Subverting Progress

Many of us find our quality of life to be less than it was decades earlier.  Oh sure there are some who are quite well off!  In particular the top income earners live as they always have, but the majority of us are struggling.   And it is getting worse, as many are finding it harder and harder to keep from drowning in debt.

In the U.S. evidence of this is reflected in the fact that two-thirds of the income growth between 2002 and 2007 went to the top 1% income earners.  In a 2008 study, The Wall Street Journal reported that the top .01% of American families held claim to 22% of the wealth, where as the bottom 90% held only 4% of the wealth.

Economist Emmanuel Saez states “In sum, our work has shown the top 1% income share has increased dramatically in recent decades (when including capital gains) and has reached levels which had not been seen since before World War II and even since before the Great Depression. The reduction in taxes at the top since 2001 has mechanically exacerbated the discrepancy in disposable income between the rich and the rest of us.”

At one time—1950’s and 1960’s—the compensation of CEO’s was about 25 times that of the average worker.  Today it is 350 times that of the average worker!  In 1967 the median household income (in 2008 dollars) was $40,261 and by 2008 it increased to $50,303—a mere $10,000 in 41 years.  Over the same period the low end of the top 5% in household income almost doubled, going from $66,830 to $129, 697.

While these trends indicate a widening of the income inequality gap in the U.S., we must acknowledge corresponding effects.  As Richard Wilkinson and Kate Pickett credibly present in their book The Spirit Level, as income inequality increases in industrialized societies so too do health and social problems.  As Yogi Berra might say these results may be too coincidental to be a coincidence.

With almost everything framed in terms of a market, the auto-correlative nature of competition ensures that the ‘haves’ will always have more and more, and the ‘have nots’ will get less and less.  It is not that opportunity for most is lost it’s that it is never revealed—you can’t lose what you don’t have.

The evidence is clear, there is no rising tide that elevates all boats—trickle down doesn’t!  So where is the invisible hand?  Could it be that making money—irrespective of how much is made—is just not as good for society (that is for the majority of people) as is making things?  When we make things we do so with the intent of serving the needs of others, and people are afforded the opportunity to develop their (human) talents.  However, when our intent is to solely make money, then we are only self-serving with little to no opportunity for people in society to exercise their capabilities.  Could it be that solely making money ties the hands of the invisible hand?

In effect what has happened is that we’ve confused means with ends by allowing the pursuit of wealth to supplant the pursuit of people’s happiness in society. In so doing we’ve reified, and become slaves to our measures. Human value is no longer the measure of all things, and instead things have become the measure of each human being—hence the worship of the wealthy and emergence of greed.  It seems we are forever striving to have more, rather than attending to becoming more of what we potentially are.   In the conduct of business, superficiality has replaced substance.

If the driving force is to just make money (for the firm and/or one’s self), then how does this support progress in our society?  What (human) value do we add to both our individual and collective lives?  Isn’t it time for business of a different mind?  What do you suspect 90% of the people would prefer, leaders who focus on making money or leaders who focus on making progress?

9 thoughts on “Subverting Progress

  1. I believe you need to look at the situation from a global perspective.

    I personally am an ecconomic migrant from the UK who now lives in Asia.

    I believe a very small minority of people will be making a massive amount of money out of the situation, and the bulk of people in the West will loosing out but some where in the “New World” a great mass of people will be gaining greatly.

    Be carefull of the thinking, taking from the rich and giving to the less well off will sort the situation. It will not.

    I believe it is an obvious consequence of the changing world that a temporary lowering of living standard will occur in Western countries. In Asia I am seeing a massive rise in living standards. A typical mid earning Malaysian has a standard of living most people in Europe and the USA can only dream about. What is more these peope have hard cash savings, this living standard in the main is not financed by personal credit, but disposable income.

    Until the recent past wages and earning for most of us in Western Europe and the USA were always governed by local competition.

    Free trade changed all that. Other factors included the fall of Iron Curtain in Europe and the opening up of China, Vietnam and Cambodia and many similar coutries. The internet also means I can still do certain types of knowlege based business from a low cost base in Malaysia, my cstomers being in high cost Europe.

    In just about every field we do not compete with our neighbour for business. If you are in Coventy,UK or Detroit, USA you competition is not the engineering factory, a few block down the road, the competition might be located in a factory in China or India or some where else in the “New World”.

    There are in balances in currency exchange rates and low wage levels in these “New World Countries” , but wage levels are rapidly increasing and exchnage rates correcting them selves.

    I have faith that the markets will eventualy will eventually balance out the situation.

    To me the invissible hand is rightfully working very slowly and carefully.

    Imagine the consequences of an imediate correction in exchange rates, or a shock increase in wage levels.

    Wage levels in East Coast China and parts of India are driving business to the hinterland or to new countries. India is now rapidly loosing out to the Philipines for calll centre operations.

    There are a limited number of countries in the World.

    “The invissible hand” to me is always seeking equilibrium.

    The scary thing from my perspective is that at many leves of goverment and political life in Europe and the USA. There seems to be a “bury the head in the sand” attitude.

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