Tag: wealth

The Math of Ethical Growth

I listened to this conversation between Nathan Schneider and Marjorie Kelly this week, about her new book Wealth Supremacy and why simply trying to build more ethical economic entities is insufficient. It’s a retrospective look at the evolution of her own thinking, which has been very solutions oriented, and focused on bringing additional values into business, either through entities like B-corps or the recently much maligned ESG initiatives. One thing she seemed particularly regretful about was falling into the trap of using the framing of business to advocate for these kinds of changes: accepting that the profit maximization is the most appropriate metric, and then making the case that more sustainable, equitable, diverse, egalitarian etc. businesses are more profitable, and therefore those attributes should be more widespread, even within the very narrow logic of Actually Existing Capitalism.

On one level, it would be awfully convenient if that were true, and in the context of the Long Algorithm I think it should probably be our goal to create an economy where it is true by construction: through the laws, taxes, markets, policies and social norms we adopt. But in general it doesn’t seem like that’s the world we live in right now. Extractive, monopolistic, wealth-concentrating businesses still seem to have some pretty high margins, and many folks arguing for more ethical, sustainable, equitable business have said that a lower rate of return might be acceptable or even necessary.

Mathematically, I don’t think that works out.

We have to let go of the idea of maximizing returns to capital. If a corporation will do something that’s beneficial to sustainability and it breaks even… why isn’t that good enough?

Marjorie Kelly
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Cooperative Capital Formation

I’m reading The Affluent Society, an economics book originally published in the late 1950s, by John Kenneth Galbraith. I’m still in the first third of the book, but so far as I can tell the idea behind it is that up until this time, economics had been built around some pretty unpleasant assumptions, like scarcity, inequality, insecurity. That those assumptions persisted well beyond their expiration date, into a new world of affluence, largely due to technological progress. In this new era, everyone’s needs can be met pretty easily, except that our thinking is still controlled by the ideas of the past.

I’m not entirely sure where he’s going with all this, but I picked up the book because I heard it offered an early criticism of the role of induced overconsumption through advertising. This is also the era in which Buckminster Fuller was writing about the techno-utopian future in which humanity is liberated from toil by our technology.

One idea that’s really stood out so far came from the chapter on inequality. He makes it out to be a fundamental aspect of the classical capitalist economic worldview. That inequality isn’t just unavoidable, but that it is also necessary. One of the explanations for why it’s necessary is the need to facilitate “capital formation” — the accumulation of surplus wealth which can then be productively re-invested to generate yet more wealth and innovation, ultimately making everything better for everybody. Lamentably, more better for some people than others, but hey it’s the only way to keep this engine running…

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Less Than Revolutionary Finance

I’ve gotten some good natured pushback on the idea of buying oneself out of corporate servitude.  The objection seems to come in two general forms.

  1. Contingency of Financial Autonomy: Deriving financial autonomy from investments in corporations whose operations are fundamentally destructive creates a morally corrosive dependency — your interests end up being aligned with theirs, because your autonomy depends on them remaining profitable.
  2. Opportunity Costs: Even if investing in corporations doesn’t actually give them financial support, there’s an opportunity cost: the same money could be used to invest in small local businesses or social enterprises.  Wouldn’t that be more powerful and potentially transformational?

Continue reading Less Than Revolutionary Finance

Trade-offs between inequality, productivity, and employment

You can only consume so much, but you can hedge against risk to an unlimited degree, and the ultra-wealthy do, suggests Interfluidity, and this makes a mess of a consumption-based economy when you get too much wealth concentrated in a few actors.  It’s an interesting argument, but it does kind of hinge on a zero-sum game setting — insurance against risk going only to the highest of bidders (lifeboats on a libertarian Titanic).  WWII as a giant re-set button, leading to a temporary age of prosperity.  What’s the next re-set?  Climate change seems like a good candidate…

The Rise of the New Global Elite

A nice long-form piece from The Atlantic on the phenomenon and dangers of the New Plutocrats… not just Lloyd Blankfein and his parasitic bankster ilk, but nearly everyone who stands at the so-called Commanding Heights of industry, including productive innovators.  The developed world was all to hot to globalize the economy when we thought we’d always stay on top.  But that was ridiculous of course.  Now “on top” is just a few people scattered all over, and most of us will slide toward the very large bottom if we’re not careful.

Shared Links for May 12th

  • Forecast: On Climate Change, Cooler Temperatures Bring Hotter Air – Augh, we are prisoners to so many perceptual fallacies. Recency and narration loom large among them. It turns out that the average temperature of the last 12 months is a reasonably strong predictor of whether or not people think they'll personally experience the effects of climate change (a multi-decade to century-scale process). We are failing to deal with problems we didn't evolve to perceive clearly. (tagged: climate statistics fallacy propaganda science )
  • In German Suburb, Life Goes On Without Cars – Ah, the New York Times has discovered Vauban! Now if only it had happened when gas was $4/gallon, we might have had a chance. We desperately need more experimentation in urban design, so we can have working examples to look at and build on. (tagged: sustainability green urban design bicycles germany transportation parking architecture )
  • Spuds in a Box – Build a box whose sides you can progressively remove from the bottom up, plant potatoes in the bottom, and fill with dirt as they grow. Remove lower slats to harvest spuds. I've certainly heard this suggestion from other people too. Will be interesting to see how well it works for these guys. Seems like you could also do this with some kind of bag, and if you sewed in sleeves/tubes periodically, that you could tie off, and then untie when you wanted to reach in and root around for a spud, you wouldn't have to worry about soil falling out when you pry off the boards. Others are supposedly reporting 50kg of potatoes from 0.5 m^2 area. (tagged: gardening green sustainability agriculture food urban design potatoes )
  • How Much Do You Earn? – A great annotated visualization of income distribution in the US as of the year 2000. It would be awesome to see an animated version of this, and see how it evolves through time. Turns out I make just about the most likely income in America ($20k), which is far below the mean (and the median). As a "household" though, I suppose we're right about at the median ($40k). Interesting. (tagged: economics wealth taxes government policy visualization )
  • The Capitalist Threat – Geoge Soros on Karl Popper's Open Society, from the mid-90s. He rails against the West's failure to extend a helping hand to the post-Soviet nations. He acknowledges that Truth may not be a strong enough motivator for most people, and that within a society that has decided to be Open, there are still many other choices to be made, but somehow fails to mention the way these two things end up pushing an Open Society closed with propaganda, apathy, and misinformation. Political evangelism – the process of deciding what (arbitrary) values your society is going to have – creates huge incentives for those who do not highly value truth to assert authority. I guess that's part of his point though, to robustly inoculate society against those assertions of perfect (authoritarian) knowledge. (tagged: economics politics popper society philosophy )