A full circle

Capital in the Twenty-First Century (Documentary; 2019) 

 Based on the book written by Thomas Piketty.

We started in the pre-Industrial Revolution with a significant disparity between the haves and have nots. Under the feudal system, there were the extremely wealthy landowners and the dirt poor peasants. The inequality between the two was phenomenal. The poor simply cannot work their way to become rich. It is humanly impossible. One has to be born with a silver spoon to own capital. Alternatively, one has to be married into one, like in the many fairytales and novels of the yesteryears. 1% of the world population owned 70% of the world's wealth.

The divide between the affluent and the impoverished became more apparent. This triggered the exodus of people from Europe to newer lands like Australia and the USA and took them over. The emigrants replicated their master's strategy of wealth acquisition. They used slaves, a form of movable property, as collateral and capital to generate more land and wealth.

When machines rolled in during the Industrial Revolution, people were just replaced, creating the same kind of impoverished people as they had before. Businesses flourished. Mass production of goods by machines needed a market. Fashion designing, haute culture, gift-giving, splurging during festivities was popularised. Businessmen accumulate wealth.

Nationalism reeked in as inequality reared its ugly head. People forgot about their poverty and stood steadfast behind the banner of nationhood. Industries fanned this by churning out weapons and starting military competition amongst nations to start wars. Now the elites are also the one who controls the narrative at the international level. Again, the same schism morphed between the rich and the poor, the 1% owning 70% of the wealth.

The world wars that came about were actually equalisers that jolted the inequality. Capitalism was held accountable for the catastrophe. It seems that on the cusp of death, humanity appeared more critical. Everyone is equal in fear of death. In rolled in heavy State involvement in nation-building. Cradle-to-tomb benefits were handed out to societies. The working class and women demand their place in society. For the first time in human history, an individual could climb up the social ladder through education and hard work.

Anti-capitalist protesters - St Paul's Cathedral, London, 2011. 
Photograph: Oli Scarff/Getty Images Europe

Actually, during the wars, capital was only marginally lost. Some were used to finance the war, whilst some were retrieved later. With the euphoria of peace and the push to spur economies, many manoeuvres were put into place to help big corporations be in the role of what the aristocrats used to fill.
Resentment grew again. Wage did not expand in proportion to the increased cost of living. The increase in union strikes and demand for entitlement did not help either. Labour was no longer an asset but the expense of doing business. The welfare state was just too costly.

We are now in a world where greed is good. The poor are handout loans for which they are not creditworthy. The lust for luxurious, opulent and decadent lifestyles lure the ill-prepared to dream of the impossible to plunge them into more misery than mired in. On the other hand, the wealthy has the four corners of the world to hide their treasures. Using creative accounting and the intelligent use of international off-shore banking, 85% of the world's wealth is just floating around without generating any benefit to the needy.
On the other hand, it generates more income for them. Tax evasion manoeuvres are helped via cash-strapped tax havens in banana republics. The problem with these havens is that their local populace does not benefit from these transactions. They remain poor. They do not have to fear economic downturns as history has shown that bail-outs can be arranged.

Relationship between per capita national income
 and the degree of inequality in income distribution

Capitalism started out unequal, flattened inequality 

for much of the 20th century, but is now headed back

towards Dickensian levels of inequality worldwide.

Only 15% of the world wealth is spent to create a beneficial trickle-down effect to the not-so-wealthy 99%. The 'baby boomers' had it good. With the post-war prosperity and ability to acquire wealth, they can enjoy the fruit of their labour in their twilight years if they had done so. Meanwhile, the Millenials has it bad. With the rung of the social ladder getting wider and having had to finance their own education, they may spend their whole life in debt. They may not afford to own a roof over their head like their predecessors. The gig economy that they find satisfying puts them in a precarious position. They are not provided with a safety net against accidents, sickness and opportunity for holidays.
The author suggests that there should be a comprehensive tax revision. The ultra-rich needed to be taxed progressively the more they earn. Invasion of taxes by clandestine methods needs to be looked into. As inherited wealth will dominate wealth made form a lifetime's labour by an exorbitant margin, he propose an inheritance tax. His argument is that one cannot start the game of life with different terms, the have and have nots. His analogy is a game of monopoly of two players where one player starts the game with more money and has the chance to play with two dices. He will pass 'Go' more times and buy more properties and earlier in the game, hence collecting more rent. Well, one can say this is a Marxist or leftist view of the distribution of wealth.

A friend once told me this. Even if all the world's wealth is equally divided among the world's inhabitants right to the last penny, creating an ideal egalitarian society, we just have to give ten years. After ten years, wealth distribution and inequality will revert to their previous pattern. Some people are just good with money. Others have different priorities. One glaring thing that is not taken into all these systems is the human innard qualities. As quoted by Gandhi, the Earth has everything to fill our needs, but not our greed.

History has shown that everything in life happens cyclically. Man will create an economic model. It will be a good, best thing since forever. Then slowly, one by one, its shortcomings will surface. Then more. Suddenly it will be the worst thing Man ever thought of. Then more calls for reform, a revolution maybe. A new system will be proposed - the best thing since sliced bread. And the cycle will continue.

Whatever said and done, the idea of utopia on Earth is a piped dream. The dream of eternal fairness and equality is as real as seeing a pink unicorn. Even the Universe is not kind to its dwellers. They have to endure thunders, typhoons, volcanic eruptions and asteroid collisions and their devastating effects. The presence of a large middle class is essential to form a buffer between the haves and have nots, to narrow the division in wealth inequality. Transformation and modification will happen, but we will keep on looking for the ideal elusive economic model.

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