Capitalism's Discontents

I am a believer in capitalism, but...

Most people in a capitalistic society work at jobs and try to get the biggest paycheck they can.  Those who make more than they require for their daily needs squirrel some away for retirement.  They put the money in the stock market or bonds, money market funds, or more exotic investments.   Most people have jobs that don't require them to be finance experts.  The few who do make their living in finance have a distinct advantage in the investing arena.  And by some strange coincidence they have some of the largest incomes.   These are the experts on the capitalist system itself.   So, while the rest of us, the people who make goods and perform useful services, we only dabble in finance.  The professionals grow wealthy on it.  They are the greasers of the wheels of capitalism.

To a certain extent capitalism is a game.  The truly wealthy got that way because they are very, very good at playing the game.  Some people are very, very bad at the game.  Most people just muddle through.  A very few are quite excellent at it.  This does not make them either good or bad.   One thing many of those people are good at is acquiring more wealth.

Capitalism has 2 aspects.  In one way, when an economy grows it usually helps most of the people in it.  The popular expression is: A raising tide lifts all boats.  This is the aspect of capitalism that everyone hopes for and gives capitalism its optimism.  But there is another aspect to capitalism.  Sometimes one person's gain is another person's loss.   It is that aspect of capitalism that needs to be addressed.  Some would say that it is appropriate for the smarter, more clever, people to grow wealthy off of the less clever.  The government tries to put some limits on this with consumer protection and other laws.  But, as they say, a fool and his money are soon parted.  Even educated people in the middle class are no match for the masters of capitalism.  This is the root of the growing disparity between the wealthy and the rest of the country.  There are some wealthy people who cheat and steal to advance themselves.  They are some of the worst.  The Bernie Madoff's of the world.  Even if all of the crooks were rooted out the divide would continue to grow.  There are plenty others who would never consider breaking a law and legally enrich themselves beyond anything imaginable by most people. Warren Buffet.  Currently the top 1% wealthiest people have about 37% of the wealth of the country.  The top 20% have about 80% of the country's wealth.  And the disparity is continuing to grow.  Clearly, those people at the top are very good, better than 99% of the country, at amassing wealth.  That skill seems to know no bound.   It is also clear that the continuing growth in the disparity is unsustainable.  The only questions are:  When will people decide something must be done about it?  What will they decide to do about it?

(Aside:  Could it be that Jimmy Buffet is Warren's wayward son?)

The Occupy Wall Street people are gone for the moment but I am pretty sure they will be back.  As long as the disparity between rich and middle class continues grow it will get more recruits.  Most of the wealthy, with a few notable exceptions, seem to be very smug about having earned what they have and wanting to keep it.  At some point they will have to realize that their financial situation is dependent on a stable government, stable society, and stable economy.  Whether they realize it or not it is in their best interest to do whatever they need to to keep the status-quo. If the current economic trends continue it could destabilize things and then their investments could end up being worthless, as in the Great Depression.