already fairly established to have a fair hope of being able to do something like opening up a local art gallery or start a regional chain of retailers. Those who are fairly established, for us to have any hope of getting any productivity out of them, need something to aspire to. When the way up is blocked, they stop doing anything worthwhile. Period.
Because they are rational human beings, once they have reached the extent of how far they can reach upward, their sights turn inward. They start thinking of themselves. They start thinking of their families. They start seeking comfort. If the potential inventor has no chance of being able to sell his or her inventions to anybody or gain any status as a result of trying to develop his or her ideas, these would-be inventions will remain a bunch of drawings he or she keeps in a drawer somewhere. When the would-be inventor dies, they will be burned with everything else. When the would-be artist dies, a drawer full of promising sketches will also go on the fire. When the would-be novelist dies, what might have turned into a great novel will simply go up in flames. Another person's plans for a business will be thrown on the same fire. Bereft of any chance of our aspirations ever amounting to anything, we simply keep our dreams locked in a drawer somewhere and pursue the simplicity of the basic comforts.
The economy where the "99 percent" is programmed to fail is ultimately a failure. "Fairness" and "equality" don't have a damn thing to do with it. When the economy itself fails, everyone fails...including the other 1%. The scientist who might have created that new artificial heart became disheartened and retired. The beautiful masterpiece that might have kept you company during your final moments--perhaps it was something that would have brought back memories of your childhood--was never painted. Whether you are 1% or not, dead is dead.
03 Apr 2012, 11:06 am
