Disengage Auto Pilot

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November 01
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NOVEMBER 8, 2011 11:52AM

The False Nobility of the 1%

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I’ve spent a lot of time thinking about the rich in this country lately. In general I don’t begrudge their wealth, but the more I think about it the more I see it as a vast distortion of market resources. In other words the rich in command, or rather performing as gatekeepers between capital and innovation, actually inhibit global economic growth. This isn’t so much solely a class warfare, economic inequality question, as it is a numbers game. As successful as the wealthy are, they don’t in fact know everything. It is this lack of knowledge that leads to whole industries being starved of resources, while a glut goes to industries that do not necessarily provide significant societal benefit. I believe this persists because we have bought into the idea that the rich are rich because they are such better workers than the rest of us. We imbue the wealthy in this country with an air of nobility that raises them above impunity. This is why there have been no prosecutions of the bankers that gambled us into the financial crisis. These men, and yes they were mostly men, remain our captains of industry despite Juan Valdezing our nation.

As socialist and anti-capitalist as that opening paragraph sounds I'm still not a socialist. I believe in an open market, a market in which everyone has the opportunity to succeed if their ideas, products, or services are desired. I do believe however the citizenry who allow the market to exist should have some say on the rules of the market. That is to say if we decide to prohibit usury then loan sharks should not be able to participate in the market. The difference between me and the socialist is that the socialist will put government in charge of deciding what industries should succeed and which ones should fail. Most conservatives would argue that government is bad and making those decisions and therefore they shouldn’t make them. I don’t think the problem is that government is bad at making those decisions. I think the problem is that government is no better at making those decisions than the small number of rich businessmen. The problem is you’re replacing the few gatekeepers of resources with one gatekeeper. Yes it is technically a gatekeeper that is supposed to represent the will of the people but until someone can answer the question of how do we prevent someone from bribing the gatekeeper we cannot rely on government to be the sole sentry to market forces.

To me the problem is the small number of gatekeepers, and the permanent nature of their roles. The goal should be first to increase the number of people who can provide access to the resources needed to innovate and progress. Second and more importantly, do not lionize these people, in fact regularly repudiate and replace them when they fail. The goal should be to create a system where success is rewarded, but only enough to continue to inspire others to achieve it. Consider professional sports, while every year there is generally a champion, the system is set up (to varying degrees of fairness) to reset and challenge everyone to win again. I believe this is the most disturbing aspect of our current state of inequality, yes there are those few people who are able to claw their way into the 1%, but the gap between even the 2% and the 1% has become a chasm the almost none can cross. In addition very few if any fall from the 1% and again this is the most dangerous aspect of our society. If members of the uber-rich are there as a function of birth rite as opposed to individual achievement then they become a defacto royalty.

Interestingly enough it is known that the offspring of the truly successful are often not as capable as their parents. It is seen time and time again in family owned businesses that once the reigns are passed down to the new generation progress often lags, and sometimes even ceases. To me this is the internal logic behind such things as the estate tax, or as conservatives like to call it the “Death tax.” The logic being yes, you can make the life of your offspring easier than everyone else, and we will let you give a huge chunk of money to them, but they are not you, and they must earn their keep in some way. To go back to sports, it is pretty obvious because the Yankees have so much money from all their past pennant wins that they are going to have a huge chunk of money to buy some of the best players. However there are limits, they cannot buy every good player out there and bench them. While it is almost certain they will make it to the playoffs they still have to compete, and many times simply because they have to compete, they lose.

The role of government isn’t to level the playing field so that everyone starts from nothing. It is to make sure that everyone has the same field of play, and while some people will have better equipment they are at least playing by the same rules, and suffer the same penalties.

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