The proper purpose of a democratic economy, which is nearly indistinguishable from its government, is to provide conditions for all persons to live a life free of want, with all the advantages the society is capable of providing at the time. Nobody has ever claimed that the purpose is for everyone’s problems to be solved by the government, although that is one of the enduring Republican arguments against programs designed to help people in need. Nor is the purpose to make a few people very rich and everyone else poor, which is also a Republican priority.
If people get rich, that’s OK, as long as they don’t become the builders of inequality and suppression. People who contribute something of value to society should be rewarded. In fact, the failure to reward them is exactly what is wrong with state socialism. But builders of inequality and suppression is, of course, exactly what the rich have become in our own era, a trend that worsens as their wealth and power become more extreme.
There is a set, finite amount of wealth in an economy. A rough idea of that amount is given by the Gross Domestic Product, which is a decidedly imperfect measure, but the most practical one we have. Because this amount of money is finite and inflexible at any given time, simple arithmetic tells us that money given to one part of the economic society must come from the other parts. If circumstances are benign, this is appropriate. The better elements of our society are rewarded for the benefit they bring to the whole. But that’s not what we have now. The people at the upper end of the wealth spectrum are being gifted with vast amounts of wealth that they have done nothing to earn. Economists call this “rent seeking”, getting additional money without doing anything to earn it, without benefiting society. This not only fails to benefit society, it actively harms it.
There is a finite amount of wealth in an economy.
Moving wealth to the rich means
moving it from everyone else.
Let’s take a look at what this inequality has become:
Imagine the highest skilled person we can imagine. Say, a brain surgeon at the top of the field. For an hour of his extremely valuable talents, he might earn, say, $50,000. That would come to $104,000,000 per year. There is no one who actually performs socially useful work earning anywhere near that amount, and even the most skilled ordinarily earn far less. Top surgeons, in fact, don’t come remotely close.
Compare that to the top pay of hedge fund managers. A number of them “earn” in the neighborhood of a billion dollars. A billion dollars a year comes to nearly half a million dollars an hour, nearly nine times what our fictional outrageously overpaid brain surgeon earns. The highest paid hedge fund manager takes home 28,000 times the national median income.
The thing is, what the hedge fund manager does cannot be defended as contributing anything, anything at all, toward the betterment of society. His entire occupation fails the test of social utility. There are a few such occupations, ones that benefit only their practitioners, and extract money from the economy at large. They occur in two categories, financial manipulation and crime.
The circularity of the conservative argument
that the rich are the natural leaders
and the natural leaders are the rich
has apparently never occurred to them.
There is a group of people who don’t agree that the purpose of a democratic economy should be democratic. Such people believe that there is a class of superior people who are meant to be the leaders. We can easily tell who they are because they have lots of money; they have lots of money because they are the natural leaders. The people in this group of believers are called conservatives, and the circularity of their argument has apparently never occurred to them.
Their beliefs have come to us from hundreds of years ago, straight from the era of landed gentry and serfs, the gentry being the superiors because they have all the money and power, the suppressed serfs being the ones from whom the riches are extracted. Their modern day counterparts are the very rich, with the rest of us in the role of serfs. For at least four decades, the wealth of the rich in the US has increased dramatically, whereas the fortunes of everyone else have stagnated or declined in spite of our rapid national modernization and increase in economic efficiency. This occurred because our gross wealth is finite. Most of this inequality stems directly from the unjust use of power to influence the law to shift wealth to themselves.
I could be wrong (All heaven forfend!) but it seems to me that the current situation does not meet the qualifications for a truly democratic economy. President Jimmy Carter says the same thing.