Inequality and Political Change

Research Affiliates posted an interesting article today titled, "The Profits Bubble. "

The gist was that outsized profits are controlled (or allowed) by government and when they get too big (there is a trade-off between profits and income), the resulting growing inequality leads to social unrest and political change. The article correctly argues that profits cannot grow at a faster rate than the economy for too long and established that they have been growing at a faster pace than the economy for the last 20-30 years.

I think this idea/notion is correct. The problem is one of timing. It is very hard to know when or what the last straw will be that has been added to the camel's back. Changing societal/cultural norms and rising living standards around the world (rising economic tide in developing world, falling cost of living in developed world) are likely to make this process alot longer than prior history examples (maybe).

Societies are just like markets inasmuch as they are tightly coupled complex systems prone to periodic crisis and unravelings.

Salt, Sugar & Fat = Money, Sex & Violence

The food industry knows what we like to eat and how to get us to eat. Salt, sugar & fat are the holy trinity of food sales.

Similarly our society and culture has its own irresistible fantasy based upon its own holy trinity of insatiable desires - money, sex & violence.

The facilitator is tv, movies, and videogames, and the enabler is the entertainment industry.

We Need a Revolution

Just as Jesus threw the money changers out of the temple, so to do we need to do a purging of US political, legal, and economic institutions.

The system is weak, decrepit and bereft of integrity with various parasites feeding off the host. Money talks, and when you're talking about the wealthiest country in the world, there is a lot of money at stake. And it is precisely this money and the power surrounding it that will continue to eat away at the foundations of society.

Sadly, as with any unsustainable imbalance (think healthcare inflation, tertiary education inflation, rising debt levels, oil consumption, disproportionate military spending, etc.), nothing will be done until a catastrophe occurs. And even then, if the current response to the financial crisis is any indication, we are unlikely to achieve true reform. It is a bad position to be in, to be a Jeremiah, when you have no clue as to when the walls will come down. But the writing is on the wall, and history shows that when something is corrupt, economically unsustainable, and being eaten away by parasites, the result is foregone.

The current healthcare debate is just another symptom of the rottenness in the system. With it so hard to create good policy, is it any wonder that we can't get true reform until it is too late.