Reducing economic inequality to avoid collapse

>>> 3 minutos

We have all heard the saying "money attracts money" or some similar expression. And it is true. It's also tremendously unfair. In system dynamics theory - an increasingly crucial field for navigating our complex world - this tendency even has a name: "success for the already successful".

It's easy to understand. If you have an advantageous economic starting position, it is much easier for you to gain access to better educational opportunities and profitable contacts, and in the medium term this will open doors to better job opportunities, and in the long run to great economic benefits. That is why scholarships and grants for the less advantaged are so important - and insufficient. They help correct an imbalance that, as we shall see, is very dangerous for all members of a society. Perhaps that is why we like so much the story of the man made from below, because it seems to us a heroic deed. Something that does not usually happen. Something that breaks a kind of unwritten rule.

But all this is also important for other reasons. A very well known system dynamics model -perhaps the best known-, the one developed by the Meadows couple and other members of MIT in Massachusetts just 50 years ago, served to show that we were beginning to crash against the limits of the planet. Something that is now increasingly evident to anyone who doesn't want to cheat themselves. A few years ago, another such model - HANDY (Human And Nature DYnamics) - showed that inequality is one of the main factors in causing societies to collapse due to a lack of cohesion, unable to face the challenges they face together.

This is also very easy to understand.

An unequal society tends to polarization, to lack of help among its members, to distrust even among peers. To conflict or directly to war between tribes or countries. An unequal society produces elites that live disconnected from reality, isolated, in bubbles of privilege that make it impossible for them to heed, or even hear, the alarms that sound everywhere. No one worries about the end of cheap energy or climate chaos if they are constantly on board a yacht.

Moreover, on the other hand, inequality makes the underprivileged feel that they are not part of the world they deserve, and rightly so. You can hardly ask for resignations from someone who just makes ends meet while some - the Musks, Bezos of the world - squander and pollute in a few minutes with their space flights what they will pollute in a lifetime.

There is also what sociologist Thorstein Veblen called conspicuous consumption. Some of the goods we buy have no clear utility; they respond to a need to seek status. That is also why it is crucial to reduce the gap, because otherwise, the elite, which generally serves as a model for society, will produce a feeling of growing dissatisfaction, helping this phenomenon of buying superfluous things to become bigger and bigger. Something that, as you have probably imagined, is just what we need to stop doing in the times of climate and energy emergencies we are already experiencing.

Imagine the amount of funds that would be available for the energy and climate transition if the big fortunes paid their fair share.

So, what options would we have to try to fix this problem? They are many and very diverse, all of them can coexist and add up.

-High taxes on large fortunesIn the 1930s, after the stock market crash of 1929, under Roosevelt, they were taxed at a rate of over 90% in the United States. This is what is known as the New Deal. That is why there is now so much talk of a Green New Deal. A proposal in danger of falling into immobilism and techno-optimism if it does not recover what really mattered, high rates to reduce inequality.

-Reduction of the working day without salary reductionPerhaps this is one of the most important measures. We work the same hours as 100 years ago, when productivity has multiplied exponentially. Someone, and not the lower and middle strata, has benefited greatly from this. Therefore, 32-hour working days, preferably 4 days.

-Guaranteed work prescriptions and basic incomesDepending on specific social and economic contexts, one or the other may be sought. In short, both would seek to guarantee a minimum quality of life for people, so that they are not forced to produce. It is undoubtedly the excess of production that is leading us to exceed the energetic and climatic limits.

-Maximum wagesAnother essential proposal. Impose that the CEO or president cannot earn more than - for example - 10, 20 times more than the lowest paid employee. These figures with minimum salaries like the current ones are much more than what is really necessary to live. We need to live more simply so that others can simply live.

And there are many more...

Many cultures have intuited that it was necessary to act against this tendency that favors inequality and fractures societies. That Buddhists have rituals of detachment from material things, or that some tribes in the Northwest of the United States have units such as the Potlach, is no coincidence.

What is the Potlach? It is a ceremony in which the chiefs of the tribe, the richest, gave away part of their possessions. Restoring a certain balance that perhaps they sensed was in their favor. Of course there were other factors in these rituals, such as gaining the respect of other clans, but the reason this tradition worked in many cultures is because before we fell into mainstream individualism, we knew that our fate was common. When your survival depended on the rest of your people doing well, it was easier to cooperate. Perhaps now with the climate emergency it is time to understand that we are only one people again. It is time to make a global Potlach, and fast, to see how well we can face the challenges that lie ahead. Challenges that will require all the generosity we are capable of.

About the Author

Juan Bordera

Journalist and content creator.

August 01, 2022 — Juan Bordera

Leave a comment