Inequality How Wealth Becomes Power

[MichaelAndrewLoDown]

https://www.youtube.com/watch?v=AFIxi7BiScI

very interesting documentary. Whattya think?

[IlliniDave]

I tend to take the Intellectual Dark Web's view. Meritocratic hierarchies appear to be necessary elements of an organized healthy and progressing social structure. Wealth inequality is a necessary outcome of a functioning meritocratic hierarchy. At the same time, in excess, wealth inequality is a destabilizing factor in a society because if it progresses unchecked too many people get "left out". Wealth leading to power is also somewhat inevitable. Where it begins to erode is when power, rather than merit, is increasingly what yields wealth. It's been suggested that the tipping point where a hierarchy becomes pathological, and the resultant wealth inequality becomes corrupt, is at some point in the emergence of power as an ordering criteria in the hierarchy. I don't think anyone has identified the precise threshold where that occurs, and no hierarchy is perfectly meritocratic.

People will argue that a balance between traditional liberal and traditional conservative forces (different than what passes for left/right in many places at the present moment) is a (maybe the) means to preserve a reasonable balance. The conservative side seeks to preserve the economic and cultural stability produced via a functioning hierarchy, while the liberal side seeks to keep it self-healing so that it does not grow stagnant, closed, and corrupt. Recasting the idea from the perspective of governance, both too much and too little forced wealth redistribution are harmful. Both extremes of redistribution have the potential to become fatal.

As is often cited around here, assessment of a person's situation is usually framed by comparing with others rather than an attempt to make objective assessment. For example I took some of the salaries cited in the video with the implication that the people were struggling in German cities and stuck them in a calculator ( http://www.globalrichlist.com/ ) revealing they are in the top 2-3% worldwide. The point being that we in the western world are typically very selective and self-serving on our wealth inequality soap box.

I don't know enough about Germany to speak to the specifics. Europe has very old tradition of relatively permanent aristocracy (although interestingly the developer they profiled to start with is not among that cohort). I can certainly sympathize with the issues of crazy-expensive real estate areas--fortunately here in the US that is still a choice since large swaths of the country are still relatively affordable real estate-wise.

Again, looking at the US, a case can be made that me might be nearing a point where wealth inequality is approaching the limits of what is healthy. The arguments wouldn't be much different than those of the linked video. Of course arguments (albeit from a more conservative perspective) can be made that is is not as uniformly runaway as sometimes portrayed:

https://www.cato.org/publications/polic ... erica#full
https://www.cato.org/publications/polic ... ution#full

There are redistribution mechanisms in place in the US. Whether or not we have a healthy balance at present, I don't know.

[7Wannabe5]

Very interesting. The self-made multi-millionaire featured reminds me very much of my self-made multi-millionaire friend, except my friend is much older, not so good-looking, and he also has a very eccentric, very frugal side to his behavior. For instance, at some point (probably when his net worth exceeded 50 million-lol), like with the guy in the documentary and his driver, my friend decided it was in his self-interest to hire somebody else to mow his lawn. However, I once had an hour long discussion with him on the topic of "How can my lawn guy possibly make a reasonable profit when he charges me so little for his services?", because it was driving him nuts trying to figure it out. IOW, I think it takes a combination of extreme stamina and laser focus to become a self-made multi-millionaire. It doesn't mean you are necessarily a bad egg in any way.

Where it begins to erode is when power, rather than merit, is increasingly what yields wealth. It's been suggested that the tipping point where a hierarchy becomes pathological, and the resultant wealth inequality becomes corrupt, is at some point in the emergence of power as an ordering criteria in the hierarchy. I don't think anyone has identified the precise threshold where that occurs, and no hierarchy is perfectly meritocratic.

I would argue that poor transmission of information can become a problem with rigid and/or bloated hierarchies even prior to "power as ordering criteria" issues. For instance, a study was done that indicated that open lines of communication between workers on an assembly line boosted productivity much more than whether or not the workers had relatively good or bad management. I believe that in general, it is important to keep the functions of trade and production clearly defined, because they, or their inherent benefits, are not always simultaneously maximized.

[IlliniDave]

I don't think that is really anything separate from a hierarchy skewed away from merit towards power--without vertical bidirectional communication in the organization the management is simply exercising power without any consideration of the merit of individuals in the lower rungs of the organization.

[7Wannabe5]

@IlliniDave:

I don't think we are far off the same page. I was struck by how that study, which I encountered in some reading on systems theory, confirmed independent reports from two different manufacturing engineers in my acquaintance, that what went wrong with American manufacturing had to do with something like "lack of respect for machinists."

[Smashter]

The book "Seeing Like a State" talks about how workers on a factory line can make the whole operation come to a halt by following the factory rules exactly as they are written. Even the simplest tasks can require practical knowledge, hacks, and workarounds.

So, yeah, I can see how losing respect for that could lead to a downfall.

[7Wannabe5]

@Smashter:

Right. What I meant about the difference between trade and production could be simplified down to the simplest economic models of I grow coconuts and you grow pineapples vs. I make mop heads and you make mop handles.