I’ll attempt to boil down our differences on key points.

  1. You believe that the greatest growth in GDP would be attained by everybody investing all their money and nobody buying anything. Businesses would be able to buy the latest equipment, expand massively, and hire lots of people. Nobody would buy anything. I believe that this would lead to an economic collapse.
  2. You believe that the increases in productivity effected by investment benefit all members of society. I agree, but my concern is that the great bulk of the benefits accrue to the owners of capital. After all, if it is capital that is generating the wealth, as you observe, then doesn’t the owner of the capital own the generated wealth? And if all of the increases in GDP were attributable to capital, would not all of the increases in GDP be owned by the owners of capital?
  3. You argue that education is not the primary way to increase the productivity of labor. I argue that there is no primary way to increase economic output. The relationship between the three main components of economic output (resources, labor, and capital) is multiplicative, not additive. Therefore, optimization is achieved by maximizing the FRACTIONAL increase in the value of each of the three components. This might require further explanation on my part, as it involves some mathematical concepts not commonly understood.
  4. Yes, the social significance of the Gini Coefficient is our largest disagreement. I’ll ask you to take three minutes to watch this video. It is profoundly significant to our discussion, because it demonstrates an important truth: expectation of equality is burnt right into our genes. Capuchin monkeys, from whose evolutionary line Homo Sapiens diverged many millions of years ago, clearly demonstrate the expectation of equal treatment, and respond to unequal treatment with violence. Homo Sapiens has the the same expectation, but amplified and refined. If people believe that they’re getting a raw deal, then they respond by thumbing their noses at the social contract, even going so far as violence.

There has been plenty of academic research on this subject. So far, it has proven difficult to come up with metrics that clearly demonstrate this principle, and the evidence in favor of the hypothesis is weak, but that’s not because the phenomenon is weak; it’s because it’s very difficult to isolate the causal factor from the many other factors that influence behavior. There certainly is no evidence contradicting the hypothesis.

More significant, I believe is historical evidence, the most salient example of which is the French Revolution. The viciousness and barbarism unleashed by that revolution clearly demonstrate just how far things can go when the Gini Coefficient gets very high. History teems with cases of the poor rising up against the wealthy and visiting horrors upon their oppressors. In most cases, these uprisings were quickly and brutally put down, but they kept recurring because people simply refuse to acquiesce to unequal treatment.

Although the violent episodes attract our attention, the more common response is low-grade resistance. This often takes the form of crime. If you believe that social conditions unfairly deprive you, why should you adhere to social expectations? Beating up some old man and taking his wallet is one way to get back at a society that is beating you up.

Consider the case of a young man who has a minimum-wage job. He earns $7.25 per hour, or about $15,000 per year. He observes that there are many people earning a million dollars per year — sixty times as much as he earns. Society expects him to believe that the contribution of millionaire is sixty times greater than his own contribution. But it is entirely reasonable for him to observe that he works just as many hours as the millionaire, that he works just as hard as the millionaire. Sure, he’s willing to accept that the millionaire might be smarter than he is — but SIXTY TIMES smarter?

That’s the flaw in our economy: it asserts that some people are immensely better than the average person. Not twice as good, not three times as good, but sixty times as good. Do you honestly believe that there is any person who is sixty times better than you are? Let’s assume that your net worth is, say, $5 million. Mr. Trump claims that his net worth is some billions of dollars — let’s just assume $5 billion. Do you honestly believe that Donald Trump is a thousand times smarter than you are, or that he worked a thousand times harder than you worked?

Of course, we both agree that one person can sit at the fulcrum of a huge enterprise, and that person’s decisions can have consequences involving billions of dollars. We both agree on the economic logic that awards huge rewards to some people, and very little to others. What we disagree on is the psychological logic. You appear to believe that the minimum wage worker should humbly accept his lot in life and acknowledge the immense superiority of his betters. I maintain that this is greatly at odds with psychological reality.

You appear to believe that social mobility is so high that anybody can simply pull themselves up by their bootstraps, that with luck, pluck, and hard work, they too can become rich. I hope you realize that, were you to preach this message on a street corner in Harlem, you might not escape with your life. More pertinent, however, is that the economic metrics contradict your belief. I urge you to read this Wikipedia article on social mobility, a well-researched economic metric. You will be shocked to learn that social mobility in the USA is considerably lower than that of the Nordic countries, and lower than most European countries. If you find that hard to believe, here’s another citation.

You argue that the current high value of the Gini Coefficient is due to the brilliant contributions of innovators who have bestowed huge economic benefits upon society. Having spent plenty of time in Silicon Valley, I can testify that the innovations were inevitable, and that time and time again, it was just a matter of luck as to who got filthy rich. You also seem to be unaware of the fact that the rise of the Gini Coefficient began with the administration of Mr. Reagan, well before the technological blessings of the computer revolution began to show much economic effect.

The concentration of wealth is an intrinsic feature of free economic systems. It’s entirely natural, and it is a poison that saps the strength of societies. It destroys ‘social capital’, an economic concept that is unmeasurable but in fact reflects an idea first recognized by the Muslim historian Ibn Khaldun. He called it “asabiyyah”. It is the heart and soul of a civilization, the driving force behind social progress. Republican Rome had immense asabiyyah, as illustrated in the story of Mucius Scaevola, or in the Japanese expression “Banzai”, which explains why a lightweight nation like Japan was able to accomplish feats far beyond its economic capacity in the twentieth century, until it overreached. It explains how the American colonies were able to defeat the greatest power on the planet, how the Russians conquered Siberia, how Greece had its Golden Age, how France under Napoleon conquered Europe, and so many other astounding achievements of societies at special moments in history.

Master of Science, Physics, 1975. Computer Game Designer. Interactive Storytelling. www.erasmatazz.com

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