Saturday, February 16, 2013

In It for the Rich

We at hope that we have been clear in previous posts that a superior economic system requires a broad tolerance that includes the rich. We propose a system based on multiple exclusive currencies that allows a higher degree of economic separation between the rich and the poor, in order to protect the poor (and the rich from themselves). This may be an interesting idea to the rich, but no one has any real-life experience with it, so the rich might just ask themselves what is in it for them.

First and foremost, it allows them to remain rich and socially justified. This is an issue because all significant socialist systems see wealth as a sign of shame if not evidence of criminal behavior. They use "scarlet letter" tactics at the very least in the attempt to make the rich poorer. They justify this because it helps "level" society.

No one who believes in evolution can believe that society can be "level," at least in the sense that all members can be made equally competitive in all areas. Evolutionary principles convince us at tosoc that we should work with the reality of inequality rather than try to deny it. We also believe that diversity and tolerance in the human population should be the goal, not uniformity and intolerance, and that diversity leads not just to greater wealth, but to a richer social life.

Using marine biology as a loose metaphor, we want to create economic tidal pools and coral reefs to separate the "whales" from the little fish. (Recall the JP Morgan trader Bruno Iksil who was nicknamed the "London Whale.") wants to create richly diverse economic environments in which many kinds of economic persons can thrive, from the whales to the little fish.

Another metaphor is the educational system, where younger students are not required to compete against older students, and the purpose of the system is to educate and strengthen children in stages instead of destroying them with advanced challenges that they cannot meet. At tosoc we believe that multiple exclusive currencies can be used to create a set of markets similar to grade levels in schools, from lower to greater difficulty levels. As individuals become more and more economically capable, they can "graduate" to more and more competitive economic markets.

As a contrasting metaphor, think of wolves and sheep, where the rich are the wolves and the poor are the sheep. We at tosoc think that using animal models to justify human behavior (and the reverse) is questionable at best, and this one strikes us as particularly misleading and harmful. Real sheep do not resent wolves and the relationship is not adversarial in the human sense. No sheep plans to become a wolf, or even to take revenge on a wolf, and the wolves do not plot how to fully exploit the sheep.

Translated into human terms, the wolf and sheep model implies that the rich and the poor are at war with one another – a permanent war, since economic equality is an illusion. This is an all too common interpretation of the relationship between the rich and the poor, one that leaves out the possibility of social cooperation for mutual gain.

Instead, we should let the rich feel that they are on top, so long as they are not allowed to prove it to themselves by abusing, oppressing, or exploiting those of us who do not want to play their games. They will not lack for underlings, however. Even if we implement multiple exclusive currencies properly, there will be plenty of those who will voluntarily endure exploitation in return for the opportunity to participate in the "top" markets and in what they see as the "highest" levels of society. Not all the rich feel the need for such things, but some do. The rich will have to give up only their most grandiose, megalomaniacal, and unrealistic visions, such as "dominating the world."

On the other side of capitalism, we understand and value rich people and their role. They will be encouraged to exercise their wealth-generating talents and use their wealth to demonstrate to the rest of us what wealth is and how to live "better." Even without meaning to, they will teach the rest of us the things we need to do in order to create wealth and make progress ourselves.

There will no longer be any need for an adversarial relationship between rich and poor. Multiple exclusive currencies and government intervention will protect the poor from the exploitation of the rich, and the exclusion of the rich from the currencies of the poor will help prevent them from attempting any exploitation. The rich will not have to fear the revenge of the poor any more.

Finally, it may be possible to release the rich from the constant regulatory and legal attacks by democratic governments in search of revenue. The need for ever-increasing taxes will diminish if not disappear because the central government will be able to adjust gross domestic consumption to be less than gross domestic product. Then the government can fund itself on the difference. It may be that no one will have to pay taxes in such a system.

A system of multiple exclusive currencies and markets would have great advantages for the rich. It gives philosophical and practical support for their state of wealth and removes the issues that create an adversarial relationship between rich and poor. The role of the rich is assured and valued, and it seems possible to reduce democratic government tendencies to pursue regulatory and tax policies that single out and hurt the rich.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (

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