Wednesday, 19 June 2013

WHY "ELYSIUM" IS NOT THE BEST THE RICH CAN DO...


From "Battle Angel Alita" to "Elysium" and including "In Time" or "Hardwired" (the book), it's been a regular sciences-fi/cyberpunk trope that, in the (near) future, the rich would exile themselves into safe, luxurious compounds leaving the rest of us to fight over scraps.


And there are enough real-life instances of this segregation (gated communities etc) actually happening to make it all sounds rather plausible. But, in my modest opinion, such a situation is not actually "the best" the rich can hope for, even from a purely selfish point of view.

In this blog-post, I will try explain that belief to address a comment James made earlier: "Your views seem to differ from those of most left-wingers in that you view socialism as a vehicle for advancing middle-class interests. Clearly, you are not alone in this belief: I remember reading an article by a left-wing columnist (it might have been Robert Reich), in which he lamented the left’s failure to persuade the middle-classes that their interests would be best served by siding with the poor against the rich".

Now, I could (and will, in another post) quibble with the word 'socialism' (I don't necessarily believe in the collectivisation of the means of production) but my main point here is that, though James is correct in that I think the middle class interests are best served by siding with the poor against the rich, I view this as a sub-optimal result due to the politics of our present situation.

In reality, it is my contention that the rich's interests are ALSO best served by more aggressive redistribution or pre-distribution policies than the ones we have now.

For this argument to make sense, one has to agree about the purpose of wealth.

If the purpose of wealth is to allow its owner to humiliate, degrade and mistreat those without, then I am actually wrong and liberal policies will not serve the wealthy's interests. There's been enough research linking material success and sociopathy that I felt the need to precise that I would start by assuming that the richest among us are not actual psychopaths, needing to see others suffer to feel happy. Even if we established that the rich were likely to be more competitive, more selfish, more manipulative and more indifferent to the suffering of others, it would not change that assumption and thus my conclusions.


I would say that the purpose of wealth is the one traditionally given to it by economists: To increase one's level of satisfaction via greater consumer utility. I would separate or add that wealth also increase one's satisfaction via greater material safety for oneself and for one's descendants against the vagaries of life and general misfortune (i.e. wealth act as an insurance). It is possible to see inter-generational insurance as being just another kind of good or service but I wanted to highlight it because James rightly points out that "It’s natural and inevitable that parents will try to give their children every possible advantage in life" and this sentiment, natural enough, does have consequences when a fraction of people can bestow not a few assets here and there but actual industrial empires, lock, stock and barrel.

So... how does the already-rich, who are benefiting immensely from the status-quo, would benefit even more from a more egalitarian, more socially mobile society?

In two words: Technological advances.

I am sure it was just as awesome to be at the top of the social pyramid in the past as it is  now. Indeed, you could argue it must have been even better given that, in the past, power was more unfettered than it is now.

Yet, if I was given the choice between being Cardinal Richelieu [relevant extract: For many years he had suffered from recurrent fevers (possibly malaria), strangury (from the gonorrhoea he had caught as a teenager), intestinal tuberculosis with fistula, and migraine. (...) [H]is right arm was suppurating with tubercular osteitis, and he coughed blood (after his death, his lungs were found to have extensive cavities and caseous necrosis)] and, say, Bill Clinton [relevant extract: Former President Bill Clinton was taken to a New York hospital today after experiencing chest pains, and underwent a heart procedure, his office said. Doctors inserted two stents into his native coronary artery after one of the bypass grafts from an operation five years ago became obstructed. President Clinton is in good spirits and will continue to focus on the work of his foundation], I would choose Bill Clinton. The ability to get and survive a quadruple coronary artery bypass trumps the rest.

Now this might seem obvious and the real question is why do I link technological progress with a more socially mobile society and a strong and large middle class?

I will admit upfront that I do not have statistically proven evidence of this link but I think there are interesting clues lying around.

Taking the 19th century as a starting point, I think the unionising of the workforce in the late 19th century was fundamental to the spreading of wealth and technological progress experienced in the early 20th century. The late 19th century was no more favourable to wealth redistribution than today's environment: international competition was rife, labour was plentiful etc. Yet, because the working conditions for so many were so atrocious, unionisation was successful, despite an intense and violent opposition from the capital owners and the more conservative elements of society.

And what was the consequence of a great many more people getting a greater income? Well, new revenue opportunities for every firms, of course!

Said differently, firms then may have had to accept a (temporary?) drop in their profitability as their labour costs rose but the consequence of that rise was an expansion of their potential customer base. This is the basis of Fordism, "the (...) manufacturing system designed to spew out standardized, low-cost goods and afford its workers decent enough wages to buy them".

It could be argued that, even if what I just said is true, it does not mean that a strong middle class encourages technological progress per se but merely growth - i.e. greater incomes for workers generate more customers for existing companies' products but it does not mean that it creates the conditions for or relates to new products being invented.

Again, I would be hard-pressed to make a water-tight case for this. But it is my belief that, as customers' needs are always evolving and mutating, an environment in which private consumer demand is the driver of economic growth is more naturally competitive than the one where gargantuan heavy industrial conglomerates cooperate with the state to maintain a military status-quo/feed imperialist dreams.

And, in time, this technological progress benefits the wealthy just as much as (or even more so!) it benefits everyone else, even if they had to relinquish control of some of their wealth along the way to get there.

With regards to the purpose of wealth, I also mentioned James' comment about parents wanting the best for their children. I believe that one of the best way to redistribute wealth across generations (i.e. reset the race to the top) is punitive inheritance taxes. My philosophy on this is similar to Buffett's. It is natural for parents to want to take care of their children. And the handful of rich people at the top of the pyramid should be allowed to satisfy this natural urge by being allowed to bequeath to their children "enough to do anything they want, but not so much that they can do nothing" but no more.

It might be a hard pill to swallow if you've build (or inherited, or stolen) a business empire to let most of it go. But, ultimately, wouldn't even super-wealthy parents prefer their children to live like Buffett's than like Louis XVI's (both Louis XVI's sons died of disease while still children)?