Even though the title of the article is “Combating
Inequality the Right Way,” Irwin M. Stelzer who wrote it has failed to deliver
on the implied promise that he is about to describe what he sees as being the
“right way”.
In the article that was published on May 23, 2015 in the
Weekly Standard, the author says the whole world agrees the problem of
inequality has worsened everywhere on the planet, and opines that something
must be done but – other than rehashing old ideas that proved unworkable – he
does not say what that thing should be, or how he proposes the problem of
inequality be approached.
One of the components contributing to the problem, according
to him, is politics – or as he put it: political power. But then, instead of describing
a way to doing things, he engages in the political game of attacking the
proposals that were put forward by his liberal opponents. The net result is
that Stelzer contributes very little if anything to the ongoing debate.
Does that mean I'm here proposing a definitive solution to
the problem of inequality? No, I'm not. But what I propose to do is broaden the
scope of the discussion to help engender more options from which to choose a
possible solution in the quest to find one that will satisfy the largest number
of stakeholders and work. To this end, I suggest that we begin with a thought
experiment.
Imagine a demon taking possession of you and me. He tells us
of a planet that is at the mercantile stage of development where fiat money has
not yet been invented, and barter is the order of the day. He sees signs that,
unlike Earth, where we made a mess of our economic system, the aliens of that
other planet seem on the verge of whipping up a more equitable system. He says
he'll send us there to try and convince those aliens their best bet is to
duplicate the system on Earth.
He wills us to the planet, and we discover to our delight
that the planet is so pure at heart; the influence of the demon on others is
zero. It means we are no longer possessed by him, except for one thing: You and
I have become as bad as the demon. Stranded on an alien planet, we plan how to
use our knowledge of what went wrong on Earth to take over the alien planet by
taking possession of its entire economy.
We convince the leaders of the planet to introduce the idea
of a central bank that will print fiat money, and have that money distributed
throughout society by a sector of the economy called financial institutions.
The aliens put together the system we designed, and they inaugurate it. You and
I get remunerated with money which we use to start playing the games we learned
on Earth; games designed to help us take over the planet's finances before
someone has had the time to realize what we're doing.
At first, we start a scheme in which only the two of us
participate at doing what is known on Earth as churning stocks and flipping
real estate. That is, we buy assets and sell them back and forth to each other
at an ever higher price; a trick that allows us to use the higher priced assets
as new collateral to borrow still more from the bank, and use that money to
send the prices even higher. We thus create a bubble whose fate remains totally
under our control.
When we decide the time has come to solidify our bloated
balance sheet, we sell the assets to others and stash the cash. Because we now
have most of the cash, and the others have little of it, the bubble bursts the
moment that we stop churning and flipping. The prices come down to near the
original levels, and we buy them back at the low prices. We take time off for a
few months, and then return to start the cycle all over again so as to make
more cash, and gobble up the new wealth that was created while we were on
vacation.
To make sure that people do not rebel and topple the system
of governance, we turn the financial institutions into the very infrastructure
that allows us to continue doing what we're doing. We get there by arguing that
“this is how the system works; it cannot be tampered with, and no other system
can deliver as much as this one for the largest number of people.”
We get the support of the employees in those financial
institutions because they too benefit from what we're doing. They form the core
of our base of operation, and to protect them, we engage in what is known on
Earth as crony capitalism. That is, we establish contact with a few other
sectors in the economy, and we feed these people too as they praise the
financial institutions and preach the merits of our “capitalist” gospel. They
do this without ever mentioning that this is the dark side of capitalism; the
side that was never meant to overwhelm the system or bury its good side.
Publishing in all its forms employs the best positioned
people to do that for us. Its employees praise the business associations while
attacking the workers' trade unions. They call us and call themselves makers
even though we make nothing. And they call the workers who create the wealth of
the nation takers even if they only take a small fraction of what they make.
By the time we have repeated the cycle of bubbling up and
bursting down the economy a dozen times, you and I – together with one percent
of the planet's inhabitants – would have been in control of almost the entire
economy, leaving very little for all the others to own and to live by.