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7. The Politics of Money from Alternative Economics 101 - Tax Your Imagination!

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7. The Politics of Money

The game Monopoly demonstrates that wealth divides automatically because of the rules of mathematics. This is a non-political phenomenon. Boom is bust. At the beginning of the game, everyone is getting rich as the bank gets poorer. Then, the law of diminishing returns take over. The bank sinks deeper into debt, and the players begin to run out of money, too. For all but one player, the expenses become greater than revenue. 

In the real world, nobody can control what other players charge them, or, if other players will buy their wares. Monopoly guarantees one winner, reality is more complex. Animosities develop as events unfold.

History has shown a tendency by the poor to blame the rich for winning, but the rich have no control over their good fortune. They win because of how the dice fall, and the luck of being in the right place at the right time. A small advantage can compound. If the majority of your transactions are advantageous, then you gain. If not, then you bleed. Everyone is playing by the same rules, and trying to make only advantageous transactions. A seemingly invincible position of success is not perpetually sustainable. Time makes all men equal. Blaming the rich for winning is an intellectual dead-end.

History has also revealed a tendency by the rich to blame the poor for losing. Some suggest that the poor are lazy or stupid. Others create schools of business and write books on personal finance. They seek to teach the poor what they did to get rich. Bookstores and infomercials promulgate this alleged wisdom. Both blame and evangelization are an intellectual dead-end. Copying success is to copy failure in development. For example, investing in real estate during a boom market accelerates the arrival of the bust market. The good times are temporary. The system is too volatile.

Nobody is too big to fail. Once expenses get ahead of revenue, any size hoard of wealth can slowly bleed away. Both publicly and privately, deficit financing and then additional borrowing are used to sustain old debts and future consumption. Borrowing is an accommodation to a fiscal engineering failure. We have bad laws and bad habits. Treating the symptoms, and blaming one another, are a political dead-end.

At any one moment, the economy is a zero-sum game. If you manage to get more money from the other players, than they get from you, then they go bankrupt instead of you. Why we have rich and poor is not be a mystery. Money is man-made, and we bring trouble onto one another by the manner in which we trade. 

A lot of effort gets expended trying to counteract the concentration of wealth. People are generally egalitarian and use their powers to help others. Poor individuals use charity, rich individuals use philanthropy, businesses use profit sharing and establish charitable foundations, governments use taxes, grants and subsidies. Regardless of efficiency, compassion for  the misfortunate should always be encouraged. Unfortunately, the laws of mathematics are strong and unyielding. What gets redistributed as a result of compassion cannot counteract the overwhelming number of man-hours spent generating inflation. Where money comes from is as important as where it goes. If we use better math, then we can produce and consume without dividing society into separate classes of winners and losers.


Religious thought has entered the politics of money debate. There are efforts to buy or sell redemption, as if it were a product like any other product. 

Some claim that the rich are God's Will. Because of their righteous, they deserve and are granted material rewards. It is true that a virtuous society will reap the rewards of virtue. It is not true that wealth alone is a sign of virtue. The existence of poverty in a society indicates a dearth of virtue. In a commonwealth, no one should suffer.

Others wear poverty as a badge of God's honor. They believe it is better to be poor than rich, because one can only become rich through unjust methods. Both positions confuse the means and the ends. Virtue or righteousness are not based on possessions, but based on beliefs and behaviors. Possessions are the result, not the cause.

Atheists, like Karl Marx, have implored the poor workers to unite, and to rise up and attack the powerful owners. He wisely spoke against poverty, but unwisely spoke against peace. Marxists misunderstand religion. A brotherhood of comrades requires the same enlightenment as a brotherhood of the faithful. There can be no communism without community. Civil war destroys a society. For economics to work, the means are the ends must be in balance. Animosity is not insight.

Marx's economic analysis bears a strong resemblance to Adam Smith's ideas of capital. They differed politically, particularly in who they regarded as a savage. Smith viewed Native Americans as savages; Marx viewed industrialists, Robber Barons and slave-masters as savages. Their definition of the word savage diverges. Smith was describing the pre-industrial material conditions of how they lived. For Marx, savage was a pejorative term regarding how owners were treating workers. One definition was physical, the other was social. There are many misjudgments where money and culture are concerned. Unclear or contradictory definitions are common, and are a part of the challenge of understanding history. Present-day dissonance is compounded with yesteryear dissonance. Smith saw a strength as a weakness, and a weakness as a strength. Native Americans had a culture that was equal to or superior to the Europeans in many ways, especially regarding economics, which was the topic of his discourse. Marx was right that violence is savage, but it is savage regardless of the target.

The Bible is full of apparently mixed messages. In one passage we are to turn our plowshares into swords (Joel 3:10). In another, turn our swords into plowshares (Isaiah 2:4). The Bible can say whatever people we want to hear. Winners and losers, owners and laborers, rulers and subjects, all claim that they deserve the rewards of their labor and inheritance. The rich and the poor can both claim to be holier than the other, but that does not explain the history of how or why wealth divided.

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Steve grew up in a family business, was a history major in college, and has owned a small business for 25 years. Practical experience (mistakes) have led him to recognize that political rhetoric and educated analysis often falls short of reality. (more...)
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