Toward a More Equal America

Part IV: Changing the Rules of the Game

These are some basic ideas as to what sorts of change would create an economy of, for, and by the people. My intention is not that this serve as a prescription but rather as the beginning of a conversation, as more people begin to wake up to the inequity of our current system and demand justice.

A movement, not a revolution

There is much within our economy that is equitable at present, and the economy still performs its original function of providing compensation for our contributions to society, thereby allowing us to purchase the contributions of others. The concept that a willing seller and a willing buyer will settle on a fair price for a good or service in a free market works in most cases, provided that demand is discretionary. And this free market system ensures that we collectively produce what we collectively wish to buy, and it offers plenty of opportunities for entrepreneurship and creativity.

We don’t need to adopt socialism, communism, or any other alternative to a free market economy that has been tried – and has usually failed – around the world over the past century. We just need to impose a few simple rules – the equivalent of legislative checks and balances – to limit human greed and exploitation, to ensure that my right to swing my metaphorical economic fist ends at the tip of your metaphorical economic nose.

Furthermore, we don’t need to steal anyone’s wealth. This is a controversial idea, I realize, given that the range of net worth in today’s America spans a factor of 100 million, but I feel that this can only be a peaceful transition if we respect that the rules of the game remain valid until they are changed, and that people will not be penalized for having played and won at the old game. If all of these changes are implemented, economic hardship in the working class will ease immediately, and the overall distribution of wealth will equalize over a couple of generations.

A 100-million-fold range of net worth in the United States

An equitable economy can still have personal wealth. I think most of us would agree that J.K. Rowling deserves to be a millionaire, for example, and if people are willing to spend millions attending professional basketball games, then the players deserve to have millions. Personal wealth alone is not an indicator of inequity; it is the aspects of the system that extract wealth, and allow wealth to beget more wealth, that must change.

We cannot win a battle for equity with violence. Those who are angry enough to lead a violent revolution are destined to become the new oppressors. History is full of revolutions of this sort. Instead we must be steadfast and insistent in our commitment to basic human dignity, following in the footsteps of Gandhi and Martin Luther King, building a movement that demands change but not retribution.

Taxes are not the answer

The standard method to address wealth inequality in the United States has been to leave the economy alone but to impose progressively higher taxes on the upper classes. This is akin to treating the symptoms of a disease rather than the cause, and it has the added effect of being divisive because we are arbitrarily deciding exactly how much of whose wealth is being claimed. Most people would rather earn a million dollars than earn two million and pay half in taxes. Taxes could be a part of the program in the nearer term, but ultimately I would like to see a flat % tax on a fair distribution of income.

What follows is a basic system of reforms to remove exploitation from the economy, which need not be implemented all at once, and with the most urgent changes listed first.

1. No profit from basic human rights

As we established in Part III: People will pay almost any price within their means to meet their basic needs, if there is no other option.

Within our current economic system we already have services that are deemed “public utilities.” Most of us pay a monthly fee to have safe drinking water piped to our homes and sewage piped away, and every year our cities send out a financial summary showing how those funds were spent. Water and sewer services are essential, so if our cities decided to triple the price we would still pay it if we could, but instead we have reached a collective agreement to cover the costs and pay the city workers a fair wage.

We should immediately begin to replicate that model for two basic human rights whose costs have ballooned in recent decades: housing and health care. Landlords, hospitals, and pharmaceutical companies should be subject to the same oversight, transparency, and cost reporting requirements as city waterworks, with restrictions on excessive compensation and strict penalties for profiteering.

I am in favor of universal health care, but only if we first act to reduce costs and increase oversight by declaring essential care to be a public utility. If we do not do this, we will simply transfer the exploitation from patients and insurance companies to the government payroll, and the inequity will continue to depress take-home income and weigh down the economy.

2. Living wage for all essential work (and respect for all essential work!)

Addressing #1 first will make this easier to accomplish, which is why I listed it second, but this should be the top priority of any economic reform. And by a living wage I don’t mean enough to stay housed and buy food, but enough to:

  • Provide all basic needs for oneself and one child
  • Make payments on a modest house
  • Save enough to cover emergencies
  • Save enough to cover eventual retirement without relying on investment returns beyond inflation, and
  • Have enough left over to pursue hobbies and take occasional vacations.

Going back to our wealth chart, a living wage is one that will, with responsible spending and money management, land someone firmly in the “security” range by the time they are ready to retire.

Wealth distribution and trajectory in an equitable economy.

I am not suggesting that all work should pay equally, and indeed I believe neurosurgeons still ought to be amply rewarded and promotions still ought to be offered based on performance and seniority. Rather, I am suggesting that the floor needs to be raised by a lot.

We depend equally on all of the hours of human labor that support our society and provide our collective needs: the apple pickers and the attorneys, the janitors and the teachers, the fast food workers and the cashiers, the contractors and the managers, the accountants and the doctors, the meat packers and the truck drivers. To suggest that people in any of these roles do not deserve comfort and security in life is to say we do not value your contribution to society.

Too often in present society that lack of financial respect translates to a lack of actual respect. We look down on cashiers and bus drivers, or fail to interact with them as human beings, as if to judge and say you could have done something better with your life, but you didn’t. That would be a little more OK if they were playing video games in their parents’ basement, but instead they are working their butts off, providing a service without which the rest of us could not survive. This disdain is a projection of our internalized elitism. We tell ourselves stories about how we deserve what we have and those who earn little deserve to earn little, and in so doing we diminish them in our own eyes and in our interactions.

There is emotional work to be done here as well, but if we can raise the minimum wage to a level that supports human life, we will raise the self-respect and self-worth of all of our essential workers, and in so doing begin to grant them the respect that they deserve in our own eyes as well.

3. Decommodify, relocalize, and restore relationship to transactions.

As we established in Part III: When transactions become abstracted or commodified, with no connection between producer and consumer, competition rewards exploitation.

A commodity is any good or service whose only distinguishing feature is price. When something becomes a commodity, the result is a race to the bottom, leading to exploitation of humans and the environment and externalization of costs. The more we can restore connections and relationships between producers and consumers, the more we will be able to ethically choose what we buy. There is no one solution here, but reforms might include:

  • tariffs and trade barriers to disincentivize offshoring and exploitation of lower-cost foreign labor, and to allow domestic producers paying fair wages to compete.
  • certifications (e.g. fair trade) that ensure an equitable distribution of wealth along the supply chain.
  • producer stories and personal notes added to products, to rehumanize producers in the eyes of consumers.
  • efforts to build resilient local food webs, local artisan marketplaces, local currency initiatives, and other incentives to relocalize and remove intermediaries from transactions.
  • Awareness campaigns to shed light on unethical practices and inspire change.

4. Money should not make money

As we established in Part III:

Investment income requires no work or contribution to society, and so provides the earner with the ability to purchase more of others’ time and effort while contributing none of their own.

Any investment that provides a return greater than inflation without requiring work or reasonably compensating for risk of loss is structurally elitist. Such returns are effectively pay for no work, and yet this pay can be redeemed to purchase the work of others. These investments may be directly exploitative (e.g. loans and mortgages repaid with interest) or indirectly exploitative (e.g. government securities repaid with taxes, or shareholder profits taken from corporate revenue), but they always entail a transfer of wealth from people who have fewer financial resources to people who have more.

This is a tougher nut to crack, because many people’s retirement plans are contingent on money continuing to make money. That is to say, changing this rule of the game now presents a moral dilemma in that many people would have behaved differently – perhaps set more money aside – had they known the rules would change.

At the same time, it may not be possible to provide everyone with a living wage so long as investment income continues to siphon wealth out of the system, providing the ability to purchase goods and services without requiring any contribution to society in return.

Not all investments are inherently unethical. The lower-risk, lower-return options like government bonds and mortgage-backed securities are actually more problematic than higher-risk, higher-return investments. The idea of buying and selling stock was originally created to allow people with money to invest in the risky process of starting and expanding businesses. Some businesses succeed and investors see a great return, while others fail and investors lose their money. On the whole this functions as a high-stakes betting game that also helps entrepreneurs to realize their dreams, and it doesn’t extract money from society at large.

The ethical problems arise primarily from investments whose returns depend on interest, which is money paid by those who have less to those who have more, in return for temporary access to additional funds. The entire system whereby everyone is encouraged to accrue debt and pay interest is extractive and serves to create a wealth curve that looks like the one below, which is exactly what we are trying to get away from.

Wealth curve resulting from investment returns via interest on debt.

This problem may ultimately be solved for us, in that investment returns are predicated on economic growth, and economic growth is following a long-term trajectory toward zero as population stabilizes and we reach our planet’s resource carrying capacity.

In the near term, I would propose a phased-in approach, whereby interest rates are lowered in a tiered fashion and ultimately pinned to the rate of inflation, with rate increases allowed only to compensate for risk. At the same time, minimum returns on retirement savings up to a certain amount would be insured for those currently retired or retiring in the next 20 years or so.

There is much to figure out in this area, but the ultimate conclusion remains the same: in an ethical economy, money should not, as a rule, make money.

5. Wealth should not be inherited

This is controversial as well, but necessary if we are to level the playing field. If we can agree that a person should not have privilege in life by virtue of being born white, then we should also be able to agree that a person should not have privilege by virtue of being born wealthy.

At the same time it is a perfectly reasonable desire for parents to want to share their success with their children. Some compromise is necessary, perhaps a maximum of $500,000 or so that can be transferred from one generation to the next, in cash or in assets, before or upon death. Anything above this amount can be donated to charities of choice, or else will be claimed for public purpose, perhaps to provide a basic income to those who are unable to work, or to insure returns on retirement accounts for those who are no longer receiving investment income.

Can we make this happen?

Two weeks ago I had no idea I would be writing this series. Then as the world began to rise up against inequity in the wake of George Floyd’s murder, the words began to come to me. What was going to be one essay became two, then three, then four as outlines and graphs filled bits of scratch paper. I found it difficult to concentrate on anything else until it was completed.

Perhaps this is not the time for a wider distribution. I do not wish to distract from the cause of racial justice that is at the forefront right now, and is finally beginning to achieve what it has been fighting for for decades and centuries. I stand with that cause 100%.

At the same time, I feel strongly that we – by which I mean economically privileged white people in the United States – cannot in any way consider ourselves champions of equality if we stand behind social/racial justice while ignoring economic justice. Not only are the two causes intersectional – in that marginalized groups are disproportionately impoverished – but we cannot truly mean what we say about confronting privilege if we only confront that privilege which requires the least sacrifice.

Writing this has changed me, in ways that I did not entirely expect. I cannot poke holes in my own moral arguments, and so I find that I will be making different choices moving forward. I will find it much harder to charge market rates for rent, for one thing, and I will be more aware of the products that I buy and who I choose to support with my purchases. I will be more particular about how I am willing to earn income. I do not know if this is destined to be read, or to make a difference in the world, but it came to me, came through me in a way, and I had no choice but to bring it to fruition. If you read it, please share your thoughts, and share it with others if you wish. We have a difficult road ahead of us, paved as it is with climate change, resource shortages, energy shortages, overpopulation, and global pandemics. We can fragment based on fear and survival, and so confront the future unprepared and in disarray, or we can unite based on our shared humanity and so rise to the occasion. To unite we must confront and eliminate our old inequities.

All of them.

Let us begin.

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5 Responses to Toward a More Equal America

  1. Diane B Kochendorfer says:

    Wow, Markus, an excellent job in writing down these ideas concisely and clearly. Definitely action is needed and the time is now.

  2. Shannon says:

    Hi, Mark.
    I am friends and colleagues with your mom and Chris.
    Thank you for following your heart and inner impulses on these essays recently…grounded insights that will hopefully gain life beyond the page.

    Found myself down an internet “rabbit hole” today and came across a researcher and problem solver out in CA – originally from IA. As I was drawn to read through his postings, it just kept coming up that I needed to share his info with you, Daniel Schmachtenberger of Civilization Emerging and the Critical Path Institute. His stuff leans toward the intellectual but it seems there is some underlying resonance with you. Do as you will 💙 Best, Shannon

  3. Jasper says:

    Okay, thought experiment: simple society, a man works in fields, digging ditches, his tool is a shovel. Being around shovels for years, eventually he comes to own three. As life goes, he gets older and a young man come along and being strong but unestablished, he wants to dig ditches, and therefore asks to borrow a shovel, because, why make a new one when the old man has three?

    They don’t know each other and several things can happen: he can use it. He can steal it. He can break it. Without penalty, it’s obvious which is more likely. Without valuing the shovel by saying “you can borrow it if you help me on next week’s shoveling job”, the young man will borrow it, get bored, and wander off, requiring tracking him down and reclaiming it, perhaps by dispute.

    So he borrows the shovel, only permitting some agreed upon exchange in compensation for risk offset by the young man’s convenience. Right? We agree.

    Okay, same thing but the old man SELLS two shovels when he no longer needs them. The young man needs a shovel, but seeing none, borrows MONEY from the old man to buy his shovel. Interest is paid.

    So this is unethical why? Because if you borrow something that instantly makes your life easier, you feel you don’t have to pay? I won’t lend it then. I may even burn it since owning unused things is a liability, not an asset. Which is exactly what you find in competing systems. Or we’ll play elaborate “let’s pretend” where I don’t exactly charge interest, nevertheless, after we’re done, I still own more, as they do in the Islamic world. There’s a whole tiresome industry for their interest-dodging Sharia theatre that dodges the initial, human problem: people who do work own things. People who are young and have not done work do not.

    So how will you not charge interest and get anything done in life? You make each young man mine the ore, smelt the steel, smith the tool before he can begin? And why would I ever, even once, agree to lend anything? Only per cost of “risk”? Really? Tell me how you accurately estimate the risk because entire industries are founded on how impossible, uneven, and cyclical that is. Well, if you want this, you can note where it was tried: the fall of Rome and the long Dark Ages. Wherein Jews alone could charge interest. This did not work out well for anyone except the dark forests of ruined aqueducts, empty of man.

    At the same time, if I own things, surely I must be able to gift them? Otherwise, they are not mine. Besides, who would stop me except the State, who would therefore take for themselves? So when I die, how are my things not mine to gift and inherit? Because what’s mine is not mine but the State’s? How would my son not perish when he could not inherit a shovel or a mill built over 50 years’ irretrievable labor? Or should you attempt such things, how would I not gift my things with lifetime use automatically written in? That’s inheritance. If the State owns all and takes all, how do you suppose they both stop themselves from taking irresponsibly and also transfer the transferred items to their best, most intelligent owner? History shows government has never once done either. Yet there is no other overlord of redistribution, a thing you said earlier you did not wish.

    Is it not enough that wealthy idiot sons inevitably dissipate fortunes they did not earn? Are you too impatient to wait for human nature? I find the cure worse than the disease, and so have others.

    • Mark says:

      Thanks for reading and joining the discussion. As I said I don’t claim to have a perfect prescription for changing the rules of the game, although I am firmly committed to the idea of building a more ethical economy, based on the premise that all humans are created equal and therefore deserve a fair shot without too many factors predetermined in their favor or against them.

      Thinking more about the issue of loaning with interest, I can agree with you that there is nothing unethical about such an arrangement if both parties are satisfied with the outcome. It becomes a problem when the entire lower end of a society is forced to become indebted in order to secure basic needs – owning a home, for example, whereby the alternative of renting is equally extractive. Thus payment of interest becomes a massive net transfer from those who have less wealth to those who have more, and it imposes a competitive disadvantage against anyone who is starting out without inherited wealth. One possible solution to this would be a Universal Basic Inheritance – a payment of $200,000 or so payable to every citizen at an age of maturity – somewhere between 18 and 25. Some people would piss it away of course, but that would be unequivocally their fault, and there could be tax incentives to spend it on home purchase, education, starting or buying a business, etc. Providing people with enough cash to purchase essential assets up front would ensure that your old man could sell his shovel while leading to a much lower level of indebtedness overall.

      Inheritance is a tricky business, because I do not wish to create bureaucracy, nor do I wish to take what is rightfully earned. At the same time I feel strongly that it is problematic that some people born into wealth never have to work a day in their lives. Perhaps this is best left in the realm of virtue ethics rather than rules and regulations. Which is to say it may be better to create social pressures that encourage those who earn vast wealth through hard work and ingenuity to leave only enough for their children to have a good start in the world and donate the rest to the benefit of their community – to restore a sense of noblesse oblige.

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