Tuesday, October 29, 2013

Addressing One Aspect for the Future Stability of Society

The structural evolution of society has depreciated recently due to the catalyzation of what could be described as the triangle of deterioration. The three separate legs form this triangle are unequal economic growth, technological advancement and population growth. Unequal economic growth represents significant economical differences between multiple parties with excessive and superficial growth concentrating towards a select few who facilitate little societal stability. Technological advancement represents the increased capacity of non-human elements to perform human-related tasks. Population growth is self-explanatory representing a large and steadily increasing population.

Representation of a triangle is appropriate to describe the incompatibility of these three elements together as a group. For example if a society has unequal economic growth and a large population, but has little technological advancement there are still numerous occupational and financial opportunities for various individuals; these individuals can later unionize, if so desired, to expand this economic opportunity to maintain societal stability. In a society that has a large population and high technological advancement, but equal economic growth and distribution there is enough man power for both societal advancement and stability because a vast majority of the population, if not all, are able to support economic stability due to wealth distribution equality. A society with high technological advancement and unequal economic growth, but a small population is similar to the first example where even though the unequal economic growth produces stresses on the stability of society the small population reduces the level of competition between individuals ensuring a sufficient level of economic and societal stability. Of course for the existing consumerism economic system that currently exists this scenario is the most unstable of the three above scenarios. Note that the “escape hatches” for society in each of the above scenarios is eliminated when adding the missing triangle element.

So how does each leg of the triangle limit the positive evolution of society and significantly increase the probability of societal collapse.

Inequality –

The chief problem found in inequality is the finite nature of economic exchange. Basically there is a limited amount of capital that society can support at any given time; any attempt to breach this perceptive barrier results in inflation reducing the efficiency of capital. Unfortunately inequality with vast amounts of capital going to already wealthy individuals also creates huge capital efficiency losses. Certain parties believe that concentration of vast wealth in a small population is effective because of the power of scale (1 person with $1000 can have a greater positive influence on economy versus 1000 people with $1). However, while the power of scale can make money more efficient, in reality those currently with the ability to induce this efficiency choose not to do so and there is no evidence that this philosophy will change in the future.

This destabilizing and inefficient reality flies in the face of the common refrain by some parties that the wealthy are “job creators” who create further economic activity. It is difficult to be a “job creator” when one does not spend the necessary money to fill such a role. Instead this excessive wealth is sequestered from society where it still exists, but is not available to society for use. Therefore, the more capital acquired by the wealthy the less efficient the entire economy because of the inflation ceiling. Creating inefficiency in a consumer based economy that breeds specialization puts all individuals at risk.

Another problem with top funneling inequality is that society has determined that non-essential occupational elements are of superior value versus essential occupational elements. The jobs that “earn” the most money are largely in the financial sector (hedge fund managers, stock brokers, CEOs in various companies, etc.) and entertainment sectors (musicians, sports athletes, actors, etc.) instead of in the medical sector (physicians and nurses), education sector (elementary and high school teachers), law and order sector (police, correctional officers and legal aids) and the emergency services sector (fire fighters and EMTs). Notice the difference between the two fields, which one of those groups is more important to the stability of society? Yet ironically that group of occupations is far less financially rewarded by society than the other, thus in times of economic stress the latter group, which is far more important for structural stability of society, is more immediately threatened creating a positive feedback effect which further threatens the stability of society.

Interestingly the acquisition of vast wealth not only increases the probability for societal destabilization, but also reduces the meaning of having vast amounts of wealth for the individual(s) in question. The purpose of having wealth versus just having significant amounts of money can be defined in two ways: 1) increasing available opportunities for material purchase or skill/experience acquisition; 2) lauding over others how much more important one is because of the difference in wealth; while these two purposes seem separate the second one is defined by the first because having large amounts of money is pointless if one is unable to utilize that wealth differently than those who have less money. However, when society struggles various specialization elements will also struggle limiting the goods and services they can provide reducing the variety and prestige advantages to having wealth over significant amounts of money. Basically concentrating wealth increases the probability that the wealth becomes less significant.

On a related note it is interesting that the Republican Party in United States seems to adhere so vehemently to the power of the free market, but refuses to acknowledge the gross inefficiencies created in the marketplace by significant levels of inequality (they instead incessantly focus on the inefficiencies caused by government though). How can they respect and believe in a system when ignoring such crippling flaws?

Technology –

Technology has two major detriments and a forked road on the triangle. The first and most obvious detriment is that technological advancement creates tools that can replace humans for certain tasks. While such advancement potentially increase efficiency and decrease costs associated with production it also decreases the amount of jobs available, especially those that pay well and justify the costs, both financial and opportunity, that were invested in acquiring the skills to perform those lost jobs.

The second detriment is the elimination of regional experts in favor of universal experts. For example suppose Sam wanted to learn how to weld sheet metal. The most efficient option is to identify someone who is experienced and skilled at welding sheet metal and learn the proper techniques from that individual. In the past this would involve searching the area in which Sam lived and selecting an instructor from the experienced individuals within that area. However, with the advent of the Internet Sam can merely go online to a video sharing website like Youtube and learn how to weld for free or attend an online lecture for a fixed fee bypassing the regional individual in favor of a highly skilled “universal” instructor.

Now most individuals would conclude that such a system is appropriate; that technology has removed the inefficiency of “settling” for an instructor that is more than likely inferior to another instructor who simply resides further away and in the past was inaccessible due to distance. However, the problem with this philosophy is the unbalanced two-pronged system that it creates.

In this environment the regional instructors now receive much less business and will find it much harder to make a living as an instructor in that particular field while the select few “elite” instructors will make more money than they can reasonably spend creating significant market inefficiencies similar to the inequality aspect above. Unfortunately this division is self-catalyzing because the individuals who are taught by these universal instructors must surpass them to take their customers otherwise they will end up just like the regional instructors they bypassed to learn from the universal instructors.

The argument made by some in favor of this system that these regional instructors must simply diversify their education acquiring the necessary skills to obtain another middle-class to high paying job is seriously flawed, flaws that are discussed in a past blog post here. The newspaper industry is another example of how technology has marginalized regionality with no appropriate response by society.

The sad thing is that regionality elimination will also permeate the developing world in a similar manner. While numerous people want to praise technology and its catalyzation of globalization for pulling millions out of poverty the elimination of regional interaction will dramatically limit these gains, especially when technology penetration is great enough that experts in the developed world start acquiring developing nation customers. In a consumer based economy the catalyzation of inequality by technology creates greater societal instability in both the developed and the developing world. This is not to say that technology is inherently bad, but that society must create appropriate strategies to address the detrimental elements that technology brings and so far society has yet to act.

Population –

The population element of the triangle is rather obvious, but not simply statistical. Clearly the more people that exist create a greater competition for jobs, but also in a consumer driven economy create a larger customer base. The general theory behind consumerism is that population increases can be managed through the increase in consumption; however, in a resource finite world this theory breaks down. In addition growing rates of inequality create greater consumption inefficiencies in the marketplace further damaging the validity of this theory.

Part of the problem with population is that a number of people simply pigeonhole the numbers themselves without looking at their influence. The 7 billion humans living on Earth is an extremely large number, but the number by itself is somewhat irrelevant. While all humans consume thus more humans equal more consumption, consumption rates are dramatically skewed between regions. For example if all individuals living in Africa were killed tomorrow very little would change in the world regarding the triangle and the speed of resource consumption despite the global population being cut by approximately 14%. This unequal resource consumption is obviously not lost on some who constantly lament the level of consumption in the developed world. Unfortunately little can be done about the consumption levels at the moment regardless of inequality because of the consumption dependency of the global economy.

So what can be done to elimination the action of the triangle of deterioration on global society? The obvious answer is to break it some how, but the how of that strategy is the problem. Clearly one cannot break the population element because of all of the indiscriminate killing; even if one could manage the moral question such a strategy would more than likely still be immaterial because a vast majority of those killed have consumption rates below global average consumption rates. Therefore, breaking the population leg, before it is self-broken by societal deterioration, would demand selective killing. However, selective killing instantly invokes questions of morality when deciding who determines the criteria involved for selecting who gets killed. On the “supply side” clearly elements can be applied to limit population growth like birth control and education, but these factors can only go so far to reducing the overall population growth and do not address those already in existence. The economic dependency of consumerism limits significant widespread changes in overall global consumption patterns when refraining from killing anyone.

It would be difficult to advocate breaking the technology leg of the triangle due to simple momentum. Certainty the global community could pass laws restricting the use and sale of certain technology, but the logistics of enforcing these laws would be nightmarish, especially because most of the global public would not be forthcoming in their adherence to them. One could argue that individual enforcement would not be necessary instead focusing on enforcement against large corporations and websites like Youtube. This is a valid argument because most of the detrimental elements associated with the spread of technology are derived from these agencies, but global cooperation would be required and sacrifices made, something not widely practiced by various countries. For example would country A really enforce technology restriction against company A if tax revenues from such enforcement fell 32% due to income reductions? If country B has little confidence that country A will adhere to the restrictions would they bother to adhere to them either?

Based on the above two problems with two aspects of the triangle it appears that to prevent the eventuality of the society destabilization one must address the inequality leg. Addressing the inequality leg is actually quite easy in theory although numerous powerful people will certainty object to the required policies. As mentioned above inequality stems from the lack of ceilings applied in capitalism. While philosophically understandable the lack of capital ceilings creates significant inefficiencies, which damages society as a whole and also damages the individuals who are taking advantage of the lack of ceilings despite their lack of acknowledgement of this situation.

There are two strategies to address this inequality problem. The first option is to change the balance of importance in society. Recall that the principle reason inequality is destructive is not because it is inherently bad, although it is inherently inefficient, but because it culminates in occupational operations that are not essential to the positive evolution and stability of society. If society determines that police officers, public school teachers, lab technicians, etc. are more important than movie and television actors, basketball players, singers, hedge fund managers, etc. then the destructive nature of inequality against the stability of society is significantly lessened.

Unfortunately this first solution is not ideal because if this switch occurs society may be saved, but numerous people will still be bypassed by society and struggle to survive including the rich individuals who used to occupy the higher tier of wealth before having their salaries cut due to the change in societal priorities. The second solution would be to apply a ceiling to the growth potential of wealth in capitalism. A legislative derived ceiling would make sense both from an efficiency and stability standpoint.

For example suppose an individual became a billionaire at the age of 30, lived to the age of 90 (60 years between becoming a billionaire and death), and never made any more money the rest of his/her life. This individual would have to spend approximately $45,662 each day to completely exhaust that one billion dollars before death. Such a spending pattern, even when including the purchase of a $4-5 million dollar home, is ridiculous and would involve the purchase of numerous frivolous items or items which would go solely to waste neither of which will result in significant job creation or retention. Dividing the above billion dollars into $1 million dollar increments among one-thousand separate individuals will result in the purchase of more bulk goods which more than likely will result in more job creation and retention due to greater economic activity. Based on the way consumerism is practiced in society wealth-based power of scale can be likened to that of a bell curve.

How would such a ceiling cap operate and where would it begin? It would be difficult to determine a quantitative optimal point for a ceiling, thus the best option would be to establish the ceiling through an instinctual mindset of what would be fair. One possibility would create a ceiling of personal finance (cash, assets, etc) at $50 million dollars and a corporate ceiling for net revenue (profits) at $1 billion dollars. All capital accrued beyond this ceiling would be taxed by the appropriate government entity at 100%. The ceiling would operate in real-time versus lifetime implying that if an individual acquired $50 million dollars and he/she later bought a house for $3 million dollars, he/she would be free to acquire another $3 million dollars before acquired capital would be taxed at 100%. Capital acquired by the appropriate government agency would be earmarked to fund food banks, education, apprenticeships and small business loans to increase both the job pool and the number of qualified applicants. Finally in the United States the IRS would be given much greater authority to pursue and charge tax cheats/thieves and all tax cheats found guilty would receive jail terms in medium security prisons with minimum sentences equating to 1 year per $100,000 that was concealed.

Of course a number of rich individuals would cry fowl after reading the last paragraph. They would opine that placing a ceiling on the amount of money an individual or corporation could accrue would be an affront to the drive and ambition elements that characterize capitalism as well as be unfair to those individuals that acquire the most success. The problem with this point of contention is that the current system of capitalism rewards needless consumption and entertainment over intelligence and calculated risk-taking. The ambition argument is also derailed when one considers that 99+% of success is determined by where an individual is born and who his/her parents are, two elements that are completely outside the control of the individual. Finally what is more important: being more fair to society and eliminating the market inefficiencies born from wealth inequality and limited spending constructs or being more fair to a very small group of individuals most of whom were born to favorable conditions?

Overall the elements that make up the triangle will hasten the destabilization of society. Now it can be said that the destabilization of society may not hasten the extinction of humanity, but the destabilization of society will certainly create an environment where quality of life is decreased. Therefore, faced with this coming reality, one separate from global warming entirely, what will society do to ensure its long-term survival?

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