Capital Grows Faster Than Wages

Neither Republicans nor Democrats inspire much confidence in people this year as they seem unconcerned with fundamental economic matters. Democrat leaders seem to regard race as an issue that can solve fundamental economic inequalities objectively. That error concerns itself with social history instead of economic facts that have always affected all people equally regardless of race. That is, poverty is poverty regardless of race.

 As the generations born in the middle of the 20th century fade away so has the economic egalitarian that brought the upper class and everyone else closer together. Economic disasters of wars changed some of the fundamental order of capitalism to one that had income earned through work of more importance than inherited wealth.

 Because capital compiles at a faster rater than national income and wages (4.5% annual average for capital and 1.5% average increase of wages) usually, wealth tends to concentrate. That situation has prevailed for most of human history, and the 20th century was one where the lucky citizens experienced a close approximation of fair economic distribution and opportunity. That circumstance has been steadily eroded since the mid-1970s with wealth and inheritance again beginning to build.  It is possible that the advantage of the rich of western nations will mean that their wealth will concentrate (it tends to be global networks of wealth rather than just national these days) and disadvantaged 2nd and 3rd world nations will remain comparatively poor, without meaningful regulation.

 Some Americans obviously weren’t full participants in egalitarian economics of the mid-20th century for several reasons and would like to correct that. The problem is that economics of capitalism concerns all people equally already regardless of race. The challenge for the poor is to find themselves in a position where they can experience some of the opportunities and advantages of good income and that requires good political economic management plainly absent from the Democrat party.

 Contemporary measures to change the course of economics toward a more egalitarian direction require changes in regulatory structures for the United States that are difficult to understand by the majority of voters. It is possible for a democracy to manage political economy and capitalism better and in a way that would stabilize and guide economics toward a sustainable economic and environmental status yet that isn’t easy; especially when the electorate is chasing after race issues that would take care of themselves very likely with greater economic egalitarianism and basic prosperity.

 In reading one text; Piketty’s ‘Capitalism in the 21st Century’ that author noticed a fundamental problem with capitalism that he named  r > g meaning the rate of return on capital is historically higher than the growth of productivity and wages; capitalism has an implicit uneven field tilted toward the direction of concentrating wealth. Even worse is the fact that at low growth of 1% and stable demographics wealth concentrates even faster. Thus a great challenge for ecological stability of the planet and egalitarian free enterprise earnings with capitalism is that wealth concentrates faster in an environment of zero population growth and conservation of the ecosystem; one ends up with  one one-thousandths of the people owning everything and everyone else renting from them. How to change economics so one can have ZPG and restore a health ecosphere are interesting theoretical challenges that probably have thousands of theoretical solutions with many that would actually work.

 There is no mistake that without careful thought seeking rectification of political economy the world economy will experience serious challenges ahead along with the environment. It would be a shame to choose to abandon reason and just let natural economic evolution lead to a crash course of poverty, subjugation and/or mass demographic disaster. Numerous remedies including different balances of public and private capital, higher or near complete taxation of estates on inheritance of more than 5 million dollars, a serious progressive tax rate and requiring new businesses to meet ecospheric benefit or non-harm standards or experience higher and progressive business taxation might be considered. I am sure that race is not the remedy for the problems of poverty and lack of opportunity experienced in the American democracy. Rather solutions will be found in the objective field of economics wherein everyone may be objectively considered in regard to their personal economic experience.  Opportunities to prosper in a society usually follow one’s economic class with notable individual exceptions. If one hang glides from the top of a 100 story building one is probably going to go farther or get higher than someone starting from the ground. Opportunities for good schools or buying good business locations tend to start with one’s economic class; Harvard is actually advantageous to people more so than is a G.E.D. for example.

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