:::this is the way the world ends:::

Risk and Wealth

1500-1071~Goddess-of-Wealth-PostersI have been thinking a lot recently about the nature of wealth and what is fair taxation, etc.

I heard Bill O’Reilly talking the other night and accusing Obama of wanting to do wealth redistribution. This got me thinking: “this is something people think of as negative because it means taking something hard-earned from those who have toiled to earn it and giving it to those whose actions have done nothing to make it.”

Then, my thoughts drifted to a few events, one from Policy class and two more recently occurring at family reunions. First of all, the statistic that something like 97 percent of the wealth is controlled by three percent of the population. The others are a game of Risk with my cousins, and a conversation with Mandy about her family.

As we know the divide of the uber-wealthy and the lower classes is growing. The amount of wealth is continuing to be governed by a smaller percentage of the population. This is fact. This is inevitable if you have read much on behavioral economics. I recommend the “logic of Life” as a book to illustrate this point.

This became clear to me as I found myself on side of a losing campaign in Risk, a game I had not played since young. At one point I decided to hole up in Australia, after spreading too thin and being conquered elsewhere. I thought, ” at least I can defend the bottle neck here in the south pacific by putting all my new resources into the defense of the one country blocking my cousin’s way to world domination. The fallacy that I quickly discovered is that if you had captured continents you amassed more armies because you had more resources, same too for just having sheer numbers of already existing armies. In essence, if you already had wealth, you could make so much more. So there is a tipping point there where defeat is inevitable, no matter how great your geographical advantage. I realized that the percentages were about the same as those discussed previously in policy class, my cousin owned about 95 percent of the board and defeat began to unfold at an exponential rate.

We attended a wedding this last weekend of one of Mandy’s cousins. Their family clearly had some financial advantages over what we have had. Mandy’s cousin and her husband decided for example to rent the condo just purchased to add to their income. Again, having the resources to make more.

So, why wouldn’t the republican stance of lower taxes be better? Because, in this system, the rich get richer and bigger breaks and eventually have control over about everything they accuse the democrats of wanting to give to government. At least in government, we may have a little more influence about whether the money is spent on the common good vs. being spent solely on corporate interests. I think Obama may be right in raising taxes higher on those who can afford to pay more, but in this system where wealth and power are synonymous, it may take an occasional redistribution to keep the Risk scenario from unfolding. After all, unless you quit in the middle, the end game for risk is inevitably the same, one winner and everyone else loses. cheers. vote Obama:)

5 Comments

  1. Ned

    Yes.

    I’m no economic genius either, but I have been arguing this stuff with my family for years.

    I don’t like to tell people who to vote for, but I’m with you Pete, even though he needs to step it up on energy.

    Your point about risk systems and disparity in the starting blocks is well taken. That’s what has got us to this point. Hard work? That’s made some people wealthy, but much of the time it’s been wealth built out of risking wealth. Not much of a risk if when you lose you still have more than most.

    I put a post about John Ruskin on this blog about a year ago. Almost as soon as The Wealth of Nations appeared, John Ruskin foresaw that Capitalism, though rooted in solid theory, would lead to this sort of disparity.

    His solution, however, harks back to an age-old question, much like the quote I posted by Solzhenitsyn. He suggested rather than make laws, the British should instill in workers and educate the young to not expect more return than the value of their work or service warranted – that moderation was a virtue to be learned.

    It is clear to us now that the “trickle down” economics of the Reagan years have failed us. Americans don’t moderate worth shit. Wealth does not trickle down, it gets stuck at the top. Thus, we have to call in solutions like Obama’s tax increase for annual private salaries over 250,000 (which of course I’m for because I don’t make near that). Bidden says, “It’s time to get patriotic”. I think that’s fair. It’s clear from McCain and Palin, it will be more of the same “free trade” “No intervention” preaching until all the power truly does reside in one arena. That’s why fair trade for Africa and developing nations is so important. Obama had the right economic ideas before the crash and he still has my confidence now. If we don’t raise taxes, our kids will have no schools, no social secuirty, and no government. It’s a good thing we didn’t go to the private sector for SS or where would we be?

    Our current predicament has relation to so many of the issues we have discussed in the past: living outside our means, fair trade vs. free trade, and the energy crisis in this country (which in my opinion Obama still hasn’t fully addressed and McCain is clueless on – “Drill Baby Drill” Are you kidding me?).

    But it also all converges on the biggest questions. We recognize that Capitalism has a chink in its armor. It is a system that many thought flawless, because it was based on the concept that human’s do what they need to rise to the top – economic evolution. But if moderation goes against our nature, can we expect to accomplish it?

    Even math and science are pushing us toward a convergence with age old moral thinkers, when thinkers like Nash and Wright realize that until we do what’s best for all of us rather than just ourselves, we’re kidding ourselves expecting to resolve large scale socio-economic problems. But who surrenders power willingly? Who moderates their own wealth? We keep hearing “Country First”. I can’t wait for the day when, like Paul Farmer, our motto and practice is, “The only real nation is humanity.”

    “It is not possible that assessment of the President’s performance be reduced to the question how much money one makes or of unlimited availability of gasoline. Only voluntary, inspired self-restraint can raise man above the world stream of materialism…

    “Even if we are spared destruction by war, our lives will have to change if we want to save life from self-destruction. We cannot avoid revising the fundamental definitions of human life and human society. Is it true that man is above everything? Is there no Superior Spirit above him? Is it right that man’s life and society’s activities have to be determined by material expansion in the first place? Is it permissible to promote such expansion to the detriment of our spiritual integrity?

    – Alexander Solzhenitsyn 1978

    See, now you got me going again.

  2. Shotts

    I am really heartened to read these posts, from Peters and then from Ned. And I’m glad this thread is being picked up again–and in general, glad people are posting on the blog after some dry months. Summer break is over.

    I agree with everything that has been said here about taxes and the economic strategies of Obama and McCain. And needless to say, perhaps, I have also concluded that a vote for Obama is a vote in the right direction for these concerns.

    Ned is right about moderation being at least part of the solution. I think more and more Americans are living “moderately,” mostly because they are being forced to with high gas prices and higher prices on food goods–higher prices on perceived necessities. This is what has happened, it seems to me, in much of Europe, where there are higher prices on premium items and higher prices on fuel and food, but much more governmental programs and support–for education, health care, family support, etc. Unfortunately, America doesn’t like to look to other models for possible change, and instead continues to operate on its insurance-mandated system. I’d rather my money went to government programs, rather than insurance companies–car insurance, home insurance, health insurance, and now we’re looking into life insurance, etc.

    I am always reminded too in these conversations about the American economy, that while we have serious issues with impoverished people in this country, in the whole, we are living at such a higher standard than 95 percent of the rest of the world, it staggers the imagination. When I worry about how we will afford everything for our son and our family, a quick reminder of the children and mothers in the slums of Mumbai is paramount to understanding our infinite good fortune. And for us, looking at our neighborhood is also a strong reminder of those truly struggling in this country.

    How to live moderately, is the question, then. One complaint I have for Obama is that it’s not really enough to give tax breaks to those making under $250,000. $250,000! Households earning that kind of money are not middle or working class in this country. They have fooled themselves into thinking so, and unfortunately our policy makers need their votes. But why not give a real break to those making less than $100,000 (if not $50,000) and try to lift us up?

    We’re trying to live moderately, and we have to, now more than ever. That can be hard with a child, when there is a lot of pressure to buy more things, some necessary and most not. Jen will be moving to part-time work after her maternity leave is over in early November. We are both trying to make that work on part-time salaries cobbled together, because we’ve made a decision to try to be with Beckett as much as we can, especially in these first years. It’s a gamble, frankly, and sometimes the numbers add up, sometimes not so much, month to month. It’s going to be a real test of just how moderately we can live, when so many things around suggest living otherwise. It’s a huge help to us to have people like you all around us who are trying to do the same…

  3. Tobias

    I’m glad to have this conversation on the blog, and some life happening here. I have to say I’ve missed it all greatly.

    I agree wholeheartedly with regards to the diagnosis of the problem in this country. The problem that rises from a system where the wealthy are able to grow their money into more wealth…and where this leaves people who, for the majority, have little to start with and will continue to eke out their lives in the same state. I have a lot of compassion towards those stuck in this disparity.

    I feel extremely blessed to be in the place we’re in, although it is built on mountains of past mistakes (some not so past, we haven’t been very good at moderation either … though much better now). However, it’s just really hard sometimes, especially as we feel financial pressures in our lives. They seem to constantly weigh down on us and it’s been a long, tough, fight. This journey seems excacerbated by feelings (correct or not) that owning our own businesses have left us solely responsible for our financial well-being. Some people out there seem to start out really lucky and breed this “luck.”

    I have to admit, I have to stop comparing myself too much to these people or it feels like jealousy starts to take hold too strongly in my life. I have to stay away from Facebook for similar reasons (which is a whole different thread of this conversation).

    I’ve grown incresingly disillusioned with politics as a game of “churning” talking points, not really achieving anything. This extends to my thoughts on a lot of governmental policies. I know that lowering taxes for businesses would help out Steph, Clara and I tremendously. It’s staggering the amount we have to write a check out to the government for each month. I also know that it would make the big corporations exorbitantly wealthier, too, and be in the situation Petes mentions in his origial post. I believe the legal entity of personhood bestowed on corporations is troublesome too.

    However, I am also hesitant to call for redistribution. Steph and I work hard (too hard sometimes) to make our little corporation suceceed. I cringe to think that someday, if we did build upon our efforts to where we “made it” — that the government might sweep in to redistribute it. It doesn’t seem just, it seems cruel. It’s a problem where it doesn’t seem there are easy answers, there’s a full chromatic range of factors to consider.

    I do think we need to tear down capitalism as god, and I really like Ruskin’s prophetic voice in all of this. In regards to his quote, I believe we need less law to follow in America too, not more. I’m sure according to the morass of legal code, I am a lawbreaker each and every day. Education sounds good, but America seems, culturally, to be skeptical of the educated and look to the “noble savage” instinct of the blue-collar working base (which isn’t bad, just not always good).

    The financial news of late makes me laugh…we’re firmly committed to capitalism in America, except when the market starts to compensate for a lot of hot air being blown up corporate butts. Then we go to socialism. Not passing a judgement on eithe system, I just think it’s funny that a lot of die-hard capitalists are calling for socialism right now. If only the 80’s could see us now.

    We do need to protect the poor in a bailout, and not Wall Street. I do not believe they are synonymous, as many in Washington seem to. Although, I am largely ignorant about all of It.

    A last admittance, I get a little depressed if I read too many headlines (and the conservative and liberal sources are equally as depressing, causing a sort of schitzo response in me…and the coverage isn’t all that different, really). The depression also sets in further if I hang too much of my hope on the men running for office. I guess my hope needs to exist outside of a political race or even men. As a Christian, you all know where this points. I was behind Obama, and had a lot of energy in that, until the whole FISA vote. That was a major letdown and I now feel the same way about Obama that I feel about the other guys. When I vote, I’m not going to feel good about it…should I ever hope to?

    Jeff, Ned, Petes, and J.E. (floating in the ether) — the encouragement flows. I am excited to see all of us taking steps to bank in the currency of our families and relationships. We’re veering towards the moderate with money, but the extravagant with people. I believe too, this is the proper fiscal rationing. Maybe in America we’re finally seeing the enemy as those who teach us we’re consumers, first and foremost — consuming is being a Patriot and a True American.

  4. Tobias

    By the way, Ned says, “See, now you got me going again.” I for one, am glad to get Ned going again….

  5. Pete

    Sometimes, I think the moment we get our plastic bottle, our obsession with materialism begins. We begin to get identity from our possessions. Sometimes I feel our coutry is going through a development process, not unlike early child development, we are a tempermental, bullying, temper-tantrumming infant of a country, focused on consumerism and materialism, and vascilating between ideals of valuing ourselves and devaluing of others, not unlike a two or three year-old’s struggle for differentiation. We are happy and compliant as long as things tilt in our favor. We are entitled and demanding otherwise. We are unable to apply Nash’s theory, for example, because we are not mindful of our state of being, our place in space and time, we are, instead living in the moment, but not in a Zen-way, rather in a selfish, short -attentioned way. And so the pendulum swings. Maybe in another 2-3hundred years we will reach a more mature version of our country.

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