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> Going right to the root: it's the monetary system itself. Please pardon me for being pedantic, but there is distinction worthwhile, here. The monetary syste
by bmh_ca 11y ago
> Going right to the root: it's the monetary system itself.
Please pardon me for being pedantic, but there is distinction worthwhile, here.
The monetary system is a mechanism of liquid exchange for goods and services. It is largely good for everyone because it facilitates trade of otherwise incomparable goods, as well as possession of assets that can in the future be exchanged (i.e. savings). One cannot trade apples for oil tankers directly.
There are a few places that are considered the root of inequality, though. In my opinion, these include the tax system. A "progressive" tax leads to greater equality; optimally this will not diminish individual incentives, but one does not want to apply regressive (and often hidden) taxes that create systemic perpetual and inescapable poverty.
Second, the social commons. School, health care, policing, roads, etc., that give everyone opportunity to apply themselves to success. These are the things that lead to "social mobility". With poor social mobility, the poor stay poor and the rich stay rich, regardless of their competences.
It is an oversimplification and arguably inaccurate to say that the monetary system makes poverty endemic. I believe the root of the problem is founded in the two points above: the fairness of how we collect taxes; and, how opportunities for advancement come about – be they smarts and hard work and social institutions that recognize and reward those, or just being born with rich parents.
- dmichulke 11y agoI think he doesn't mean money itself but the monopoly of money definition and creation by a small set of people (state or central bank).
- bmh_ca 11y ago> I think he doesn't mean money itself but the monopoly of money definition and creation by a small set of people (state or central bank). He's not wrong in thinking that in practice people who are close to the money supply do better than those who are not, in the USA. That is not necessarily true, elsewhere. The real questions are, IMHO: 1. should proximity to the money supply be a (the) basis for social mobility? and 2. are the requirements of getting close to the money supply fair? The supply of money is a separate issue from the fairness of distribution; central banks are not inherently unfair or a cause of inequality – they can in fact contribute to reduction of inequality by employing monetary policies that reduce the cost of borrowing (and simultaneously reducing the returns of lenders), which favours workers over savers.
- jschwartzi 11y agoWait, can't a worker also be a saver? That seems like a false dichotomy to me, and what you're really suggesting is that monetary policy should encourage the accumulation of debt(spending) rather than careful insulation from chance(saving).
- bmh_ca 11y ago> That seems like a false dichotomy to me, and what you're really suggesting is that monetary policy should encourage the accumulation of debt(spending) rather than careful insulation from chance(saving). I do not believe my statements suggest monetary policy should encourage anything. At least they were not meant to. Lowering interest rates is bad for those with savings, but good for those with ongoing income. I understand this is a widely accepted observable economic phenomenon. Does that clarify?
- Kinnard 11y agoThe monetary system is more than that. It's a monopolistic mechanism of social control founded on debt(an asymetric social relationship) and which can only be sustained by debt(more asymetry). Starting out, the list of who has what wealth, defined in terms of our arbitrary monetary system, places some on the bottom and some on top then applies a massive downward force on those on the bottom. I recommend Paul Grignon's Money as Debt: https://www.youtube.com/playlist?list=PLdMxiaZGboJSgU2raUksCFGSUfWS8eHR8 https://www.youtube.com/playlist?list=PLdMxiaZGboJSgU2raUksC...
- laotzu 11y agoThere is also the fact that the monetary system is not a zero sum game for its users. Hence the perpetual indebtedness to central banks as we see with all major nations. Professor Franz Hörmann of the Vienna University of Economics explains this design in his Banned Ted Talk: https://m.youtube.com/watch?v=FYWVbdSX7B4 https://m.youtube.com/watch?v=FYWVbdSX7B4 TLDW: When central banks create money and loan it out to nation states they charge an interest rate on top of the principal. However, the principal was the only money created, so the money which is contracted to be paid as interest physically does not exist. This systemic flaw is, Hörmann suggests, what creates poverty To put it in even simpler ELI5 terms: it would be like going up to a 5 year old and saying, I've got these 10 widgets that only I can make and that you rely upon to survive. I'll let you borrow them if you agree to give me 11 of these widgets back when you're done, or else!