Tuesday, January 1, 2013

The Gap

We know a few things about 2020 for certain ...
  • more distance between rich and poor
  • more access worldwide to the internet
  • more unbalanced population growth
  • more resource constraints
The gap between the rich and poor of the world

While the wealthy (successful) nations rise, the less fortunate nations stagnate or decline.  Within nations, the wealthy (successful) folks increase their wealth rapidly while the rest stagnate or lose ground.
Ethiopian home life in the center of the nation's capital; I
took this photo from the balcony of a 4-star hotel.

The world is progressively dividing itself between the wealthy few on one side and everyone else on the other.

The $10 dollar a day figure above is near the poverty threshold in the US
and is provided here to give a more global perspective to these numbers;
the World Bank, however, has felt it is not a meaningful number for the
poorest because they are unfortunately unlikely to reach that level any
time soon.
Governments support the wealthy almost exclusively.  Success supports itself by arranging for more success, wealth with more wealth.  It doesn't trickle down.  It doesn't raise all boats.  The gap widens.

Most people in the world live in poverty.  That's an astonishing statement, particularly because it points to the threshold of survival.  If it's true that most of the world lives there, then those of us who are wealthy don't understand, or if we do, then our minds are calloused, perhaps inordinately selfish, and in denial about legitimate reality.  (We're not real; they are.  We're artificial, supported by fiction, by theft and abuse, by a Tinkertoy structure that the real world doesn't recognize.  OK, that's too bizarre for words.)

Disappointingly, the success of the wealthy is often at the expense of others.  We note that success brings jobs and upward mobility for many.  The actual results aren't so encouraging, though. “Nearly one in six Americans are living in poverty, including a record number of women, and the middle class is struggling amid falling incomes, rising prices, and persistently high unemployment.”

 ~ Andrea Saul  


It varies from city to city and region.

As an example, Washington, D.C. has a dramatic spread across the quintiles with the top income households raking in fifty+ times more than the bottom quintile.  Income for the top 20% is more than the combined income for all the rest.

Where are the key control points?
Not agriculture.  Not education. Not transportation or small businesses.  Probably not even health care. 

Business began between a fellow with grain and another with cows.  They worked out a deal so both could have food and the means of survival.  Or something like that; it was a mutual benefit arrangement.
 
Farms and factories provide food and goods in exchange for the means to have other food and goods.  Not terribly troublesome although larger corporations tend to undervalue their workforce.  The service industries provide skills and labor for daily life's needs.  Resellers like Walmart handle distribution well, but they push the ethical envelope by encouraging unfair labor practices overseas.  

Then there are the banks ...  The community bank was birthed to serve as an intermediate agency between community members, but her illegitimate children on Wall Street have become manipulative giants with tentacles reaching into governments and the rule of nations. 
Many things that happen on Wall Street and in London’s financial
district are “socially useless,” says Lord Adair Turner,
chairman of Britain’s Financial Services Authority
 Thomas Jefferson said in 1802:
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered."



"The financial industry grew rapidly, as did the sums of money with which its players speculated on the prices of stocks, commodities and government bonds. The products they developed to turn money into even more money became more and more complex. At the same time, the risks they were willing to accept became incalculable.
The sector’s high salaries tend to attract the best and brightest university graduates. The members of this youthful elite don’t devise new products that make people’s lives better, nor do they found new companies that further progress. Instead, these young financial wizards invest a great deal of money and effort to develop sophisticated financial products, the sole purpose of which is to generate more profit for both their employers and, ultimately, for themselves — sometimes at the expense of other market players or even their customers.
Many things that happen on Wall Street and in London’s financial district are “socially useless,” says Lord Adair Turner, chairman of Britain’s Financial Services Authority (FSA). The values that are created there are often not real or of any use to society, Turner adds. Paul Volcker, the former chairman of the US Federal Reserve, once remarked that the only truly useful financial innovation in the past 20 years is the cash machine. (emphasis added)"
If 80% of the world lives in poverty, then by analysis, that's the 'norm'.  The wealthy are abnormal, anomalous, and perhaps even cancerous tumors in the world.  Their contribution appears to be progressively less relevant and more destructive as the years pass.  It's been that way for centuries; wealth cultivates its own interests at the expense (on the backs) of others.   

Is our view of the world perhaps upside down?  Are the wealthy in fact the abnormal?  Are they like most of the financial industry?  Socially useless? Just criminals, destructive to all 'normal' folks?  Perhaps so with just a few exceptions like Gates and Gutenberg and the innovators that create great jobs and products.

We'll adjust and adapt of course, but by what path?


Interesting prospects, most of which are volatile, and as usual the poor (normal folks) will carry the bulk of the burden. 

“The gains from economic growth in 2011 were quite unevenly shared as household income fell in the middle and rose at the top,” Robert Greenstein, president of the Center on Budget and Policy Priorities in Washington, said on a conference call with reporters.
Average incomes fell for the bottom 80 percent of earners and rose for the top 20 percent, highlighting the need for “those at the top to share” as the nation looks to reduce its budget deficit, Greenstein said.
An ethical economy would make a place for all who were willing to work and contribute, would it not?

The only way for a small group of people to become obscenely rich is for huge masses of others to be kept quite poor.