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Discussion #18 - The Wealth Gap

Most people have no idea just how massive the income/wealth gap is getting. Many of the ultra-wealthy are making an unbelievable amount of money on the backs of the middle class, near-poor & the poor. (Just try googling the stats, it's truly shocking)! This trend shows no signs of abating, & there are a few reasons why.

1. Massive disconnect in psychology between earning & spending.

When we are earning, we want good decent-paying local jobs. When we're spending, we want to get the best deals. The thought process is; everyone else is shopping at Wal-mart, why should I be the only one having to spend more for everything. We've all heard the expression "if you're hungry, eat your import". Well, that pretty much sums it up (I drive a Kia, my wife drives a Dodge). Very few want to bite the bullet & support local employment (which costs dramatically more).

2. Capitalism has become a bit of a religion. Very few dare to question it's functionality, for fear of being labelled a Communist.

The reality is that no country on Earth is pure anything, (Capitalist, Socialist, or Communist). Every country has it's own mix (commonly of Capitalism & Socialism). Also, no country on Earth has it all figured out, regardless of political party(s) currently in power! I personally (if I had to choose just one) would choose Capitalism, as it rewards hard work, honest effort & ingenuity the most. The problem is that for the last 30 years or so, the game has become rigged in some of the most influential countries in the world. I hate to pick on the United States, but they do seem to be leading the way recently in this department. They of course are not perfect, & have been making some pretty big mistakes lately. From where I sit (in Canada), these would seem to be the debt crisis & far too much lobbying (the 2 are somewhat related).

The debt crisis was caused by far too much credit being available to people, in an attempt to compensate for a shrinking middle class. There are currently over 12,000 lobbyists working in Washington, with an annual budget of $3.3 billion (there were a few hundred in the 70's). One (of many) things I do respect about the U.S. system, is it's transparency about this paid influence on government. Many other countries have a similar system of lobbying, with similar dramatic increases in numbers/budgets since the 70's. The result of all this lobbying, is that the deck is stacked in favour of the wealthy elite. With this influence of government legislation (especially in the area of taxation), power over money will continue to increase up the ranks of the ultra-rich. The game is to win at any cost, & a level playing field is not a priority (or option).

Pure Capitalism would work beautifully if a level playing field could somehow be enforced. Instead, what's happening is the gap is steadily getting wider, & young people (especially) are finding it more & more difficult to get successfully launched in life. Education, which is the best way out of poverty, is rising in cost far faster than wages. Children of the wealthy are (statistically) far more likely to succeed in this fashion. Starting a business would be a similar story. In fact, children of the rich are approx. 10 times more likely to follow in their parent's footsteps economically. The solution? In my humble opinion, there is only 1 solution to this problem; level the field, stop this vicious cycle before it gets any worse.

The biggest ingredient to the solution is to have the masses wake up & become fully aware of what is really going on. The remainder is to inject a bit of Socialism into the mix, & use taxation to try & level things out somewhat. This would have to be done on a global scale however, as the 1% will likely just relocate to another country otherwise, nullifying the effect. This wealth gap choke-hold is really a global problem, & should be treated as such anyway. If the world can co-operate enough to allow the exportation (from the west) of this many good-paying jobs, then it can surely pull off something like a global taxation plan. This plan could emphasize incentives for companies to share the wealth more with employees & management, not just shareholders & owners (which was a reality in the past).

I'm personally very optimistic about this issue (& many others), as we are living in the information age. It's going to be very difficult for any form of injustice or corruption to hide for very long in this culture. Knowledge is evolving at an incredible pace. We just need to get organized, & then learn to get along with each other. (Keep in mind that a call center worker in India earns approx. $1 USD/hr. A factory worker in China earns approx. $2 USD/hr.).

Global economics is of course an incredibly complex subject, but there are a few basic trends and facts that should be brought to the surface. The first is that on top of many jobs being outsourced from the richer countries, there will always be a few insourced as well, but this is mainly for companies to have access to much needed raw materials. Also, products which are large, heavy, & expensive to ship will likely remain locally produced or assembled with domestic labour (or robotics) as well.

Let's face it, unless a company is attempting to win some brownie points with the general public in their marketing, whichever plan improves the bottom line is the one they will choose every time. In many cases, utilizing local labour is not even an option, as business competiton is becoming increasingly intense, heated, & global.

In fact, if and when it's possible, the vast majority of companies would much rather have a completely automated operation, with virtually no human labour whatsoever. This will eventually be by far the most profitable option for most of them. This is not just going to affect future generations, it's affecting us right now. Just think about how many "robo-calls" you get already. Driverless cars & trucks will be on the roads within 10 years, along with robo-financial advisors, & the list goes on & on. We also seem to forget about all of the robotics we've already had for years, like ATM's & factory automation. Many politicians love to blame trade deals like NAFTA for much of the middle class factory job losses, but it's been proven that automation & robotics are by far the biggest culprit.

Instead of fighting against the freight trains of globalization & automation, which is simply not going to work, we should be adapting (globally) to these new realities. We are wasting precious time flogging obsolete ideologies about jobs and economics. There is a growing desperation that is starting to affect a quickly growing number of people, & we do not have any more time to waste.

The top wealthy earn the vast majority of their money from investments, which greatly benefit from reducing expenses, & employee wages are virtually always the biggest expense on any balance sheet. On the other end of the wealth spectrum, wages & jobs are going to continue to shrink & disappear if we do not wake up and smell this coffee. The wealth & income gaps are getting wider, and we cannot just use the same old obsolete economic methods, and expect this to reverse.

The collective work that is remaining (even as it continues to shrink) must be divided relatively evenly among those who are able, need, & want to work. This shorter work-week must also pay enough for a comfortable living. This solution will obviously not be popular with virtually any company on Earth, but nevertheless, it is the true solution. Eventually, inevitably, it will come to pass. It's just a question of how stubbornly we're going to cling to the old (& current) economic traditions.

People living in extremely poor countries tend to have a very fatalistic attitude towards this life. They feel trapped in their situation, and therefore start to prioritize the next life (afterlife). This is really what is fueling many of the world's biggest problems, including terrorism. Military action is not going to solve these issues. If we really want to live in an increasingly stable world, then we need to start addressing the underlying root problem, which is mainly the growing global economic inequality. If everyone on Earth has the chance of having quality of life, then the rest of the world can relax and enjoy theirs. If however, the greed-fest continues to grow, then planet Earth will become an increasingly unstable and dangerous place to live.

I personally believe in a spiritual afterlife, but I also believe that we should be making living conditions on Earth better for our future generations (and ourselves), not worse, and this should be an equal priority to our future afterlife (if we believe in one). Otherwise, it's just pure selfishness. While this may be an over-simplification of some extremely complicated subjects, often it's more effective to zoom out and glance at the bigger picture to gain perspective, before zooming back in for the details.

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