Saturday, July 8, 2017

Who Are the Real Wealth Creators?

Technologists, of course.

Of the various indignities of the campaign last year, the economic ignorance displayed and accepted was particularly galling. The Trump voters of the hinterlands, supposedly angry about their compromised economic position, elected a party and person whose avowed goal is to take more money from our public institutions, the poor, and the middle class, and give it to the rich. This after a near-decade of total intransigence by the same party against restarting an economy that was floored in the banking meltdown and has been limping since. It has taken a decade to get back to more or less normal conditions- time lost to economic growth in general and to countless individual traumas.

Who and what creates economic growth? Is it the "job creators"? Is it Goldman Sachs? Is it the 1%? That is a big question facing the nation, both politically and in straight economic policy. The new administration says yes, yes, yes, arguing that giving the rich hefty tax breaks, not to mention reducing regulations of all sorts in financial and environmental sectors, will help economic growth. Will it? Obviously we have been through all this before, under G. W. Bush and Reagan as well. And the answer is no, it does not increase economic growth. Money going to the rich is money that is, largely, invested in low-risk assets like bonds and real estate.

More generally, does the managerial class create wealth by their organizational prowess? Is Amazon better than Staples, which is better than Pat's Stationery store down the street? Organizational differences make only minor advances in overall wealth, and seem mostly to facilitate the redistribution of labor earnings to ever fewer and richer capitalists. As previously discussed, the power of capital is that it always wins, through good times and bad, in every negotiation, since versus labor, it is always taking less risk.

What Amazon has that Pat's establishment does not is, mostly, new technology. The internet came along and showed that everyone could be connected, instantly. How about using that connection to sell things on a nationwide scale, especially things that are easy to ship? Sears would have been the natural founder of this franchise, based in their nationwide catalog roots, but they had become too invested in their stores to pay attention. Capitalists only deploy the technology that exists. They do very little to generate new technology- that is left to academics and the government. It is technology that keeps revolutionizing our lives and raising our standards of living- our collective wealth. And when it comes to distributing new technology, sometimes the market does a worse job than the government, such as with roads. We could have much better internet infrastructure if it were managed in the public interest as a utility.


Where would the "job creators" be without their cell phones? Where would they be without databases and spreadsheets? Where would they be without electricity? They would doubtless be riding herd over an estate of serfs. They would be just as wealth-creating in relative terms, but all in a much poorer society. The dark ages were dark not because entrepreneurs had lost their will to manage others, but because technological, scholarly, and governing instututional development ground to a halt with the dissipation of the Western Roman Empire. It took centuries of slow, accreting technological progress to make cities as large as they were in Roman times, and make societies as wealthy. By that point, the process took on a life of its own in the West as an ideology of Enlightenment and material and moral progress took hold, maintaining support for learning and innovation which reached unimaginable heights in the twentieth century.

Looking back, we can rue that the fuel of all this transformative progress and wealth creation has been buried reduced carbon, which as our waste product, CO2, is now befouling the biosphere. Our collective wealth has also begotten a vast and completely unsustainable increase in human population, whose many appetites are destroying much else of the biosphere. These are the problems of prosperity, and are, if we are morally responsible, now foremost in our public and private intentions and actions to transition to a sustainable as well as prosperous future.


  • Who needs clean water?
  • Who will sue on behalf of the public interest?
  • Free? We are not free. We are under the feudal thumb of corporations. "Likewise, the origin and success of the factory lay not in technological superiority, but in the substitution of the capitalist’s for the worker’s control of the work process and the quantity of output, in the change in the workman’s choice from one of how much to work and produce, based on his relative preferences for leisure and goods, to one of whether or not to work at all, which of course is hardly much of a choice."
  • Trump is the weakling.

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