Blog Action Day

Today is Blog Action Day on the subject of poverty, apparently. I happened upon a post at MomGrind:

What if we could create a social system where no one is outrageously rich and no one is miserably poor?

No matter how smart or capable you were, you would not be able to accumulate more assets than a certain pre-determined amount.

No matter how bad you had it, you would always have a roof over your head, food on your table and access to basic health care.

In reading the discussion I was frustrated by the fact that most people really don’t understand economic disparity in the US.

My current favorite explanation is the L curve. It helps put the numbers into perspective with the ever-helpful football field analogy.

It starts off by lining everyone in the world up across the the field:

Then it shows the middle income family on the 50 yard line with their yearly income of $40,000 in $100 bills stacked at their feet an inch and a half high.

Then it pulls back to show the far end of the football field where Bill Gates’ stands beside his annual income as $100 bills, or at least by the base of the 30 mile high stack of it.

Money is freedom and the power to cause change in the world. I’m fine with the fact that some people work harder than others and should have more power. The thing about that is that Bill Gates is actually far more powerful than the already absurd disparity suggests. Not only does he have his huge pile of money, but people tend to hang out with the people close to them on the football field. Ideas within that group have amazing financial backing.

The other half of the problem is that the investor class expects returns on their money. In order for that to happen, managers of huge pools of capital are constantly seeking the best place to invest to bring in the largest returns.

One of the very fundamental problems with our economy is the fact that these huge quantities of investment capital are overwhelming markets that are simply insufficient to deal with the amazingly large sums of money involved. Ultimately, people either get greedy or stupid or both, and there’s yet another financial debacle.

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