What are we thinking?

Why our economic plan is rubbish.

Capitalism in an odd bird. It is more or less wholly responsible for the increase in living standards and global stability. The latter point is arguable but think of it this way: do you think that we would have less or more war if people were more devoted to nationalism than to capitalism? After all, transnational trade breaks down barriers and, with the simple threat of imposing sanctions, we can maintain some semblance of order.

That being said, capitalism is failing and is in drastic need of an overhaul.

Adam Smith’s Wealth of Nations, is the bible of modern economics and it states, as put best by Yuval Noah Harari in Sapiens: A Brief History of Humankind: “people become rich not by despoiling their neighbours, but by increasing the overall size of the pie. And when the pie grows, everyone benefits. The rich are accordingly the most useful and benevolent people in society, because they turn the wheels of growth for everyone’s advantage.” This is the most common theme in arguments claiming that capitalism benefits everyone through “trickledown economics”.

I don’t know if this has ever really been the case. And, despite being part of what we claim is a liberal democracy, even today we cannot claim that the trickle economic model is really working as it should be.

Using the most commonly reported case, let’s start with Amazon. Amazon is a giant unlike anything this world has ever seen. An online marketplace that sells pretty much anything and that doesn’t have to cover the usual retail overheads. Jeff Bezos is the modern day success story. But it is because of a shoddy work ethic and malpractice that Amazon has been a so-called “success.” There are reports that the factory workers whose job it is to pick and pack the items we choose, are made to wear headsets that bleep in the employee’s ear every time they miss a quota. People have been fired for going on bathroom breaks. Workers have not wanted to have time off for childbirth for fear that they will lose their jobs and some workers are even said to have urinated in bottles because to go to the toilet might result in them losing their jobs.

In the world of trickle-down economics in which the wealth is meant to be spread among the workers and they can therefore pay taxes and perhaps even purchase the wares from their benevolent employer. Along with shoddy work conditions, employee pay is around £9.00 to £10.00 per hour.

One common argument we find ourselves constantly faced with is that it is better to have an employer in town than to have no employer in town. But you might as well tell all those people experiencing despicable mistreatment to “suck it up” and “be thankful”. The truth of the matter is that just because a company is the only employer in town, that people should simply settle for mistreatment and be thankful that they even have a job. We are not living in an age where employers should be able to get away with such activities. Having a job is one thing. Being treated with respect is something else entirely.

Capitalism is meant to fund economies. Again, Yuval Noah Harari captures it best when he says:

“Capital consists of money, goods and resources that are invested in production. Wealth, on the other hand, is buried in the ground or wasted on unproductive activities. A pharaoh who pours resources into a non-productive pyramid is not a capitalist.”

The same can be said for so many of the rich and powerful. Houses, cars, private jets, yachts. These things are some of the hallmarks of the wealthy but there is also another realm into which the rich funnel money which would be better spent either paying employees a decent wage or perhaps funding new start-up operations. The world is that of the offshore tax-haven. Not only are companies shirting their duties of paying adequate tax within the countries where they operate, they are also squirreling away profits for their own economic gain.

It is all very well boasting that you are employer and that you are doing x,y and z in aiding the economy and keeping people within jobs, but the boasting stops when their capitalist idea hits the real world. Money and power corrupt. Look at capitalism’s nemesis; communism. What may look like an understandable and worthwhile pursuit for equality consistently breeds dictators, as history proves time and again. Capitalism does the same. Entrepreneurs turn from imaginative and successful capital generators to wealth hoarders.

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