Trend lines in wealth

Rothkopf: "the world's 1,100 richest people have almost twice the assets of the poorest 2.5bn"

Where does unregulated capitalism lead? The evidence tends to point towards exponential concentrations in income. I wonder if there is an equilibrium level or it continues to concentrate ad infinitum. Was consumerism only a short passing phase of history? One that kept socialism at bay, but now is no longer needed given the vast pools of competitive and geographically dispersed labor available today?

Comments

[Andy]

John

I think his book "Superclass" is one of the most important works to hit the street in some time.

Where this is all leading is another class based conflict, and it will be ugly. When people can't afford food (or because it's simply not available), or gasoline (for the same reasons) or medical care, and they see the ultra-rich pandering around in their private jets, their quarter-million dollar cars, and living in their $10 million dollar homes, you are going to see a bloodbath.

There has to be a readjustment of wealth in the world. The current global system has made the robber baron's of the 19th Century US look like paupers. Gates is worth what now - close to $100,000,000,000? Who they hell needs that much money? How many nations GDP are eclipsed by this one man?

Something is going to give.

[John Robb]

I am looking forward to reading it. I've been considering the global financial class part of the "destabilizing" GGs for some time. Will be interesting to see how he treats the subject.

You are right about the blood though. Different dynamic this time. No peace/law during the next global economic depression. No socialism or ideologies. Just GGs battling it out and the rest of us caught in between.

[Andy]

Neil Stephenson wrote a sci-fi novel called "Snow Crash" in the 90's that was a great read. I think we are headed down that path - but Stephenson missed the part about shortages with what are considered everyday items such as crude oil based products and food combined.

Did you see Boone Pickens said oil is hitting $150 a barrel this summer? I suspect it's going to $200 - just throw one monkey wrench into the supply and the world starts to get panicked.

[zenpundit]

These are not the results of "unregulated capitalism" but of temporary comparative advantage gained from participation in capitalist markets being "locked in" by manipulating the state (the west) or extra-legal coercion (the rest) or both.

Oligopolistic and dupolistic markets represent policy choices.

[John Robb]

Zen, so you think that markets would be more egalitarian if legal/state systems weren't being "gamed" to advantage.

[shloky]

Going to be interesting to see who is caught in between. Have a feeling that a lot of those who think they're in the middle will end up donning GG garb.

[James Bowery]

A battle is starting to erupt within the Republican party over this. At a recent Republican state platform meetings the phrase "sanctity of private property" was removed only under a last minute protest by a pro-lifer.

The refusal, by even so-called "libertarians", to treat protection of property rights as a use-fee-based government service is a big part of the problem. Everyone freaks out the moment anything looks like a "wealth tax" -- even though it is obvious to the most casual observer that the primary government service is protection of property rights. There is no way you can have a rational economy without charging for that service in some proportion to the in-place liquidation value of those property rights. It's like having a DC component that you don't subtract out of a signal prior to integration. The system you're controlling _will_ crash no matter how you try to compensate in the downstream filters!

Probably the biggest error these days is surrounding things that should be called "network externalities" but are now being renamed to the politically correct "network effect". These externalities are captured by guys like Bill Gates and were foreseen by guys like me when I was doing a COMPASS 80806 simulator on a Cyber 6500 at the PLATO lab with Steven Freyder prior to the first silicon precisely because I saw the potential for such a network externality in the OS for that microprocessor. Ozzie probably remembers us doing that. His office was down the hall and he hung out at our house quite often.

The only reason I abandoned the project was that CDC offered me a position at Arden Hills Operations with the promise that I could work to bring PLATO to the mass market -- a promise reneged upon when we actually had demonstrated a mass marketable version in 1980. Unfortunately, after that betrayal of CDC's stockholders by middle management, I was offered a similar position with Knight-Ridder/AT&T in Miami on the VIEWTRON project which met with a different, but equally disastrous fate:

http://www.geocities.com/jim_bowery/vnatap.html

By that time, Gates had locked in his deal with an 8086 OS someone else wrote and managed to delay the network revolution by a decade while becoming the world's richest man on network externalities.

These days if your business plan doesn't include network externalities locking in your customer base somehow, most VC's won't want to look further -- that's how corrupt "high tech" capitalism is now.

Indeed, "capitalism" might be best defined by the shift of the cost of protection of property rights off of the holders of those property rights. Is it any surprise "capitalism" corrupts the richest?