Part One: Inequality and Fortress Mentality
Life is basically a power game whether we like it or not. It’s all about various groups of people trying to grab as big a slice as possible of the world’s resources. This material pursuit has led to lopsided inequalities and many violent upheavals. Now, we are only beginning to learn about the limits of such pursuit. Is there another possibility for sharing resources peacefully and equitably? Yes, if we can first overcome our fortress mentality.
Inequality is a fact of life for two reasons: individuals are not born equal and do not grow up in the same background. Furthermore, everything has its own dynamics depending on what kind of advantage an individual starts out with. This is borne out by the fact that the first million is always the hardest to make. One inescapable consequence is that the rich tend to get richer and the poor poorer unless something extraordinary intervenes. Thus we cannot assume that the poor must be dumb and lazy, for there exist dumb and lazy rich people, too. The difference between rich and poor often depends on the opportunities available.
In the year 2011, two popular movements (the Arab Spring and Occupy Wall Street) demonstrate the eternal power game that has been playing out in human history, only in a different form this time. The Occupy slogan “We are the 99%” is an effective rallying cry to draw people’s attention to the worsening inequality between rich and poor. The percentage number only serves as an eye catcher. It’s the lopsided inequality that really matters.
Within certain limits, inequality surprisingly breeds progress because it motivates people to work harder for more material possessions. On the other hand, extreme inequality destabilizes society. The question is, what do we mean by extreme? The practical answer is, when anger or trouble is brewing, we’d better pay attention. If not, a convulsion event will take place that will topple the status quo. The Arab Spring represents a recent example.
For a society to remain stable, inequality should be held in check to avoid extremes. The rich seldom recognize this fact. Despite all the powers associated with wealth, they lack the power of number. The overwhelming number of poor people is big enough to overthrow the entire system in a violent manner as seen in many revolutions. On the positive side, if the poor are given the opportunity for even a small slice of the economic pie, a middle class will develop, creating a large consumer market for the rich to exploit even further. Are the rich enlightened enough to help expand opportunities for the poor?
Left to its own natural devices, inequality tends to worsen as shown throughout history. The biggest problem lies in people’s attitudes rather than economic management. As for the rich, they think they have more to lose if they don’t exercise all their powers to hold onto what they possess. This includes the pervasive practice of bribing government officials to keep the laws and regulations working in their favor. They fail to recognize that getting rich depends more on enlarging the economic pie than occupying a big slice of it. Enlarging the pie means expanding the market where profits continue to flow. This in turn will create more opportunities for the poor, and further strengthen the middle class. A fortress mentality calls for protection rather than enhancing opportunities, which will anger the poor, and solidify their resolve in toppling the system.
In a society where extreme inequality exists, the poor have almost no hope for upward mobility. They have little to lose by disrupting the system, regardless of what will happen next. All they need is a leader who is able to organize the angry mass into a strong opposition. We have seen many such popular movements succeed in the past. They may not produce the desired result for the poor, but that is beside the point. The point is that the rich and powerful had failed to wisely protect their own interests by letting inequality get out of control, thereby losing most of what they have achieved. The irony is that the poor have few responsibilities because they have little to lose; whereas the rich have heavy responsibilities because they have so much at stake. Given all the powers associated with wealth, the rich have a choice to make things more equitable. The poor have no choice because they are powerless, except to capitalize on their big number to overthrow the system and start all over again.
The extreme positions between rich and poor is hard to bridge except through violence. It does not have to end up like this. There exists a better way in the middle. A peaceful solution does not mean transferring money to the poor, which the rich are always afraid of doing. But rather, it means expanding the economic pie through enhancing opportunities for a middle class to develop out of the poor. If the fortress mentality is too strong on the part of the rich, a peaceful solution is unlikely to take place.
Why is the middle class so important? The middle class is considered a stabilizer because they have something to lose and something to gain. That is why they oppose to overthrowing the system but favor peaceful reforms. The middle class knows how it feels to be poor, but they also aspire to be rich through hard work and playing by the rules. If the rich are enlightened enough, they should find a way to strengthen the middle class which is their potential ally. A fortress mentality reduces opportunities available for the middle class, thereby inhibiting a grand alliance between these two groups.
In summary, the eternal power game in life involves four groups of competitors for the world’s resources: the minority rich, the poor masses, the government, and the middle class rising out of the poor only in modern times. The rich and the poor are always suspicious and hostile to each other. The rich find a convenient ally with high officials in the government by corrupting them with money. In this way, they create laws and regulations to protect their assets and expand their powers. This fosters an unstable society where the gap between rich and poor keeps widening. The situation worsens until one day the angry poor will rise up and overthrow the entire system. With all the resources at their disposal, the rich have the ability to wisely protect their assets by extending opportunities to create a vibrant middle class, instead of dwelling on their fortress mentality. Should the rich fail, the power of number will take over where the angry poor will shake the system down to its roots. Although nobody may win in the end, the rich will lose more because they have a much bigger stake. So it’s up to them to choose. It’s their responsibility to society.
Part Two: Corruption Kills Opportunities
Among the rich, many self-made millionaires know how the poor live because they have come from poor families. They must take pride in their hard work. They should also appreciate the opportunities available to get them to where they are. Without opportunities, hard work means backbreaking labor with little compensation. Hard work needs to find an opportunity to be rewarded. The same goes for talent, too.
Given a choice, the poor do not want charity or welfare, for it depresses the human spirit. The poor want opportunities to realize their hopes and dreams. They are not dumb or lazy like other people think. They may even be smarter because a tough environment makes people more adaptable. Given more opportunities, some of the poor will make it to the top as proven before. This is the magic that keeps hopes and dreams alive for the masses.
The rich needs opportunities, too, even though they may not realize it. How do the rich make money? They profit by selling their products and services to the masses. If the masses become poorer causing the markets to shrink, the profits flowing to the rich will be reduced. Thus the enlightened rich grow richer by enhancing opportunities for the masses. More opportunities mean more jobs, higher spending power and bigger markets. On the other hand, the rich with a fortress mentality erect all kinds of barriers and controls to protect what they have, causing opportunities and markets to go downhill.
What is the biggest killer of opportunities? When the rich and high government officials join forces to milk the people, it will make the most toxic poison for society. Why? As the power of wealth joins the power of law and regulation, a vicious circle of “legal” corruption, exploitation and repression is created that continues to plague the society until the poor masses finally rebel and overthrow the entire system. There are plenty of cases in history such as:
*The French Revolution of 1789.
*The Chinese Communist Revolution of 1949.
*The Arab Spring of 2011 that toppled Mubarak, Qaddafi and others.
*The corrupt governments of many developing countries around the world that are waiting for the masses to rebel.
The following are examples of corruption that perpetuates poverty:
*A dictator and his cronies own all the resources of the country.
*Rampant corruption at all levels, even a street vendor must bribe a policeman to stay in business.
*Land ownership is not based on paper deeds backed by law, but by some arbitrary authorities or gangs.
*Rich merchants and high government officials control all raw materials and their channels of distribution.
*Government regulations are set up to obstruct, but can be bent by bribes.
*Education emphasizes indoctrination rather than skills and knowledge.
*Discrimination against a large segment of citizens such as women, or an ethnic or religious group.
Note that corruption creates a vicious circle of poverty that is difficult for a country to break out. What about corruption in a rich and democratic country? The middle class will be squeezed and weakened in a downward spiral. The United States offers a good illustration:
*The Congress is paralyzed, torn between citizens’ voting power and big corporations’ money power.
*Taxes are full of loopholes for the rich to take advantage.
*The Supreme Court has ruled that big corporations have the same rights in politics as individual voters. Since corporations cannot vote, they are allowed to use money to influence politics.
*Despite facing runaway health care costs, the government fails to prevent insurance companies, pharmaceutical firms, and hospitals to milk the people.
*Government fails to regulate against the big banks’ creative financing in real estate until the bubble finally burst in 2008 that required $800 billion of taxpayers’ money to bail out the big banks.
*In higher education, the colleges keep on raising tuition, while the banks come in to offer loans to the students. As a result, total student loans balloon to over $1 trillion, which is more than the entire consumer debt of the country. The US is the only place where the government allows the banks to milk the students.
Overall, corruption resulting from government joining forces with the rich has done great harm to the common people worldwide. Besides killing opportunities, corruption creates a condition of hopelessness that is the source of social instability. It looks like we are in a vicious circle of exploitation and mass poverty. But we should not despair. Some very powerful forces are at work that are able to turn the tide, which I will describe in Part Three.
Part Three: The Rise of the Middle Class
As I have described in Part One and Two, the worsening inequalities between rich and poor is a vicious circle resulting from a corrupt system where the rich join forces with the government to milk the people. A threshold will be reached one day when the poor masses rebel and overthrow the entire system. The consequence is a new order that may benefit nobody. But it does not matter to the poor for they have nothing to lose anyway. Since the rich have so much at stake, their self-interest should urge them to keep greed in check in order to avoid excess that may bring about their own downfall.
The threshold of rebellion may be reached now or later depending on the degree of inequalities and the emergence of a leader who can galvanize the masses into opposition. Note that inequality is relative and varies between countries. One can readily observe that inequalities are reaching the boiling point in many under-developed countries where mass rebellion is simmering just below the surface. As a matter of fact, inequalities in various aspects of life portray the different levels of development between countries.
The worsening inequality is a downward spiral if left to its own devices. The result is mass rebellion and chaos as shown in history’s accounts of revolutions and violent upheavals. In modern times, revolutions and upheavals are mostly limited to the under-developed world. Why? There are many explanations but the critical factor is the absence of a middle class. By promoting the growth of the middle class, the vicious circle of inequalities between rich and poor can be broken.
What do we mean by middle class? A practical definition is that the middle class is a large group of people who have something to lose and something to gain. That is why they are considered a stabilizing force in society because they don’t want to rock the boat. In the developed world, they are generally known as the silent majority. The middle class does not come from nowhere. They emerge from the poor if more opportunities are available in the form of jobs or freedom to engage in small private business.
The rise of the middle class is a natural human endeavor born of a combination of latent forces that include: the profit motive, desire to share and exchange, enterprise spirit, curiosity, the ideas of freedom/democracy/human rights, and last but not least, the dynamics of science and technology that is the biggest enabling factor. These forces have one thing in common: They promote participation, inclusion, opportunity, and individual empowerment. Since the middle class thrives on natural forces, unleashing those forces by lifting all the encumbrances yields the greatest impacts. Government policies cannot generate those forces, but they can enhance or suppress them to a large extent.
Throughout history, the natural forces favoring the rise of the middle class have been suppressed by all kinds of man-made system such as:
*Absolute monarchy supporting elitism and favoritism for the few.
*Dictatorship or authoritarian regime exercising tight controls.
*Colonialism based on exploiting the resources of foreign lands.
*Communism that makes everyone poor except the top communist hierarchy.
*Religion controlling government and suppressing ideas.
*Big corporations and rich individuals bribing government officials to perpetuate a corrupt system.
All the human designs mentioned above have three things in common. First, they exclude the great majority of citizens from sharing power and resources. Second, they perpetuate the vicious circle of inequalities by bribing, controlling, or even owning the government outright. Third, they fail to realize that one can get rich and powerful by enlarging the economic pie rather than just protecting one’s own. Enlarging the pie means fostering the growth of the middle class, which will lead to more opportunities for everybody, higher consumer spending, and the creation of huge markets.
What has happened to those man-made systems nowadays? Absolute monarchy disappeared one after another since the French first overthrew their King in 1789. Colonialism has yielded to a wave of national independence since the end of the Second World War. Communism has proved unsustainable and has morphed into a hybrid system in China where the ruling communist party practices capitalism to support the vibrant middle class. There still remain a few authoritarian and religious regimes facing the growing anger of their disgruntled citizens. The only survivor remaining is the corrupt system perpetuated by the alliance between big corporations and high government officials. This is the modern system that may stay for a long time to come.
The present system we have is not perfect. The rise of the middle class is never fast enough. The widening gap between rich and poor is shamefully big. That is why I call this the eternal power struggle. There will always exist a big gap between rich and poor. However, if a large segment of the poor masses can successfully move up to be middle class, it will be considered great social progress. Overall, the tide is turning, albeit slowly, in favor of more opportunities and inclusion for the masses. The other important fact is that this is a historic journey of no return. Once having tasted the fruits of freedom and opportunity, the masses will not tolerate any encroachments imposed by the rich and their allies.
Finally, the natural forces that contribute to the rise of the middle class are too great to resist. As time passes, they will only grow stronger because they reinforce each another, aided by the development of science and technology, which has a special dynamics of its own. Have you wondered why the system of absolute monarchy that had lasted for so long began to crumble in the 18th century? What major event took place during that period? It was the time when the Industrial Revolution and the Enlightenment began to take roots. The result is great transformation of human society that continues to unfold before our eyes. (December 2011)