Lest we forget, a primer on capitalism.
MeanMesa takes a longer look at a suspiciously obscured reality. This is the first of series of postings on illicit wealth redistribution in a free market system.
During times of settled peace, money tends to accumulate at the top. Economies bump along, creating wealth, but the distribution of that wealth seems to always migrate in a certain, familiar pattern.
At first, at least in our "free market system," a dynamic waltz occurs between inventors, innovators and efficiency hawks on one side and all manner of value seeking consumers on the other. In the interim phase, assets which can host these new developments are owned by those who can reap the economic benefits of such forward progress.
But, as conditions ossify, the value and potential of risk investment in the traditional forms of innovation slip in comparison to the advantages possible through the manipulation of the system. In the early stages of this phase, representational government steps in to protect the values of the currency, rectify deviations from the "innovation creates value model," sustain its own prerogatives of control and constantly re-establish the country's economic "normal balance," that is, safe guarding the dynamic opportunities of innovation.
It is, however, exactly at this point that the counter responding effect of economic "checks and balances" can begin to falter. In our present US economy, this "faltering" actually occurred some years ago. Absent the counter response feature, our powerful bipartisan government has slipped constantly farther away from the equilibrating "pivot point" of what we would traditionally consider an effective, healthy economy.
Healthy Redistribution and Illicit Redistribution?
Societies since even before the ancient Sumerians have functioned on some form of commerce. Ours is no exception. (Note: We used the term "societies" rather than "economies.") Although there are enough text books on the subject to fill an oil fired rived barge, we can comfortably cite a quiet, fundamental commonality extending through all of this variation.
Values are defined by social culture. Economies -- as in our topic here, "wealth distribution" -- derives from temporarily unbalanced values made increasingly subjective -- and potentially profitable -- by the separation between each party to the transaction. When products are repurchased by their "former" owners or not traded at all, nothing happens.
A 30 cent cartridge is worth ten dollars in the midst of a revolution or an invasion. A smelly rhinoceros horn is valuable enough to risk a gun fight with forest rangers five thousand miles from its final market. Values are values.
Redistribution of wealth is the basic outcome resulting from such commerce. Transactions are made where both parties exchange items at a corresponding market value, and each side "gains" value because his new possession is more valuable to him than his old one.
Whether staple commodities of wheat and water, new technology, rifle cartridges or rhino horns, markets, along with their resulting wealth distribution, value the same things: innovation, invention and efficiency, the features of trading which result in healthy, "free market" wealth redistribution. Even though such a striking over simplification may seem a bit "meat handed" given the complexity of a modern economy, the fundamentals remain essentially the same.
The "monetization" of what we might consider otherwise to be the nobly direct "bazaar market" of previous cultures introduces an interim system. What we see now is that the "money" phase of transactions between humans will almost inevitably host a modern, unsavory appetite to control markets and prices -- if not values -- unless counter balanced by widely accepted basic regulation -- that is, rules.
Examples of such rules are emerging now as our domestic economy is staggering back to its feet following the handiwork which precipitated the current Great Republican Recession. Resistance to the rules imposed by the victims has been energetic indeed. These most contemporary looters missed the lecture which covered the question of when to stop.
Or, at least, when to pause until the coffers of "normally" distributed wealth might be replenished.
Redistribution in Peace Time
Here we can characterize "peace time" as periods when economic activity proceeds in a manner primarily based on commerce. Priorities and values in such an environment are based on the value of predictability and progress. However, individuals and corporations which have accumulated wealth beyond what is necessary for their continuing operation are confronted with three "invitations" to further increase their prosperity.
The first is the obvious advantage of already owning the mechanisms which make further -- profitable -- innovation possible. This type of assets includes laboratories, research and development facilities and even established market structures already prepared to advance the sale of new products.
The second is the expectation of growth by investment which will generate interest or market possibilities outside their corporate bounds, that is, the purchase and ownership of other economic entities with the potential of profits from their own, now financed, innovation.
The third possibility returns to the issue of the control of the market. Unhappily, this last temptation is notable thanks to the fact that the "return on investment" is significantly greater than the first two choices -- and, generally far less risky. Market and supply manipulation by means other than those of the open market take many forms. We see now that these may be imposed in subtle ways until the politics "permitting" them has been groomed sufficiently for more bolder styles.
|Who's Got the Money? (image source)|
The health care debates were an excellent example of this boldness. The propagandistic preparation of the field was so effective that what could have otherwise been a troublesome, popular "self-interest"
Other examples are plentiful. They include managed inflation, soiled national monetary policies, commodities made artificially scarce and all sorts of non-competitive business agreements -- most with the equivalent of peace time "no bid" goods and services procurement by the Federal Government. The normal commercial features of innovation begin a slow, constant slide into economic features of manipulation.
Accompanying this slide, the actual value of the currency is also degraded as less value is purchased for more dollars. For example, when MeanMesa first began purchasing gasoline, the price was 16 cents a gallon, the marketing corporations were facing a top marginal tax rate in the 80% range and the oil corporations were still some of the most profitable enterprises in the world. Rather than troddling through a long list of tedious details, simply consider the changes which must have taken place to make this modern "business" condition possible.
|Manufacturing Depressions (image source)|
The beneficial technology of oil production has, indeed, improved, but has it improved 350% in value or just 350% in price? If the answer is that it has not increased 350% in value, how did the price become what it is today? Through a self-correcting "peace time" free market or through illicit manipulation?
This is the nature of "passive" illicit wealth redistribution. Call them what you may, petroleum consumers, tax payers or simply citizens who have purchased something which arrived in a truck have steadily and patiently paid a higher and higher price which exceeded the "free market" increase in value more and more in a quiet, "small change," illicit wealth redistribution made possible by market manipulation.
The glaring examples are legion -- everything from pharmaceuticals to a head of lettuce. Costs have been manipulated into a state where value has become disconnected from price and where the synthetic difference has been disguised as profit rather than what it is -- extortion. Further, the carefully crafted, constantly accelerating speed of the process has been disguised as economic growth.
Americans pay a price for access to a free market and, normally, expect corresponding benefits. However, when -- usually through either manipulation or propaganda --- we are prohibited from purchasing products and services which should theoretically be available, we must immediately suspect that, at the root, we have been prey to illicit wealth redistribution.
We would like to purchase rational health care we see available on the market in other places. We would like to purchase rational power generation systems which are clearly available, too. We would like to cast our ballots in credible elections where they are counted by our neighbors instead of suspicious voting machines. We would like to purchase network media services -- especially news -- from objective sources. The list is already far too long and getting longer.