The Solution to Wealth Inequality
And my influence from Eastern Philosophy
I’m going to make a bit of a bold claim here by claiming to offer a “solution” of sorts to the current rise in wealth inequality, but I’m doing it mainly due to the attention it will garner and the solutions it will raise. However, this is no clickbait, I will offer an approach that I do believe will work as the solution. In particular, I hope it is one that is practical and feasible.
Backstory
My overall approach that I take here originates from when I learned about Eastern philosophies — Confucianism, Taoism, and then you have The Art of War by Sun Tzu.
Many people seem to have taken their lessons from these philosophies:
And then you have Confucianism, which is more in line with moral idealism, the Golden Rule, and similar philosophies endorsing kindness and respect towards one another.
Taoism is a philosophy that endorses spontaneity and discourages humans from trying to solve problems, as it argues that humans tend to create new problems in an attempt to solve existing ones. And as I’ll demonstrate later, this holds true for much of modern philosophy.
The Art of War is about war strategy. But it presents a lot of rules as if they ought to be common sense. It makes simple statements such as “better to capture a city intact, than a city broken”, in an attempt to criticize the use of siege warfare. This “common sense” mentality was my first realization to just how strategic thinking ought to work.
When I first read into these philosophies, I found their approach and how much it contrasted from ours to be quite fascinating. They weren’t obsessed with “morality” or “God” or “honour”. In fact, the recurring rhetorical terminology seems to be “wisdom” in much of these ancient philosophies.
There was no mention of even “courage” in the bits of “The Art of War” that I’ve read (and admittedly, I tend to skim over books than read the entire thing). There were no such notion of virtues even in Confucius’s philosophies, as he simply endorsed kindness since he believed that a world in which everyone was kind to one another would be ideal.
All these philosophies were before Zoroastrianism and its likely derivatives, the Abrahamic religions, dominated over the world. I find this interesting, as our actions and philosophies were less driven by an obsession with morals and virtue at that time — very differently from how we think today. It also appears that none of these major philosophies discussed the existence of God or the meaning of life, but only how we ought to live it. I believe we ought to go back to this way of thinking, as our obsession with ethics and virtue seems to cloud our judgment more than assist it.
I personally started to lean more towards the strategic thinking from the Art of War, as a means to resolve issues in the world — whether those issues be relating to wars or economics.
Analysis
To strategize, we ought to first understand the world and how it works — or in this case, the economic system and how it works. In the Art of War, Sun Tzu began by mentioning the various factors into play:
3. The art of war, then, is governed by five constant factors, to be taken into account in one’s deliberations, when seeking to determine the conditions obtaining in the field.
4. These are: (1) The Moral Law; (2) Heaven; (3) Earth; (4) The Commander; (5) Method and discipline.
This is to present the reader with a basic understanding of the various factors involved in the context of warfare. I personally, won’t go into it in exactly this manner, but will lay some sort of a foundation on my understanding of economics.
Measuring Economic Prosperity
For starters, looking at all wealth transfers combined to measure our economies has clearly been proven to be a very bad idea for the most part. The GDP is no measure for economic prosperity. I won’t go into the details myself on this, as several others have done so already:
As our recent experiences have shown however, living conditions are determined more strongly by necessary expenses such as rent/housing, in addition to food and water; relative to our wages:
We’ll call this the prosperity ratio, as I’m going to use it later.
A time scale needs to be specified before making such a measurement, but I think looking at the monthly scale is a fair starting point, as rent and bills are typically monthly.
This equation however, is only good as a starting point, as it only looks at an individual’s prosperity, not an entire society’s. But a society is made up of individuals, as a result, we get into our next step, a graph.
A prosperity graph/function would be a curve of best fit containing the data points of (wage, prosperity ratio) for each individual in society.
A curve such as this, in my opinion will provide much more comprehensive data on the living conditions of individuals in a society.
As much as I’d like to provide a sample graph, I don’t really have the data to even know what an actual society’s graph may even look like. I mean, I’d expect a typical society’s graph to get shallower (close to 0) as the wages increase, since that implies you’re more likely to have your basic needs met, but I’m not sure exactly what it would look like near the lower end, as the middle class and lower class have slightly different values under their necessary expenses.
I should add that I consider education an “expense” here, as it’s treated essential for landing a job — which is essential for increasing your wages.
The Issues
Trying to force things (in particular, prices) to change won’t resolve the underlying issues that are causing the wealth inequality.
Increasing the minimum wage won’t address why the cost of living is going up (ie. from my experience, this is usually due to rises in prices of necessities). It also won’t stop corporations from raising the prices of their products and services, or being stricter on their employees. And once the prices of products of services are raised to make up for the raise in minimum wage, the cost of living has simply gone up as a result.
Forcing a limit to housing prices won’t change the rate at which houses are being built and why they’re being built at a relatively slower rate than the population growth. Sometimes, it’s a simple matter of the population growing too fast, either due to reproduction or immigration. Legal complications however, also make people hesitant to learn to build their own houses. And as a result, housing prices will continue to rise. And if they’re forced to stagnate, then we’ll deal with the consequences: underpaid construction workers, even fewer built per year, etc.
Welfare is a nice way to work around all these issues, but even welfare won’t actually change the underlying issues that persist. Not only that, it places the state into deeper levels of debt, which will create myriad of its own issues. Loans are nice, but they create issues in that there’s a transfer of wealth despite no work being done to replace it. And sadly, lack of work done means people’s living conditions silently worsens — as there’s no work done to improve it to account for the transfer of wealth.
The rise in prices are typically the symptoms of the underlying issues, and they’re often mistaken as the issue itself. As a result, well-intended “solutions” that don’t actually resolve the underlying issue by forcing affordability end up only making things worse.
This is where the importance of strategy, not rather than virtue, as a basis of decision-making that I mentioned at the beginning of the article comes into play. It’s also nice to reflect on how accurate Taoism has been, despite being a 2500 year old philosophy, in describing just how many problems humans create when trying to resolve existing issues.
The Solution Itself
The short answer is to deal with these problems from their roots, and to rely on strategic thinking, rather than ethics and virtue, to derive our solutions.
“Relying on strategic thinking rather than virtues” is only the solution.
Wealth Inequality
The solution here is to start by increasing taxes on the rich, but only the extremely rich, such as the billionaires and the multibillionaires, in addition to various other things we may do to improve things that I’ll explain.
I do not think they create as many jobs as they kill. Though this should already be very apparent due the sheer number of people in the workforce remaining relatively stagnant (until “The Great Resignation” of 2021) and the massive wealth transfer to the billionaires, I’ll redirect readers to this article which already makes a fairly good case for it rather than dwell my own time arguing it:
But back to the “other things”. This is mostly to socialize monopolized industries. That is, the state owns them.
The usual counter-argument to socializing goods is that “the state is a monopoly”, which is technically correct. However, there’s a difference between a state and a monopolistic business — and that is that the state is a republic which can be elected out of office if acts corruptly, and is expected to act on behalf of the best interests of the people, whereas a business monopoly can and likely will, generally act on behalf of primarily its own self-interest.
State-owned social media, ecommerce, film industry, etc. will resolve a myriad of issues:
- State-owned social media. No concerns over “free-speech” laws not being fairly implemented. The state would have access to public discourse and will be able to identify perpetrators of illegal riots, such as the capitol riots, and deal with criminals more appropriately and easily.
- State-owned ecommerce. Businesses will be able to spread online without assisting an ecommerce business benefit to the point of acquiring ridiculous amounts of wealth. And since the state owns the available ecommerce platforms, it can set competitive prices since it already acquires wealth from taxes alone.
- State-owned film industry. I generally think that even more than just the ownership of the film industry, it’s better to have the state simply offer various movies for free once they reach a certain income. All of this will help the average individual relax more affordably, while reducing the wealth acquired by celebrities, since films will ideally no longer make as much money due to fewer people paying for them. As a result of the reduced wealth going to actors and actresses, I do think it will reduce the obsession the public has with celebrities.
- All wealth acquired by the state could be used to pay off its national debt. If the state continues to hoard wealth even after the debt is paid off, the people may elect a party that chooses not to — provided one becomes available.
It may even help to have anti-corruption laws to demand that the state reduce prices once its paid off its national debt.
Housing Prices
- State-owned housing. Already the same as the previous, with additional benefits of its own. Personally, I think there should be about 10% more houses than necessary, to keep a healthy margin for in case something unexpected happens, and to account for population growth.
- Construction education. The state educates as many people as possible into construction. This allows there to be a surplus of potential workers available at all times, should the state need it.
- Taxes on additional houses? This would ideally discourage the trade of houses, as it would make it an expense. I added the “?” as I’m concerned about the possibility of living under a roof on rent, and still being able to trade single houses and sell them at higher prices. Maybe combining it with the added requirement that sales on houses also end up taxed.
Conclusion
I should note that much of this was a byproduct of listening to the views of those both on the left and the right on the political spectrum, and understanding their overall concerns, while also recognizing that they may be letting their biases get in the way. I usually tried to present the issues with their views when I could, to see if they could deal with them, and when they were unable to do so, I’d form my own conclusion that went against their beliefs.
What I propose is technically a form of “state socialism” — though only as a means to address wealth inequality caused by monopolized industries (rather than full-blown anti-capitalism), but as my criticism of raises to the minimum wage have shown, it’s not endorsing the more “modern” socialist views of “make it illegal to raise prices”. It is based on a clearer understanding of how the world works rather than forcing it to be a certain way.
We cannot force the rich to become less greedy, any laws attempting to do will result in people becoming successful if they find loopholes in the legal system — which will easily result in a system of corruption and exploitation. We need to come to terms with the system as it is, with people as they are, and come up with solutions with that understanding.
That is, as a general rule, understand that you cannot force people not to be selfish. And strategize accordingly.
That is the nature of strategic thinking.
All criticisms are welcome.
