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More Inequality Divides – Less Inequality Unites



Brief Summary

      

This book reviews the emergence, development and rebalancing of economic inequality. Inequality is based on a number of related factors including technology, education, economic and social standing and luck. However, it has reached a level that compromises social cohesion. The socioeconomic impact of industrialization, the diffusion of technology in developed countries and its impact on less developed countries, globalization and its socio-political ramifications will all form part of my analysis of inequality. But first, a historical review of the chain of events leading to the current state of inequality is in order. Determining causation can be a challenge when looking at such a complex issue, hence the necessity of revisiting the past with an appropriate analytical framework.


In Part I and II, the book begins with a brief history of Homo sapiens and its associated cultural evolution. Historically, people have chosen various ways to secure a constant supply of the necessities of life. To protect themselves from rival bands and tribes, marriage between groups or submission to a more complex polity took place.


Part III and IV review the origin of inequality in the Old and New World in six primary states. Although humans organized themselves as an egalitarian society for the greatest part of history, inequality is now the dominant feature of modern society. Around the globe, those invested with the power to protect have become richer, and capable of exchanging more goods and acquiring more land.


Part V concentrates on the origin and development of capitalism. The sheer force of competition influenced economic systems around the world. The Black Death killed almost one-third of Europe’s population creating a huge labor shortage. Feudalism became no longer viable. With the rebound of population growth and commercial exchange, mercantilism became an impediment to development. Needless to say that this transformative process in most societies around the globe provoked many social upheavals in France, Russia, Great Britain. Among a few of them are the seven-year war between France and Great Britain, the birth of capitalism, the French Revolution dismantling the monarchy, the independence of the United States, the Bolshevik Revolution overthrowing the Russian monarchy with rippled effects on China, World War I and other events.


Part VI describes the economic and political dimensions of inequality and their ramification. The first quarter of the 20th century signaled a turning point in terms of the world sociopolitical profile. The establishment of two main political ideologies, capitalism and communism, each competing to maintain a prosperous socio-economic order around the world under the umbrella of social justice. The outcomes of World War II, the fall of the Berlin Wall and the collapse of the Soviet Union have proven the supremacy of capitalism. It was adopted in mitigated form in most socialist countries. A surge of democracy ensued around the globe. My focus is on the underlying forces which sustain the imbalance wherein profit is privatized and debt socialized. Consideration is also given to the maintenance of democracy or lack thereof and the rationale for the rise of populism.


For the sake of simplicity and to avoid being too technical, I opted for a narrative rather than a mathematical approach to discussing economic matters. In addition, framework of mathematical models can only be temporary given the combined effects of the current and last two decades politico-economic events. These models must be often adjusted to account for imperceptible changes yet strong enough to alter any benchmark or socioeconomic prediction. In this context, I have covered the optimal rate of inequality that is a rate where economic growth is maximized and inequality is at an optimal level.


In the current decade, inequality between democratic countries has been reduced but not within countries. The main message of this book, given that inequality is inevitable, its magnitude must be reduced from the current level currently experienced in most countries.


I dedicate this book to everyone having an interest in inequality. Gender and racial inequality are unacceptable at this stage of our civilization. It is my expectation that it will reach a wide range of readers including policymakers. In some instances, I could not avoid using technical terms or concepts. However, there are endnotes after each part and a glossary in appendix I. Conversely, sociologists and political scientists may feel unsatisfied or frustrated by the limited coverage of certain academic subjects. I hope this limitation does not affect the understanding of the topics covered.


In her book The Wave in the Mind Ursula K. Le Guin posits that words are events, they do things, change things. It is my hope that the message in this book will facilitate the necessary changes.




Technology and Society: Rewards and Challenges

 


My purpose for writing this book stemmed from a perceived need to remove certain myths about technology particularly in the context of its accelerating development. Some of the most popular remarks are that technology is taken away our jobs it has reached a level of convenience where it should be stopped or it presents a real danger for the future of humanity. While part of those concerns may be legitimate, the big picture is often missed leading to three stratification in our society: the indifferentists, the antagonists and the protagonists. According to 2014 survey 51% of Canadian feel that they need modern technology. South of the border 54% of American are optimistic about the coming technological changes. A deeper examination of the position taken can be explained by either a lack of information or deep rooted beliefs, education or any combination thereof in spite of the abundant information available on the subject matter.


Beliefs affect choices, which in turn affect action, one may choose to ignore the impact of technology or be predisposed to it. Those who adopt the former position will have robbed themselves of the opportunities that the evolution of technology will bring forward as never before. Those choosing the latter position, will be more informed of the benefits and potential risks ahead but also will participate in this new development. At the beginning of the book I have compared the resilience of our fellow humans with that of a stubborn boxer whose efforts are only encouraged by each knockdown.


Indeed, we have come from a long way. In fact, the history of technology starts with the first axe maker. My review of technological progress, for convenience sake, covers the period from the Renaissance to the first decade of the current millennium not ignoring the contribution of the Middle Ages from the Ancient civilizations. I felt that the past needed to be acknowledged so that the reader can have a good understanding of the accelerating pace of technology, unstoppable despite political and religious strictures. Some discoveries, inventions an innovations of the Renaissance can be considered the launching base of our current technology particularly in the areas of Agriculture, Health, Education and Energy. In fact, the name of certain inventors are still being used today. I have also underlined the enormous socioeconomic impact of these changes such as the development of urbanization, the commoditization of time, the emergence of mass production thereby creating the middle class. People moved from the suburb to the city to be closer to their work intensifying transportation and unfortunately pollution.


By the end of the First industrial Revolution many millionaires won their fortune with the latest technology. The American author and humorist satirically called this period (1870-1917) the Gilded Age because of the extravagant display of opulence resulting from unparalleled wealth using the latest technological development. But the Gilded Age was also a period of greed, corruption and horrific labor conditions for women, men and children. It is not technology that is at stake but the misuse or overuse of it. The dualistic aspect of technology, constructive and destructive, is underlined many times in the book.


I have defined technology as the expression of our will to live, to make life easier and better. Surely life condition has improved since the beginning of the Renaissance. No one would want to go back to the past where, using a quote from the philosopher Thomas Hobbes, life was nasty, brutish and short. However, in this ascending trend, I suggest throughout the book that practical wisdom be our guiding principle in the use of technology. Fast forward to our current time, Artificial Intelligence and Nanotechnology can produce miracles but could also have devastating effects if not planed and used properly. I am pleased that technologists and policy makers are aware of it.


Progress is a reality. But in the same vein, consideration must also be given to the Bertrand Russell’s quote: “Change is one thing, progress is another. Change is scientific, progress is ethical; Change is indubitable whereas progress is a matter of controversy. This explains the reason of lengthy and incomplete discussions particularly in the area of Health such as stem cells or immortality and in the Economy such as the lack of work and the gap between the haves and have-nots. In this changing environment a shift of perspective is needed. Certain jobs taken for granted will disappear and replace by others more rewarding. Needless to say that this change will have a great impact on the social programs in terms of retraining, early retirement and possibly, as a remedy, the implementation of a universal basic income.


In our history an economically seamless society has always been sought explicitly or not throughout the many revolutions and political reforms. Disposable income varies greatly between individuals and, in countries where democracy prevails, taxation, education, pension and health reforms can be seen as instruments to achieve a fair balance in the purchasing power and fulfillment of individual needs. As to whether this goal could be totally achieved remains a moot point because it is a moving target and also income distribution means different things to different people, groups of people of different political ideology. It is not the aim of my book to expand on this fluid subject, but in the context of technological development outcomes manifested in new products and services availability, the increasing gap between the Haves and have-nots has a different meaning. It covers many grounds: well-being, wants versus needs and, more importantly, affordability of goods and services to most. Technological innovations tend to be expensive at the beginning with substantial price reduction as the product or service penetrates the market.


The Gross Domestic Product (GDP) is the commonly used measure of the total output of a country’s economic performance in terms of the value of the marketed goods and services for a particular period. In the book I have provided a table from the World Bank showing a constant progression of the world’s GDP from 1960 to 2015 with very few exceptions such as the globalization surge in the mid 1980’s, the Great Recession of 2008 and the oil price fall in 2014. This does not mean that productivity is on an ascending path. Most developed countries have been experiencing a constant decrease in their productivity based, inter alia, to a lack of startup businesses. But there is another probable explanation. I believe that it relates to the technological frontier, the position that the United States and other First World countries occupy now.


The creative economist Giovanni Dosi in Innovation, Organization and Economic Dynamics has defined the technological frontier as the “highest level reached upon a technological path with respect to the relevant technological and economic dimensions.” Many new radical innovations need to enter the market to cross this frontier like computers, transistor, internet, portable phones etc. did in the recent past. No one could have imagined in the preceding century the economic impact of these innovations. It is one of the main reasons why technological development must be embraced without being alarmed. Throughout its existence Homo sapiens has crossed many boundaries. The emergence of language, the invention of the printing press in 1450, the electric telegraph in 1774, computers in 1837, transistor in 1947 etc. We are now in the Fourth Industrial Revolution with automation affecting our way of living. Our success depends on how we adapt to this new environment.


Back to the GDP, there is a general assumption that the higher the GDP, the better it is for all of us. But, is this an accurate statement? While the GDP provides a relatively good picture of a country economic performance, it was not designed to address the well being of a society. There are other tools for this particular purpose. In the book, I have used both the Global Creativity Index and the Social Progress Index to provide the position of few countries. In the former, an overall ranking of countries is made on the combination technology, talent and tolerance.


They are the drivers of economic growth by fostering creativity. The latter has eliminated the traditional limitations of the GDP in the measurement of social progress by the exclusion of economic variables and the use of outcome measures rather than inputs. In other words, how better off are people irrespective of how many resources have been used. Combining three dimensions—basic human needs, foundations of well-being and opportunities—the report defines social progress as the capacity of a society to meet the basic needs of its citizens, establishes the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and creates the conditions for all individuals to reach their full potential.


1. Acceleration of Connectivity worldwide.


2. Readiness for Pandemic Diseases.


3. Reduction of poverty and the gap between the Haves and have nots.


4. Enhancement of Human Rights.


5. Restoration of the Environment


Where are we heading to? A term used among futurists to qualify this evolutionary path is “Singularity”. For the sake of simplicity, I have retained, among others, this definition of singularity by James Martin, a world-renowned leading futurist, computer scientist, author and lecturer: Singularity “is a break in human evolution that will be caused by the staggering speed of “technological evolution”. In other words many radical changes of increased frequencies will occur in the next two decades. I believe that we are heading to a qualitative difference in society with fewer natural limitations with a higher level of comfort, at least in developed countries. Conceivably, this will have a ripple effect in less developed countries. Adaptation to this new way of living depends on the choice that we make supported by practical wisdom. The combined effect of low mortality and birth rate, better disposable income may give some people the flexibility to experience the fruits of another career while others may decide to enjoy more leisure time.