On Fulfilling our Debt to Each Other and Supporting a Healthy Society and Economy
Economics, we are often told is a very complex science. It can be, but at its most basic level it is simple. An economy is the mechanism by which societies create and distribute the products and services demanded/needed by its members. It is a functioning system, an instrument of the ‘social contract’ to which members commit and, in so doing, support the other members via their participation in the economy. It is a quid pro quo arrangement. You scratch my back I scratch yours played out broadly at a societal level, not one of backroom deals and personal enrichment. It is the structure by which we get the money we require to meet our own needs. It is the means by which we can responsibly meet our needs while supporting others. Money is the medium by which most transactions occur, legally, in our economy, though this doesn’t include the many daily ‘transactions’ we grant each other gratis, to our friends and those others we choose. It is through our participation in the economy that we acquire the money, social capital and good will we use to satisfy our needs. Again this is part of the social contract by which all participants must agree. The system requires trust, a degree of fairness, an expectation that these transactional commitments, be substantial, that the participants with whom we enter such agreements, follow through. All members therefore must be treated fairly in order for the system to continue working. Violate this ‘contract’ and you can lose not just credibility and trust, but you in some cases suffer incarceration. This contract is subject to continuous tweaking and adjustment. We do this through the legislation of laws and by agreeing to binding contracts. We are all then, our lives, a product of the economy operating within which we live. The wealthy, the poor and the rest of us.
Much of our financial insecurity, the existence of the poor and the homeless, are a ‘product’ of our economy. The poor and homeless exist not simply because of bad decisions they’ve made, we’ve all made those, although that may be a factor. Our economy produces these people or at least creates and sustains the conditions which will result in a poor and homeless population, citizens, sometimes entire classes falling into them, tripping those up who are least well equipped and ‘connected’, those most lacking in opportunities. Every economist knows that a certain amount of unemployment, of individuals suffering financial insecurity, provides a degree of necessary ‘desperation’ in order to get needed work done, especially those jobs deemed widely undesirable, that are looked down on by society and whose compensation is inadequate. This ‘necessary poor’ have a tendency to drag wages down and thus assure those at the top, their share of the profits. The structure and rules that govern the economy could be changed, in such a way as to result in a much smaller disadvantaged population. Poverty and homelessness are not necessarily conditions deserved, ‘earned’ by those living in those conditions. They are a given structural ‘element’ and a product of this particular economy, just as the billionaires are. We, this economy, need the poor. They spurs us, driving us to pursue better pay and security, leaving those at the ‘bottom’ on their own. ’Kicking them when they’re down’, blaming the poor, especially the working poor for an alleged lazy work ethic, is a denial of our economic system which requires them and it draws us away from the real problem. An economy built on a structured unfairness, a punitive, ruthlessness.
Think about it, to earn $1 million in a year, working 40 hour weeks, (there are 2,080 working hours in a year) you would have to make almost $500 an hour. Today we have a rapidly growing billionaire class each such person would be ‘earning’ almost $500,000 per hour…per HOUR. A billion is a thousand million. How can an individual ever earn this through their individual contribution? Is a millionaire’s contribution really 20 times what mine was in my working years? Is a billionaire’s worth 20,000 times mine? Or are they just in a position to take it? Their advantage lies in the very structure and details of our economy. Yes, the poor may have made some bad choices, but they began from a position that offered very little meaningful opportunity. Our economy creates and supports the conditions that push them into this station. Those occupying the bottom rungs of society exist in proportion to the wealthy class, both tending to increase in number together. Concentrating excessive wealth leads directly to more widespread and entrenched poverty…and creates insecurity amongst those of us in the middle classes. There is a massive and increasing gap between the very wealthy of this country, the poor and middle classes. Even a cursory examination of our income distribution shows this.
Out of desperation the poor will take on the jobs others with more security and higher expectations, never will…at least willingly. This work pays poorly, is insecure and comes with difficult working conditions, while at the same time their performance is essential to many of our lives. Those who are more ambitious and reject the so called opportunities available to them at the lowest levels, sometimes turn to crime and illegal markets, because such ‘pursuits’ promise what the legitimate economy cannot, a higher social station and financial security, and, when we catch them doing this, we throw them in jail rather than address the forces driving them down this path. In a sense our own well being in this economy makes us complicit in the work and living conditions of the poor.
The middle classes exist in between the poor and the wealthy, drawn forward by the mostly illusory ‘carrot’ of potential future wealth, which is strictly limited to them, (yes, there are those Horatio Alger exceptions, a self-made man risen from the streets of poverty, but the vast majority remain mired in poverty) and driven so by the threatening devastation awaiting them should they lose their jobs and fall much further. The poor and the homeless are an ‘object lesson’ for the middle, with very real and harsh consequences. We all live in this economy, playing our role according to the contract we have ‘agreed’ to, knowingly or not, in order to have a chance at this life. We learn how this economy works through experience. The economy is presented to us as some kind of fixed, perfect ideal, that only ever needs minor adjustments, its hierarchical structure, its envied owning class and the struggling bottom, is constantly being presented to us as superior to any alternative….
It is a system in which the powerful take and ‘deserve’ what they get within the economy. It rewards, intentionally, the shrewd, connected and the aggressive. While promising reward for good work and loyalty to ones employer, wage workers are also at their mercy, dependent on the largesse of their employer, who themselves may be struggling to survive, given their costs of doing business out of their control, necessary resources and inputs, finances, held by larger more powerful players, suppliers and service providers, upon whom they depend…and over whom they have very little control in terms of cost. This is the way the economy works, those further up have gained both legal and economic advantage over those beneath them. There is a power differential working against those on the rungs below. Supervisors and mid-level employees often serve as ‘enforcers’ of the system and they most certainly reinforce the stigma attributed to those at the lower levels. It is a built in unfairness completely disconnected from one’s genuine ‘worth’ as a person. It is a kind of twisted ‘trophic’ chain, those above consuming those below, leaving them just enough to keep working, to keep production moving ahead.
The bulk of production happens at lower levels. Most ‘value’ is added by the ‘worker bees’, not by the managers. Upper levels depend on them, but give them relatively little to secure or enhance their lives as it takes away from their share. There is an operative equation here but we deny our dependence. Right is claimed and power takes from the less powerful. This has the effect of limiting the overall productivity of the entire system/society and builds in a hierarchy and its related inefficiencies. The fact that those most benefitting from the inequitable distribution of such a system’s production loudly claim that this is the most ‘efficient’ system/market possible dismisses and reduces efforts that would rightly assert that there are other, better, more equitable markets which would better support and reinforce the workings of production and the market, thus assuring and securing the future for all members. Today, money, wealth, collects at the highest levels. That is the highest priority, the driving force behind our economy, not the wellbeing of society’s members or even that of the economy and the countless natural systems upon which it depends. Production, health and the overall capacity of the market and related systems are all put at risk and suffer so that the more wealthy can secure an ever greater ‘piece’ for themselves.This system of ours is an aberration, under rewarding those contributing essential work in light of how a business and the economy create wealth. The overall system itself is being sacrificed, compromised, left less capable of producing into the future.
Wage and salary workers are the ones who add value to our economy’s products and services. They build the products, maintain our infrastructure and provide many of the services we require. They do the bulk of the work and indeed ‘are’, arguably, the economy. All of the money in the world evaporates without them. Yet their/our health, financial and personal security are often at risk, the services and products they/we require subject to loss or interruption. The wealthy control and guide their businesses, determine their policies, reinvestments, mission and the technologies they use in the process. They regularly justify their earnings and wealth differential by the ‘massive’ financial risks they take in these endeavors. They are also able to manipulate or at least influence law makers and regulators in order to reduce this risk. They play a powerful role in determining the policies, laws and contracts which determine how the economy functions, how it rewards and punishes. Yes, economies do punish and they do so to keep disgruntled workers in line, workers dissatisfied with the conditions of their work, their pay, their ‘so called benefits’ which they are lead to believe are some how extras that may be denied and the insecurity that haunts and worries them in their and their children’s futures. Our economy is a very ‘human’ invention. It is not some ‘true’ reflection of the natural order. It is a man created structure intended to serve the goals of the designers first and secondly to compensate the workers at a level at which most will remain compliant.
Any given economy can only produce a limited amount of value. When Owners and the wealthy carve out bigger pieces for themselves, it leaves less for the rest of us. That is simple arithmetic. Capacity is limited by resources, workforce…and the ‘rules’ of commerce which govern it. ‘Who’ gets how much is a political decision embedded into the economy. Value, when translated into dollars, when that is cashed out and removed from the active economy, that is ‘profit’, by definition. Too often, to meet the demands of the boardroom, owners and managers, businesses and workers, are ‘sacrificed ’to extract greater profits. In a ‘healthy’ business when producing at a fixed or even an optimal level, value and profit, cannot be increased without compromising your economic base. Workers are thus, in our current economy, under rewarded, resources squandered and infrastructure allowed to deteriorate as more profit is extracted than is sustainable. In such a world as ours an economy is first a ‘machine’ intended to produce profit, all other factors being secondary. That ‘arrangement’ of priorities could be reset without throwing the baby out with the bathwater, but there has to be the will to do so…and will requires understanding.
Conservatives constantly carry on about government efforts which would redistribute wealth downward as ‘socialism’, moving the wealth which by right belongs to them to the unworthy poor, when that is precisely what they do, in reverse, by changing law and regulations, allowing big businesses to funnel an unhealthy balance of wealth into their control from those who did the work of adding value. They work hard to insure this unfair flow by continuously changing the laws to give this graft legal, though sketchy, unethical, legitimacy. Americans are sorely in need of a broader understanding of economics if we ever want to address the economic and social problems we face today.
One more time, poverty, homelessness and financial insecurity within the poor and middle class, are a product of our society and economy. It is intentional! A necessity, to grow and support the wealthy by providing the masses with just enough, a minimal level of support calculated to keep the balance and stave off revolt, along with the promise of a ‘carrot’, that if they too work hard, they can join the wealthy and leave poverty and insecurity behind. In accepting this ‘carrot’ we embrace the rules of the ‘game’ as laid out for us, including our agreement not to question the rules….Throw in enough distractions, pump us up into a patriotic fervor, and in America we’ll work hard to keep the ‘dream’ alive. We stay hooked, engaged in the ‘promise’ of this economy and the sensational and outrageous claims and promises. This feels distressingly familiar. The poor and the homeless today are ‘ours’. Our economy delivers the products and services ‘we’ demand, at cost carried disproportionately by the poor, homeless and those of us whose lives could tumble with a health emergency…the wealthy growing ever more so. The wealthy today ‘enjoy’ an economy which requires little of them socially in terms of their responsibility to their community, the environment and nation. They have little obligation with regards to the poor, their workers and their communities upon which they depend. The relationship is grossly out of balance, and as such, is unsustainable. Society itself, under these conditions, is threatened with collapse as more members come to ask themselves why should they follow the rules and, instead, begin to take lessons from successful wealthy ‘takers’. The social contract crumbles and civil society with it. These are not separate problems. They are all linked.
Economics, as a subject, is rendered boring and esoteric to us. We are taught this in school, by politicians and economists themselves, an esoteric exercise in statistics, in which ‘experts’ constantly disagree, a desirable condition if you are one of those trying to keep our attention away from the man behind the curtain, what he is doing and why. The old charge of following the money is as true here as it might be in sussing out a crime. To who is the money flowing and who is on the outside. This is not a matter of chance. An economy is a mechanism of sorts and it can be designed and directed according to very different priorities. Our current state of the world is consistent with the priorities of our economy. They cannot be separated. What do we want? We have the power to reinvent ourselves and our economy if we so choose or we can simply continue blaming the victims it excludes and hope we can maintain our own status and security. An economy provides an emphatic motive force to our world. To attempt to live in it while ignoring such a profound, impactful force on our lives, is futile…like fighting gravity.
If this still feels like a mystery to you, just remember to follow the money; which way is it moving, who has it, who’s losing. Money moves in response to power differentials, much as does air and water in response to pressure differentials, electricity to differences in charge. It does not move randomly. While we cannot know which pocket a particular dollar will end up in, we know tendencies. The poor will tend to stay poor, the rich-rich. Wealth accumulation has nothing to do with need, nor does it flow toward the most skilled or most productive individuals. in our economy it flows to wealth. It flows to power as intended. Our economy is structured to do exactly what it does. The poor, the homeless, those in peril of falling from the relative security of the middle class, are acceptable collateral damage in our domestic economy ‘wars’. There will be casualties. Will we change the rules of engagement? How much greater of a wealth disparity can society sustain? Already it is pushing us away from democracy as our commitment to one another and the practice of civility continues to erode opening the door for authoritarianism. Democracy is not possible with such an unfair system of wealth accumulation. Democracy requires trust, fairness and a measure of equality, equity. Authoritarians reject this and raise power and wealth to the highest stations in a society. That is what it serves. We become simply subservient. We serve the ‘greater purpose’ or we are tossed aside.