The Rise of the Super Rich and Corporate Power
Early Industrial Fortunes
Why the super rich and their enhanced power? Some early fortunes resulted from near-monopoly control of major resources, oil for the Rockefellers, iron and steel for the Carnegies, the Mellon fortune from savvy investments in ideal conditions, with all contributing enormously to charitable services.
The Technology Boom and Modern Wealth
From the 1990s on, huge fortunes were made in high-tech ventures, notably Microsoft’s Bill Gates, who also sponsors major benefits for others. Huge changes in technology, communication, transportation, and spans of control made such ventures possible. Many wealthy people still contribute enormously to charitable causes. But fiduciary obligations push corporations to seek shareholder value, not the public good.
Concentrated Power, Wages, and Labor Costs
Employers once earned a few times that of employees, and while a few inventors became wealthy, the American dream was still within reach of more and more people. No more. The difference is that of concentrated power. Prices and wages are now determined primarily by corporations seeking profit and shareholder value. And a powerful strategy for increasing profit is to reduce labor costs, hence outsourcing and, increasingly, artificial intelligence and robotics.
This concentrated power has created far greater inequalities in wealth and power than in earlier eras. Trump promises relief by bringing home new factories and jobs. But, driven by self-interest and profit, investors seem unlikely to provide the needed capital unless robots and artificial intelligence are more profitable than using domestic and foreign labor
Automation, Unemployment, and Historical Precedent
If, as seems likely, we continue on the current path, with robots and AI often becoming more profitable than domestic labor, many people may be unemployed, even desperately poor. To provide more jobs in the 1930s, the Roosevelt administration created some make-work programs, the most successful being the Civilian Conservation Corps. While giving jobs and skills to young men and sending money to their families, it created infrastructure that persists in many places today.
Currently, our nation’s infrastructure needs help—roads, bridges, the power grid, dams, levies, docks, wharfs . . . And much of what needs fixing is in locations where robots may not be very effective, perhaps an open question as robotic technology improves.
Government Programs, Socialism, and Economic Necessity
As in the 30s, we need some job programs that address important needs. But such programs may not offset possibly massive unemployment, and a government-administered program of distributing wealth might be needed. Whoa! That’s socialism, diametrically opposite to free enterprise and a dirty word for many, to be opposed without further thought. But events and necessity may drive us there.
Measuring Well-Being: Inequality, Happiness, and GDP
We might learn from societies that have already moved toward more equitable levels of wealth. They seem to accept high tax rates in exchange for services and, by the widely-accepted Cantril Ladder, people in such countries rate their happiness higher than we do here in the United States. Also, the U.S. Gini coefficient hovers around 0.48 to 0.49 showing higher income inequality than in other developed nations. But in reporting our economic health, our news outlets tend generally to focus on the gross domestic product, which doesn’t correlate well with overall well-being and general happiness.
Submitted by J. Alan Wagar
1 Nordic countries generally have low Gini coefficients, indicating relatively equal income distribution, with figures often in the mid-to-high 20s (e.g., Finland around 26.1-28.5, Sweden 27.6, Denmark 27.7, Norway around 26.5-29.4).