Wishing for Wealth

Sometimes, as Jesus said to Saul, you ask, "Why should you kick against the pricks?"

The thing is that the circumstances of life can be resisted if you assume the existence of free will. Indeed, if the will has some freedom, you have a duty to use it, since freedom of will differentiates you from inanimate matter.

However, sometimes it doesn't make sense to strive for things that cannot logically be attained. For example, hoping that everyone will be rich is silly, because humans always rank each other, and if everybody is rich, nobody will be happy.

The pragmatist idealists then reply, "Yes, but surely we can hope for sufficiency, that everyone will have enough?"

Certainly! The problem is that a significant number of humans are unhappy about mere sufficiency. Indeed, many of those in the grey zone between poverty and wealth are very, very unhappy even though they are not poor. They subsist, survive, have enough... but it is never enough.

As Jesus also said, "The poor you will have with you always." There will always be those who claim they are poor when they aren't, and resent those who are rich enough to give their excess to the truly poor.

Strikingly, the people who want to eliminate the very wealthy for 'Christian' reasons are also the people who don't want the wealth redistributed because that would be Marxist. Well, it should also be noted that Marx got his ideas from the Book of the Acts of the Apostles, chapters 2 and 4.

Go figure.

Family Fortunes

Wealth does not redistribute itself naturally. It behaves like water (hence Newton referring to it as 'currency') and it can be transferred within tight groups that make more of it by rent-seeking and bulk-gambling behaviours. The only things that really redistribute wealth are onerous taxation, mass death, and bloody revolution.

These are the lessons of history.

It's therefore very hard to see how much redistribution will occur as a result of NOT doing any of these things. But modern ethical thinking is such that these things are unthinkable. Hence, modern ethical thought supports (although it does not condone) continued inequity and inequality in terms of wealth distribution.

There are other mostly-theoretical redistributors with limited historical validity, of course.

One such is a strong moral reform campaign premised on individual desire to give away one's wealth to those who are poor. It can happen. But there are few who will succumb to this admirable lust.

This is why Jesus said, "The poor you will have with you always."

Of late, I've seen many atheists or anti-religionists tell off theists and religionists for not practising their own preaching and solving the problems of the world. Well, two thoughts here. One: 'practise what you preach' cuts both ways. Two: what prevents the former class of discussants from nicking the loot of the latter? If they stand to profit from it, that's a clear conflict of interest — and if they want to, this won't stop them either.

Here are some old thoughts on inequality.

Glory

As the market statistics (note, not 'markets) fall across the boards and bourses, I feel happy. I feel happy whenever these funny things happen because they amuse me and I am fortunate not to be directly involved, thus fulfilling at least two meanings of the word 'happy'.

What has always bemused me from a rational perspective is the way people sink huge funds into gold and diamonds. Gold is not particularly rare; there are 200,000,000 kilos of it lying around in the world today. Diamonds are not particularly rare; there are so many of them (and so many kinds and varieties and ways of making them) that it seems odd to think of them as stable investments.

What distinguishes these two elemental resources is chemical stability (for gold) and physical stability (for diamonds), you might think. But the most important quality they have is attractiveness. Gold is golden; diamonds scintillate when cut aright. They have wonderful optical behaviours under the right conditions. Beauty, for them, is not just skin deep; they are beauty crystallized, whether as metallic crystals or covalent crystals.

And yet, their elevation causes anomalies in value for other worthy substances. Take ruthenium, a harder and more durable cousin of gold. It is tough and chemically resistant, beautiful in a cold silvery way, more silver than silver and more valuable in chemistry. It is selling for USD170 per ounce right now, a tenth of gold's current price. But there are only 5,000,000 kilos of it lying around. The same kind of problem exists for tanzanite; it's a more beautiful and much rarer stone than diamond, and once it's been mined out of the three mines in Tanzania, there will be none left. But diamond, that simple structure every high-school chemistry student must know, is made in ton-loads by geological activity.

So what is the weight of glory? The glory of the world passes, and yet we invest in it. The glory of man is like the flower of grass; the grass fades and the flowers fall, and the wind blows them all away. What is seen is only what there is to be seen; what is unseen abides forever.

Income Inequality

I've noticed a lot of people talking about income inequality these days, mostly revolving around the ideas of debt, fair wages, and how uncivilised such inequality seems. Very few grasp that it's somewhat inevitable in specific contexts.

Actually, it's inevitable in a context that is very specific and also very rarely thought about. All city-states are like that, because a city-state seldom has control over its hinterland except by huge investment in overwhelming military force.

Such investment normally cripples the economy, because you need to reward the soldiers and mercenaries. A rich city-state normally avoids that, one way or another, by disproportionately rewarding wealth generation, networking ability, and the personal power to control and manipulate others. And this is also how the state will define merit implicitly.

That's it in a nutshell. The whole argument is partly historical in nature and very much longer. Major footnote: see here.

Skill-Based Technical Change

There's this loony hypothesis in economic circles that had me in stitches (especially after reading what I've been reading for the last 18 months on technological history). It's apparently a fairly entrenched idea that economic inequality stems to a large extent from technological change; the reasoning is that those with technical skills can parlay those skills into economic force multipliers or something, so they get richer faster. This is called 'skill-based technical change' (SBTC) theory.

I don't think so. That's not how technology (not itself a well-understood term) works. But apart from that, there are actually two models of technological spread that are very different, and work against the SBTC model.

Firstly, there's the 'ubiquity' model. In this model, technology spreads very quickly until everyone has the tech. This is the empirical case with many technologies — washing machines, refrigerators, toasters, radios, MP3 players, pottery, the plough, road-building, brick-making. Given a general technological level in a society, some techs will become ubiquitous very quickly. Once the coiled-coil tungsten wire technology became available, incandescent bulbs became ubiquitous within years.

Secondly, there's the 'patent control' model in which the tech originator deliberately makes it hard for the tech to become ubiquitous. But because the only way that's possible is if the tech requires a very high level of tech (e.g. stealth materials tech (and in the past, steel), requiring a large industrial base to be economically viable) or it is very arcane (e.g. stealth materials tech (and in the past, steel), which very few people understand in detail). Such tech is too expensive to give people an advantage.

Real-life examples are doctors and lawyers. The two are oft-cited examples of professional middle-to-upper class prosperity. But as my doctor and lawyer friends will tell you, the economic benefits aren't as obvious as you might think. Doctors have it worse; they tend to get sued more often and need far more supporting tech — lawyers only need information and brains.

The real money-makers often don't have a tech advantage at all; if anything, they are really good at networking and deal-making, which are social advantages. They make use of technology, but the advantage of technology is unclear at best. Any tech they do use doesn't enable them to get rich faster then the next 40% of population, simply because tech of that kind is ubiquitous tech — computerised trading systems etc. It's again brain and skill.

So is inequity accelerated by technology? I don't think so. The same people who argue for SBTC models also acknowledge that a large middle class is created by tech ubiquity, which means the bottom moves up faster than the top. Which, in turn, means technology should actually work against wealth inequity. Maybe some economist can correct me on this point.

Public Housing in Atlantis

In Atlantis, there are all kinds of pyramid games. These aren't your usual distributed sales or Ponzi scheme pyramid games, but games that have to do with the distribution of wealth.

I'm a poor boy, and my little apartment in the outskirts of the Swamp was cheap. In fact, I paid for it entirely with the government-backed savings plan. I never touched any of my own liquidity. The price of that apartment has gone up about 70% recently.

Does it mean that people are getting wealthier? No, I'm afraid to think what I think, but I think that it's because the upper middle class are thinking twice about expensive property and are starting to encroach on the cheaper stuff. This is raising the price of the cheaper stuff.

It's the same with education. Education ought to be a public good. But it's become stratified by class to a very measurable extent, both in terms of money as well as in attitudes. It has led to an odd equilibrium similar to that found in schools founded some time in the 19th and early 20th centuries all over the world.

The equilibrium is multipolar. It goes like this. Consider an hypothetical school A.

School A has average teachers but the scions of rich families go there. The senior members of those families sit on the board. They give the school a sense of importance, of national-level destiny. They allow the school to create expensive programmes with (as is the case with many social phenomena) difficult-to-measure outcomes. We don't know if these programmes would work for everyone, or only for the scions of rich families who have too much spare time and energy on their hands.

The 'scion' students in this school would not dream of going to 'real' publicly-funded schools, as you won't find such networks there, or such a brand name. In fact, they look down on other students who do, although they will not admit it (and indeed, it might be subconscious). These scions even look down on students in their own school who haven't the multiple swimming pools, horse-riding lessons, or holiday ranches. However, there is some grudging admiration for brains, since after all this is supposed to be a school.

Actually, most of these scions have been hothoused, so they themselves are pretty smart compared to the national average. And if not. there's always private tuition, paid for at about $150 per hour or more, which is a pittance to their parents (or even, to them). Eventually, none of them actually needs good teachers, and for the price of one good teacher, you can hire maybe two not-so-good teachers. What do you think happens?

Well, as some people once told me, you can get about three new recruits for one 15-year teacher. Quality can be developed and your ROI is better if you invest in new recruits. After all, a good teacher can only be improved a tiny bit, while a new one can be improved by adding rims, spoilers, and a flashy paint job training and development. The absolute quality does not matter. And you can plough the extra cash into aesthetics like pagan statuary.

Eventually, the school is taking in 'students with lives' (as in 'come on, get a life'), who have some brains. You might call their philosophy of education, 'brands and brains'. The school will then label this 'holistic education', since it's quite obvious that these students 'have a life' and 'live it to the full'.

But this is an unfair caricature. Most of the students aren't really like that (although they would be if they could). The school isn't really like that (it could be worse). And the teachers aren't really like that (actually, it's hard to tell what the teachers are like).

And so, the cost of public schooling goes up on the side. Fortunately, public housing and schooling are both reasonably good in Atlantis. But sometimes I think they're a bit too expensive for what they're supposed to deliver.

This thought is a Bad One. It is an Ungrateful Thought. The correct response to such a thought is, "Why are you complaining, after all, your nett value goes up because of all these things, since you are from School A and you also have an apartment that has gone up 70% in value?"

Well, I just hope that people will be able to afford more of the good stuff and that there are more good years ahead for everyone. It's kind of hard to see how this can be when money is buying less and less in terms of real value.

Relative Hardness

There is a famous anecdote about Voltaire and a whinger. The latter complained to the philosopher, "Life is hard!"

Voltaire replied, "Compared to what?"

It's an interesting reply, and one worth worrying about. It's possible to compare life to life in some ways. But what I've been thinking is that if you're a university student, you're already in the top 10% of the world's population. There simply aren't many people being educated in universities as a percentage of the world's masses.

One estimate of the current enrollment of students worldwide at the tertiary level is 150 million. Compared to the total world population of about 6.8 billion, that's 2.2% of the world. The current enrollment is the highest it's ever been; one forecast says that at this rate, India alone will need 2400 new universities to educate all those who might meet the current criteria for entry to a university.

It's probably quite accurate to say also that the top 2% of the world's population owns about 50% of the world's assets; that's what this UN study claimed about the world in the year 2000. The same study points out that if you had US$2,200 worth of assets, that made you richer than the average human being; US$61,000 would have put you in the top 10%.

My conclusion is that if you are debt-free (or tolerably so) and own a house or apartment in an alpha or beta world city (or you are a member of a small family that owns one), and if you also have a university education or are a university student, then you are blessed beyond any kind of complaint you might want to make.

A Brief History Of Some Rock

Well, here I am back from the Bay of Bengal, the tsunami amplifier of the region. On a clear day you think you can see forever, but what you are seeing is inestimable beauty mixed with a poverty that is induced by the globalisation of a certain kind of wealth-concept.

Because certain people over the globalisation history of the last 200 years have successfully imposed certain wealth values on others, to their own benefit, those others have become poorer. Sri Lanka, the Ceylonese centre of great wealth and marvellous gems; the various city-states of the Indian sub-continent; the mysterious outskirts of Indochina... all of these have been exploited to their own detriment by the powers of the world, minor pieces and pawns in the Great Game.

Why else are gems mined in this region marked up 10x in their journey to the markets of Bangkok, marked up 10x again en route to Hongkong, and 10x again as they fly their clattering journey to London? The miners are as poor as dirt; the dirt is perhaps richer. The society belles with the outsize carbon and impure alumina and other Mammon-sanctified rocks — they live on the backs of the poor. And why ever should this have come to pass? These aren't even useful rocks in their shiny metal cages.

I sat by the Bay of Bengal. And I laughed, and the waters answered me.

Greenspanned

I read with interest recently of Alan Greenspan's recantation. He has finally admitted that the economic policies he presided over were some sort of pyramid-selling scheme in which the assets and worth of future generations were traded away under the assumption that wealth would never dissipate. This humans-conquer-the-cosmos thing has long been an SF trope: you can find the idea that man will run out of time before they run out of space and matter in most science fiction of the 1960s to 1980s.

Timothy Rutten, in the Los Angeles Times, has an interesting take which does not only address issues of time, space and matter. This is what he has to say:

No one begrudges a company about to go out of business the right to cut payroll, but now nobody blinks when a CEO throws people out of work for an uptick in the stock price or to ease the service of ill-considered debt. It's been a long time since anyone who analyzes the economy has been willing to say that it's immoral for a profitable firm to deprive families of their income and health insurance, to strip hardworking men and women of labor's dignity.

"I did not forecast a significant decline [in the housing market] because we had never had a significant decline in prices," Greenspan told the committee, adding that the Fed's record of economic foresight remains unequaled. "We can try to do better, but forecasting ... never gets to the point where it's 100% accurate."

Perhaps only an economic education prepares a man to draw as his conclusion from catastrophe the gnomic declaration that fallible human beings are not infallible. Some things, however, are true 100% of the time: Societies in which the few are allowed to fatten themselves without limit on the labor of many are not just; they aren't even particularly productive for very long. Countries -- like companies -- that cling to notions that allow some to pursue their own interests by behaving indecently toward others come to bad ends.

There is no recovery from moral bankruptcy.

The full article can be found here. It's just one of the many pieces now available in journals and newspapers around the world. Can we have only just woken up?

The answer is NO. Simply put, the voices championing rights for the employee and a fair deal have been drowned out by the voices of wealth, prosperity gospels, and the idea that wealth will always trickle down to the bottom (like the collector tray at the bottom of some vast hydroponic tank).

The operative word there was always 'trickle'. Wealth was associated for far too long with moral dominance. It was never supposed to be so; Jesus would have been the first to identify the need to keep the love of money away from the hearts of men, and to always tie responsibility to power. The Bible is full of it: the scholar, officer and gentleman are not to boast of wisdom, power and wealth — they are to boast (if they must) in terms of how well they know God and His ideals of mercy, justice and righteousness. And of course, to know Him is to do His will not according to the understanding of men, but according to the Word and the Spirit.

You who read this might not subscribe to that sort of theology or any kind of deicentric belief. But it does seem that, as Rutten puts it, some people actually can be found who believe that doing nasty things to your underlings makes the world a better place for everyone. That folly is now being exposed. Maybe altruism is indeed a survival trait after all, and the dinosaurs of this age will perish.

Bookie

I've noticed an interesting trend in my personal life of late, as I sit here pondering the outcome of the English Premier League's latest round of farcical and amazing results.

That trend has nothing to do with the EPL, but a lot more to do with what I do when not thinking too hard about it.

I tend to give books away as birthday presents; in the past, I used to read them first and then give them away. I'm one of those who treats books well – most people say my old books look brand-new. But of late, I've realised that I'm giving away books I haven't read, some nicely sealed in plastic, some being unread copies of books I have already read.

I suspect that somewhere along the line, personal affluence made me slowly slip into this new mode. In the past, I used to budget $10 or so for gifts. I'm not rich, and I come from a line of thrifty merchants. Now, I tend to aim at £20 as a limit for casual gifts, and for those who mean more to me, it goes as high as £200. Madness.

I don't think it's purely the affluence. I think it's also relative affluence and an awareness of what that means. Most people I know are in the top 5% of the world's population in terms of earnings. That might sound outrageous, but the average person in my city is in the top 5%. Think about the billions of poor agricultural workers in the third world nations, and you will see why this is true.

What does it all mean? I guess when the Bible repeatedly tells us not to be consumed by love of money, that the love of money is the root of all evil, that rich men find it hard to squeak through into heaven, and that we are to be good stewards who give everything back to our master... it's good to just spend money on other people.

We who are people of the Book ought to pay up out of our own wealth for people who need it. I have been perturbed in the past to watch Christian institutions raise millions of dollars in funds just to build nice buildings. It's all very un-Christian. Just take a look at this passage, if you need to know why I say this.

The prosperity gospel is a sham. Whether you end up with wealth or not, understand this: wealth is a burden, to be given away wisely and easily. When you cannot shed wealth easily, then it is as good as a shackle of rusty iron.

Making The Pond Bigger

I was a teenager not that long ago. Well, not that long ago. By that time, John McCain had entered the Senate. At that time, the internet was non-existent except in the highest levels of a small group of nodes. It was possible to look around me and take comfort in the false belief that I was really pretty smart compared to many people. Maybe even smarter than half the people around me, which would have made me one tiny spot above average.

The thing about statistics is that they are not easily mapped into properly meaningful ideas in the human brain. I use that word 'properly' for a reason – it is all too easy for them to be mapped into meaningful ideas with the wrong meaning. Take, for example, the last sentence in my first paragraph above. If I went around saying I was smarter than 50% of the population, I'd only be attributing slightly-above average intelligence to myself (however you measure that slippery concept of intelligence). But I'm sure it would be taken as some sort of elitist comment.

Let's be honest, though. I classify myself as 'pleasantly ugly' (i.e. a bit below average in looks), 'fairly intelligent' (i.e. at least about 1 standard deviation above the mean on most scales), 'normally fit' (i.e. within 1 standard deviation of the mean on most scales), and 'normally healthy' (i.e. within 1 standard deviation of the mean on most measurements of health).

All this self-assessment was not so easy to make when I was young. You only had the evidence of your immediate senses, and I had the disadvantage of going to a school in which lots of people seemed smarter and fitter than I did. As I grew up, however, I began to realise that the immediate population of my youth had been somewhat biased.

In other words, as the pond grew bigger, I realised that while there were amazingly huge numbers of people who were incredibly much smarter than I was, there were also perhaps more people who were not. This made me feel a lot better, although not that much better.

The point of all this really is that if you have spent your whole life in a small city-state, you should get out a bit. Look at as much of the whole pond as possible before you think of what kind of fish you are. This is increasingly important as access to the global pond opens up. This especially goes for people who are discontented with life after looking at their neighbours.

You know the kind: *grumble* *grumble* I only earn US$4000 a month and my monthly costs (after paying the bank and all the bills) are now US$3200 so I only save US$800 a month. My neighbour has US$16000 a month, so he can probably save US$12800 a month.

Well, that kind of pay probably puts you both in the top 2% of all wage earners in the world. In a small city-state, you can even determine very exact and accurate figures for what percentage of your pond-people earn more or less than you. What's scarier is that in this particular city-state which is the focus of my research into education reforms, it seems fair game to determine what the best primary schools are based on economic principles of supply and demand. That's not so bad, except that it might be true.

I guess the great thing about access to the whole pond via the Internet is that it's easier to find data about where you really are in life, if you need such things. I know a highly accomplished person who was #1 in everything, but ranked very poorly in the big pond; at the same time I knew one who was thought to be pretty low-ranked, but whose data when compared with the rest of the big pond made a big splash.

In the end, I suppose that the economically-minded fish will do the economically-minded rational thing and migrate to the parts of the pond with more food. Then they will grow bigger and fatter until the fishermen figure out where the big fish are.

Conclusion: somewhere between 1 and 2 standard deviations above the norm is fine; don't push your luck. Heh.