It has been fascinating to see concern about the increasing spread between rich and poor unfolding. What, if anything, will come of it?
Ironically, while the general public feels pretty helpless, the majority should have at least some say in the way executives are compensated. Anyone who has shares in mutual funds, through workplace pension programs or in their individual registered retirement savings plan, owns a piece of the very corporations that are paying outrageous salaries and bonuses, in the form of cash or shares, to top executives. Perhaps a formation of these shareholders, along the lines of a class action suit, might help make a difference.
But make no mistake about it, there will always be a penchant for money to end up in a disproportionately small number of hands. I often describe this reality by saying that money is magnetic — it attracts more money and the bigger the pile, the greater the magnetic property.
I suspect that any schoolteacher could demonstrate this by giving each child in class a loonie a day for a week, with the only caveat being that the money could not be spent outside the classroom. How many people think that each student will have five loonies at the end of the week? Fat chance. The bully will simply beat the coins out of some, the manipulator will con coins out of others and the budding entrepreneur will accumulate a share because he or she has something to offer that others want. Conduct an audit at the end of the week and we will no doubt learn that money doesn’t just circulate as transactions take place — its magnetic properties ensure that there will be a few wealthy kids, some who are broke and a middle class has emerged, consisting of people who have been able to hold on to all or most of their coins.
We know, too, from experience in our own lifetimes, that the utopian idea of sharing wealth by redistribution doesn’t work. Even in the heady days of communism, there were people who figured out how to get more than their fair share. It is, apparently, a characteristic of human nature that greed will trump all other needs.
Last week, I was having a conversation about economics and human nature with a friend and I presented the following argument:
“Think about this,” I said. “Twenty million mostly rational, reasonable Canadians will willingly and happily throw two bucks into a pot on the promise that half of the proceeds will go to the government (think of it as a form of tithing for the privilege of participating in lotteries) and the other half will go to one lucky person.
“By any reasonable analysis, a one in 20 million chance is the same as no chance. We don’t stay indoors for fear of being struck by lightning, we don’t stop going to Mexico because we fear the long odds of being murdered, we don’t stop taking cruises because a pilot might run the ship aground. People do die for all of these reasons, but we know that the odds against such tragedies befalling us that we consider them to be irrelevant.
“But we — or most of us — will still throw away money by purchasing lottery tickets, choosing to ignore the statistical fact that we have so little chance of winning the jackpot that it is, for all intents and purposes, impossible.
“And then,” I added, “the 19,999,999 who didn’t win the jackpot will complain about the growing disparity between the rich and not rich (I don’t like to say “poor” because the majority of us aren’t). Maybe they just spend their two bucks to buy a right to complain.”
We are, if nothing else, an endlessly fascinating species.
Lorne Eckersley is the publisher of the Creston Valley Advance.