Any purchase event at any level in the markets always boils down to a realignment of ownership rights. Buy a chocolate bar from the store and, in exchange for money, you get a chocolate bar. As proven by the receipt (a legal document, proof of an event), there is now a prevailing trust in the eyes of society that you hold rights to the chocolate and the store holds rights to the cash.
When supply and demand deal in the markets, they are effectively dealing with the realignment of society’s trust in who owns what. But we should always remember to add the final piece of this sentence to the end, which is “part of the Commons”. Supply and demand deal in the realignment of who owns what part of the Commons.
The Commons are always there, no matter how rarely spoken of these days. All equity is historically deduced from the Commons, and thus all ownership rights to equity are, essentially, on lease from the whole of society (humans as a species) and the planet. There is no arguing with this statement as long as we stretch the consideration of history back to the times when we were all part of a co-operative whole. Which we were.
We should remember that there was a time in history when all resources within a society were shared. All we need to remember is to consider hunter-gatherer families and tribes, the descendants of whom we all are, which behaved co-operatively to stay alive. We thus have no choice but to acknowledge that we have been on the path of increasing wealth inequality for quite some time. Compared to days when resources were equally shared within a family or tribe, ownership rights to equity are now spread much more unevenly.
Certainly there are many arguments as to why we don’t share all of our hedonistic property with others – they are our treasures, not anyone else’s, and we can’t be blamed for picking the fruit of the society we’ve been living in. We should be very thankful for ownership rights to equity and the progress they have brought us in history.
Regardless of the importance of ownership rights to our hedonistic property, there are no moral arguments against why we have to share all of our existential resources with others. We only have one planet, and it only has so much resources to distribute. These are matters of life and death at a planetary scale, and I’m sure no one really wants to have anyone’s death on their hands – regardless of who or where they are on the planet.
Money is an existential resource in today’s world, let’s face it straight up. Having money, or any other form of liquid capital, is equivalent to the potential to have food or water. Without access to capital, as every financier knows, there is no chance for progress. At its most extreme, without money to buy food or water, this means there is no chance to keep on living. At its most extreme, a lack of progress means death.
We only have one global financial system with one amount of global money in it, and it seems to be distributing current and newly-injected money very unevenly.
So, just as we are forced to share one global resource chain to stay alive, we are forced to share one global financial chain for said purpose, as well. If wealth inequality continues to strangle significant parts of the population, as shown by youth unemployment, for example, then it can potentially lead to a devolving global financial chain. Without access to the free markets, brought by having capital, new black markets will begin to form at an increasing rate. Usually, this exacerbates the spread of negative societal outcomes, as shown by the black market for hard drugs (why not do intravenous drugs when there is nothing else affordable to strive for in life?).
More equal and transparent financial co-operation, to balance out the negative externalities caused by wealth inequality, should be striven for with the utmost immediacy across the globe. But it will only be possible if there are no financial black holes in the chain, where money sinks into, never to come out again. If such black holes exist, there will be an unnecessary gap in trust between peoples and nations, slowing co-operation down or preventing it from getting started altogether.
Tax havens are once such form of financial black hole, but what the tax havens have accumulated at the bottom of their black holes – immense private wealth, held mostly by citizens of wealthy nations – are the actual problem. Immense private wealth, regardless of however and over however long a period it has been acquired, is the root bug in the financial system.
Access to capital leads to access to more capital, with the initial capital acting as collateral. Immense private wealth is, thus, constantly sucking liquidity out of the system, storing it at the very bottom of a legally unobtainable hole. New injections of liquidity into the system, bond issues by the central banks, seem to flow rapidly to the exact same places where wealth already is. Those without capital stand absolutely no mathematical chance of ever catching up. Compound interest denies it! The logic of math is unbreakable; the statements in this paragraph are as close to economic facts as one can get without a political debate.
Even money is deduced from the Commons, as money signifies Common Trust in exchange. Money is a quantified, materialised (cash is still King!) form of trust. A dollar is not equally worthy for a poor man and a rich man, as a proportion of their total individual wealth. If the rich man cannot understand the value of a dollar for a poor man, they will have trouble trusting each other.
If a common understanding in the value of money goes, if we lose trust in money itself, we lose all capacity for exchange. Who knows what happens then, but it certainly won’t help the world get better.
As we need money to survive, individually and collectively, it should be spread more evenly. The argument is purely moral and, thus, political. All it takes is a significant, globally co-ordinated hike in the inheritance tax of wealthy nations and the backbone by poorer nations to stare down the arguments by those wealthy nations until such a system is enacted. Famous economic researchers Piketty and Saez, amongst others, have concluded the optimal level of inheritance tax to be 50% or even more. To make it work fairly, however, global co-ordination is necessary. Otherwise, capital would just flow into the tax havens at an increasing pace.
Another option would be for the Bank of International Settlements, under UN co-ordination, to flood global society with new capital, in the form of a new global currency, directly into government budgets. This would decrease the relative wealth of the wealthy and ensure new wealth is being directed to those in more need. This would also be a much more extreme measure, as it would place a lot of sovereign power in the hands of the UN and the BIS. To me, a controlled redistribution via inheritance taxes seems safer.
However it is conducted, the redistribution of the wealth of nations should commence, under leadership of the United Nations. This economic reset, unrivalled in history, would level the playing field for countless future generations of children across the globe. In times such as these, when there is Common reason to invest into bettering societal outcomes significantly, the preconditions in the economy for redistribution are as good as they’ll ever be. If we’re to conduct politics on a scientific basis, we don’t really have a choice; see below.
Remember, all societal outcomes are caused by the economic preconditions set by who owns what part of the Commons, and how they use it. That’s what supply and demand are all about, and it is time for economists to start taking the Commons as seriously as ever so that we, the new generation of parents, can get started on building the future for our children and grandchildren.
Oh, and, the final argument: let’s remember how much people are calling for fact- and science-based politics these days, as alluded to above. If that truly is the case, then there should be no politician avoiding the biological fact that all humans on our planet are of the same species. Somewhere out there, we have a common ancestor. A species is a larger unit consisting of smaller individual components, a generational system. In other words – a larger unit of a family, which consists of, at minimum, smaller components of parents (older) and children (younger).
Politics starts with how power is distributed between kids and their parents – only then does the politics between nations begin. If we’re all family, am I really happy with the way all my distant cousins around the planet are faring right now? Is the right to play with all the toys of Mother Nature’s Commons divided so as to set fair pre-conditions for new generations to continue playing the market game, as well?
Immense pre-existing wealth, cornered into the control of a small population of the whole, sets pretty good pre-conditions for a bad division (for the whole) in the future, as well. There’s some deep-fried food for thought.