Cheap Thoughts from a Wannabe Economist

I’ve been thinking a lot about the economy lately, not just about what’s going on in it, but what makes it run. I am engaging in some public brain storming here, so please don’t anyone get upset, many (if not all) of the following thoughts are just hatching.

I think that without some sort of commitment to community we may see a cycle of grab-what-you-can-while-you-can, which will continually destabilize our system that relies greatly on trust. In other words, repeating cycles (ever shortening) of what we have experienced over the last three years. If this is the case it will cripple the system to a point where no large scale business will be possible due to lack of trust in the regulatory system.

This seems to be a repeated cycle in free market economies. Some few who have a high measure of control/knowledge of the system are able to reinforce the system for their benefit.* These people are able to use the system to gain a great amount of wealth. Over time, the amount of wealth that these powerful few gather begins to be at great expense to those who have little or no relative power (the middle and lower classes). When wealth begins to concentrate too much in favor of the upper classes, large numbers of people get angry.**

When people get angry enough people loose their offices, and hopefully we start seeing a redistribution of income that is more evenly spread. In other words, the system corrects itself.

However, if the powerful have strong control over the pool of public ideas, they can direct the blame for unequal distribution of wealth wherever they please. It is possible that we are entering into one of these phases. So, one might ask, what is next?

Answer: I have no idea, and this is not the purpose of this post. The purpose is to illustrate a condition that is (in my opinion) sub-optimal. This opens us up to think about what underlying mechanics make our system run the way it does and what changes could we make to improve the situation. This also means we need to talk about what is could be considered merely a condition, and what is a problem that needs to be corrected.

Future posts I have planned will begin to explore these areas.

---

* This does not preclude rags to riches stories, but does make them less and less probable. For all its virtues, who you know and who your parents still matters a great deal in America.

** Unless they can be made to blame someone else, and kept working hard for little pay and thus distracted from the situation.