You’ve probably heard this story. A man was relaxing by the sea shore one morning. A passing wealthy man asks him why he was just sitting idle. “I am enjoying the day, now that I’m done with fishing for today,” he replied.
“Why don’t you go catch more fish?” the wealthy man asks.
“And why would I do that? I have enough for now.”
“You could make more money if you caught more fish. Then you could buy another boat. And then you would be able to catch more fish and end up with a large number of boats. Then you’d be wealthy.”
“And then what?” asked the fisherman.
“Then you would be able to have a relaxed life, free from worries.”
Inequality is baked into the nature of reality. There’s no escaping it anywhere or anytime. Cosmology holds that the universe began in a state of perfect equality but then following the period of rapid expansion (inflation), inequality appeared in the form of clusters of matter (stars and galaxies) and empty space. The primary force that caused that clumping, physicists contend, was gravity. The weakest of all the four forces, gravity molded the universe into the form it has: clumps and voids.
Equality would have implied a structureless universe. Physicists believe that in the far distant future, the universe will end in a heat death. Then everything will be back to the undifferentiated state of pure equality.
On a much smaller scale and in a different domain, we find the same story of increasing inequality. The first single-celled organisms were all the same. Multicellular organisms have greater diversity. The variety of life forms on earth kept increasing through biological evolution.
Diversity and equality are rival properties. The more you have of the one, the less you have of the other. Naturally this is true of the human world since, being part of the universe, we are not exempt from the fundamental laws of the universe.
Click to embiggen. There’s a famous landmark in the picture. What’s it?
I can justifiably claim that equality is rising in the world. Meaning, the world used to be less equal than it is today, and that in the future it will become more equal than today. The reason that claim appears to contradict reality is that I have not specified the dimension for the comparison implicit in any measure of equality. When it comes to comparisons of material wellbeing, there are three distinct dimensions — consumption, income, and wealth.
My claim is that consumption equality is increasing, not wealth or income.
Here’s a trivial case that illustrates what I mean. Warren Buffet’s income and wealth is six orders of magnitude greater than mine. Meaning his wealth is measured in units of “000,000,000” and mine is measured in units of “000.” Billions as opposed to thousands. Similarly his income per year is measured in billions and mine in thousands. Certainly, compared to Buffet in terms of wealth and income, I am dirt poor. But I am not dirt poor compared to Buffet in consumption. Continue reading “Rising Equality”
This is a continuation of the brief piece about what’s wealth and where does it come from. Wealth, defined broadly, is important to us because it’s useful for our material well-being. Material well-being is not an end in itself but it is instrumental in providing the irreducible basis for our happiness and therefore it is a means to all other higher human aspirations and goals. Without a sufficiently wealthy foundation, it is hard if not impossible to live in peace and harmony with oneself and with others. Continue reading “Competition and the Creation of Wealth”
10 million years ago, there was no wealth on earth
Wealth comes from human action. It does not exist in nature although the ingredients from which wealth is derived through human action does exist in nature. A simple example illustrative example is hydrocarbons in the ground (coal, crude oil, natural gas, etc.) They simply exist in nature. Whether it is useful or not depends on the user. Primitive life forms on earth had no use for it. Dinosaurs did not dig up coal to use as an energy source. Even primitive hominids had no use for coal. Though coal existed for millions of years, it did not become wealth until modern humans figured out only a few thousand years ago that it was great fuel for fires. Continue reading “What’s wealth and where does it come from?”