Economic inequality

Economic inequality

Peter Kopa, Prague, 24.10.20241

https://thinktanklatam.org/el-mito-del-reparto-1-99/

A bit of history

A recurring theme in the media is the news that too few have too much money, or that wealth is concentrated in too few hands. This is often presented as an injustice that needs to be remedied, without being willing or able to make a calm reasoning around this issue. The first question to ask is whether another economic system has been better. If we look at Communism, the accumulation of wealth has occurred only in the hands of the state. If we look at Hitler’s flourishing of the war economy, it does not help either for analogous reasons. If we look at China we see a special phenomenon in which the initial state dirigisme of the economy has been successful because it has aimed at an open economy with a certain air of freedom. The predatory capitalist model, devoid of common-sense regulation, which curbs unfair competition, exploitation of employees, etc., does not work either.

The open and free economy tends to disproportionately reward the most capable and disadvantages those who are below the average personal capacity. https://thinktanklatam.org/la-tirania-de-la-meritocracia/. If we look at the ancient economy we realize that the differences were even greater between the nobles and nouveau riche bourgeoisie and the rest, with more rigid social classes and with a system of economic production dependent on land, which was worked by very many people, before the mechanization of agriculture. And the land generally did not belong to the farmer, which seen with the eyes of our time seems unfair.

Today, inequality is different

As of 2023, it was estimated that there were approximately 56 million millionaires in the world, i.e. people with a net worth of more than one million dollars. In total, their accumulated wealth was valued at about $158 trillion. However, these numbers can vary from year to year due to changes in the global economy, financial markets and other factors. This data is published annually by Cap Gemini in conjunction with the RBC Wealth Management Financial Institute.

It is estimated that there are tens of thousands of people in the West with wealth in excess of $30 million. According to recent reports, the number is typically in the range of 200,000 to 300,000 individuals in North American and European countries. This segment of the population is part of a category known as the “ultra-rich” or “billionaires.” To obtain more accurate and updated data, it is useful to review reports from institutions specialized in wealth analysis, such as Credit Suisse or Wealth-X.

We must get used to not thinking a priori badly about this accumulation in a few hands because it has always been like that, with its ups and downs. I believe that we should not focus so much on the concentration of wealth in a few hands, but rather ask ourselves whether this situation unfairly reduces the quality of life of citizens. Then we have to see whether the rich have managed to accumulate their wealth legitimately. Paradoxically, the rich countries, where the concentration of wealth in a few hands is attacked, are the ones with the highest percentage of middle class, where the “poor” do not lack good food, shelter or minimum social assistance. At the bottom of the scandal of inequality, is there not an excessively materialistic vision of man, in which happiness is confused with wealth and with the greatest capacity to acquire it?

The media forget to say that the money of billionaires is invested in maintaining production and service infrastructures that provide jobs for millions, who in turn pay a direct and indirect tax in the order of 40-45% in Europe. In addition, most large companies earn a moderate profit margin of up to 10%.

There are some essential parameters for the quality of life, which are silenced by the media, and which have nothing to do with money: the moral dimension, which manifests itself, for example, in the low birth rate, which then induces suboptimal conditions in the education and training of children and young people. https://thinktanklatam.org/anomalias-psiquicas-en-aumento/. Nor is it a question of money other spheres in individual personal life that are decisive for a happy social coexistence. It is paradoxical that the Judeo-Christian culture has made possible the emergence of giant companies, which now turn against their own roots when a part of them, allied to the Davos 2030 Agenda, seek to destroy this culture.

Small and medium-sized enterprises

Moreover, economic productivity of prime importance is achieved by small and medium-sized enterprises, also ensuring good economic stability. The German ˇMittelstand’ is well known, which is the broadband of the affluent middle class, which has been built up by the high-level education provided by the state, both for trades and for jobs at the highest technical or scientific level. Welfare is always the result of a rule of law where human rights are stably guaranteed, which requires a low level of corruption, a good education and a policy that allows entrepreneurs to breathe freely for decades.

Today everyone knows that they have the chance to rise, and they also know that this usually requires good ideas and hard work. The biographies of quite a few great millionaires show that they started out washing dishes in a restaurant. But there are also millionaires who inherited it and then knew not to lose it, but to multiply it. As always and in everything, we only look at what we see. Thus we do not see the legions of ex-rich people who have gone bankrupt, the many who have not been able to maintain their inherited fortune and so many who, out of their own modesty, have tried to start a business and have not succeeded.

The people who are best equipped for a good economic career are those who know that economic failure is nothing dishonorable. The important thing is the free choice, not to be stifled in a system that blocks the possibility of human self-realization on the economic level. I remember now what one of the richest men in Brazil once said to me in Zuerich: ‘Peter, it is very difficult to be rich and at the same time to be happyˇ. I know many rich people and I can confirm it: if they are happy they are happy for other reasons, mainly thanks to the family and the children and grandchildren. The difference is that they have a better house, then there is the country house and a nice car. And little else. It is necessary to abandon the paradigm that self-realization is conditioned by money and adopt another one: that happiness depends on whether I am consistent with my spiritual and transcendent identity.