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When the Revolution Comes

A recent article circulating on the internet demonstrates how completely out of balance the global economic system has become. The specific case discussed is the US, but few people would deny that similar problems occur elsewhere, although maybe to a lesser extent. The article discussed wealth inequality in the US: what people’s idealised position would be, what their perception was, and what the reality is.

The article showed a series of graphs which plotted the actual wealth of various sectors of society compared with where they stood in various categories of income: bottom (the bottom 20%), second, middle, fourth, and top (the people with the top 20% incomes). If wealth was completely equitably split you would expect the graph to be a rectangle (in which case the 5 partitions would have no real meaning) but, of course, it wasn’t even close to that shape.

There were three graphs presented: what the people surveyed thought would be an ideal distribution, what they thought it really was, and what it actually was.

The distribution the vast majority (92%) chose as ideal was a split ranging from the bottom 20% getting about 10% of the income and ranging up to the top getting 30%. Presumably this is to recognise that certain people make a bigger contribution to society and so deserve greater rewards (even this idea has problems, but more of that later).

Sadly, they also realised that the ideal situation was far from the truth. The graph which the same majority thought reflected the reality had the bottom 20% on about 5% of the wealth and the top 20% on almost 60%. Many people would find this situation quite abhorrent but it doesn’t even begin to cover the actual reality.

In the real graph the bottom 20% have a section on the graph so small that it’s invisible. In fact the bottom 40% section is barely visible. And it’s much worse than that because even adding in the “middle class” middle section only brings the total up to around 5%. So the bottom 60%, including most of the middle class, get 5% of the wealth.

But even that’s just the beginning. The “upper middle class” only get 10% of the wealth leaving the rich 20% with well over 80% of the wealth.

But where the whole thing moves from abhorrence to obscenity is when you consider the top 1%. Draw a graph with a typical middle class person’s bar one centimeter high and guess how high the bar for the 1% is? Is it 10 cm, or 50, or 100 centimeters high? No, it’s almost 10 meters high. The top 1% have more wealth than all of the poor, and all of the lower middle, and all of the middle, and all of the upper middle, and a good part of the rich all put together!

The true situation is as far beyond the perceived reality as the perceived reality is beyond the ideal situation. So not only is wealth distribution a total disgrace but people are barely aware of how bad it really is.

So no one can doubt that the situation is extreme. We must now move on to whether it is justified. As I said above, some people do make a greater contribution to society so it seems fair to reward them with a higher income. Few people would debate this idea and that is represented by the ideal graph being weighted towards the top 20%.

But there are two issues here: first, how much extra income do these people deserve, and second how should the determination of their contribution to society be made.

Many people will say let the market decide. There are huge problems with this though…

First, the market only exists through a series of essentially arbitrary laws and regulations enforced by governments. Change the rules and the market delivers a totally different result. Therefore the market is essentially arbitrary and often shaped by laws designed to benefit the richest sections of society.

Second, the market (as it is under current rules) tends to reward people who are good at making investments which might result in high returns without achieving anything beyond that. For example, a currency trader (who really does absolutely nothing of any value at all) can get a huge income where someone researching a cure for cancer gets nothing. So the market can easily reward exactly the wrong people.

Third, even if there was a single free market what guarantee is there that it will achieve a good result? After all, we have many laws to stop people murdering their enemies, stealing from others, and acting dangerously on the road. Why shouldn’t we have rules to control dangerous activity in the economy as well?

I think I know exactly where this attitude that the market can solve all our problems came from. It came from the top 1% obviously! But it’s not that simple because I know many people on much more modest incomes who also support the “market”. Why? Because of that seemingly reasonable appeal to freedom, progress, and entrepreneurship. But not only is that idealised outcome not real, but even if it was real it isn’t the answer we should aim for anyway.

So the propaganda machine being run by the rich has persuaded enough people to act against their own best interests and that is how the system has both maintained itself and gone on to even greater extremes. But it can’t last. All despotic regimes eventually come to an end and I think we are beginning to see the end of the current one.

It’s time we made the economy work for the majority of people, not the other way around. And it is happening in some areas, with Europe now making (some rather feeble) attempts to moderate the pay of perhaps the most corrupt section of society of all: the banks.

Even in the US there is the beginning of a swing back to more moderate policies. Because of changing demographics there it is unlikely that the Republicans can ever regain power unless they moderate their policies significantly. And a swing back towards the center there (even Obama is far right by most standards, despite the silly claims of him being a socialist) should trigger a global trend towards the same thing.

But looking at those graphs I do wonder how much longer the poor, and even a lot of the middle class, will have to suffer just so that the (in most cases) greedy, corrupt, and self centered can get even richer. How much is enough for these people?

One final thing: I do realise that there are a few rich people who do make a significant contribution to society, and there are a few who contribute to worthwhile causes (Bill Gates being the most famous example). This is OK but it doesn’t really affect the big picture. The system is rotten to the core and any small examples of good outcomes like that are swamped by the vast majority of bad.

The rich aren’t the solution, they’re the problem. As the classic line in HitchHiker’s Guide to the Galaxy goes: they’ll be the first against the wall when the revolution comes. Bring on the revolution!

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