The Gravity of Poverty
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This is a work in progress. Constructive feedback is welcome.
The American economy is not the greatest economy. But it could be.
In 1742 coal mining yielded its first five million tons worldwide. The steam engine was perfected by James Watt seventeen years later in 1759. That very same year Adam Smith published his “Theory of Moral Sentiments,” the work upon which the capitalist understanding of the primacy of self interest was established—the idea of the “invisible hand” that lifts the world up out of poverty through the power of the selfish actions of individuals.
Early capitalism thrived on the nourishment of colonialism, slavery, and cheap access to energy-dense, newly discovered fossil fuel resources—capital extracted from the commonwealth, from mother nature, and given over to private interests.
Thus the first industrial age was born into a perfect storm and was guided by a political economy founded on consumption, greed, exploitation of labor, and the combustion of non-renewable carbon resources.
Our current economic system is petrocultural, colonial, and dominionist by virtue of the era in which it was designed.
A quarter of a millennium later, it’s time for a new political economy for an era of environmental stewardship and economic democracy.
A new economic system for the 21st century will make the American dream a reality for every person, while maintaining the beneficial features of our current economy that reward industriousness, innovation, and entrepreneurship. We play lip service to meritocracy, but our current system closes the door on it.
This new economic system will bring true egalitarian democracy by laying the foundation for a new paradigm of social wealth that can lead to the carbon drawdown the environmental movement is seeking, while also increasing the standard of living and the free time for all people to enjoy their one precious lifetime.
The contemporary political discourse seems to be seeking an economic blueprint—a design for a peaceful and orderly transition from where we are now (winner-take-all corporate capitalism) to a socially just and environmentally sustainable economy that is highly desirable to the general public.
To succeed politically this new economy cannot be about asceticism or sacrifice. In fact, this new economy should be designed to bring riches to a vast number of people who could never dream of such abundance within our current system of capitalism, which itself is riddled throughout with nepotism, happenstance of birth, racism, and class tribalism that limit the opportunities available to Black, Indigenous, People of Color, and those born into poverty to participate in wealth-building endeavors.
There are many proposals out there to reign in corporate power and regulate winner-take-all capitalism. But there are limitations to the efficacy of policy reforms that are a patchwork of repairs layered over our current socioeconomic system that at it core relies on endless raw resources and a large class of extremely poor and disenfranchised who can be called upon to provide inexpensive essential labor.
What is needed is a new political economy that removes the countless daily discretionary opportunities for the implicit bias of individuals to create accumulating structural inequity. A system that limits the power of luck and birth fortune and instead rewards merit. We need a new political economy that incentivises human behavior towards acts that will help to heal a dying planet and regenerate natural systems.
We must take a new look at how wealth is created at the most basic level, and how it can be equitably shared, by design.
The term “greatest economy” can be read in two ways.
In one sense it means an economic powerhouse that increases quality of life and expands opportunities for everyone, while generating wealth and reinvesting in the future. In the second sense it means the most frugal, the most efficient—that which fulfills our needs while expending the least amount of resources and energy.
These two readings of the term “greatest economy” may on the surface seem to be in contrast, yet they are fundamentally intertwined within in a closed system like the planet Earth. They are the yin and the yang that give rise to regeneration.
One of the fundamental contentions of my argument is that our economy functions better for everyone, even the most well-off, when it is just and equitable by design. By designing our social contract to be just and equitable, we will make our society and our politics more democratic.
According to Ganesh Sitaraman, Theodore Roosevelt wrote that “there can be no real political democracy without something approaching an economic democracy.”
Economic democracy can be defined as relative economic equity. It can be recognized by a low gini coefficient, a measure that reflects the disparity of income within a society.
A Gini coefficient of zero expresses perfect equality, where all values are the same (for example, where everyone has the same income). A Gini coefficient of one (or 100%) expresses maximal inequality among values (e.g., one person has all the income and all others have none).http://www.fao.org/docs/up/easypol/329/gini_index_040en.pdf
Since 1979, the gini coefficient of the United States has risen from 34% to 42%. We have gotten 24% more unequal under a system of neoliberal capitalism. Those with capital have taken more capital, and we’ve not checked nor have we balanced our greed.
The kind of resource hoarding that we have designed into our current economic system of winner-take-all capitalism is anathema to any system that can perpetuate in the natural world without collapsing. At some point every logistic curve meets its constraint. The parasite cannot continue to grow exponentially within its host.
In the image above, the rectangular areas correspond to the total after-tax income of equal groupings of American households.
The large rectangle at the top left is the average after-tax annual income of the wealthiest 11,600 households (some households in the top of that group keep more than $100 million each year, but the average is $36.4 million). On the lower right where the image gets denser are the after-tax incomes of the majority of Americans.
There are 32,800 people (2.83 persons per household) in every one of the rectangles, even the ones so tiny you can’t see them. If you look closely you will see a cyan square. That square is the absolute middle grouping of 11,600 households (there are the same number of households above and below). That cyan square represents the 11,600 households that live on $40,465 after federal taxes each year. Households to the right and below that tiny cyan square makes less than that. They are the lower half.
The households to the left and above that small square make above average income. Within that upper half of the population, 7.4% of households reported their self-identified race as Black to the United States census. If income distribution were not racist in practice, then 13.4% of upper half households would be Black because that is the percentage of the overall population. In other words, in the upper half of the socioeconomic ladder there are half as many black households as we would expect within a “colorblind” society. The same disparity can be seen in Hispanic, Latinx, and Native American populations. When you look at the households at the top 5% of incomes (those making more than $400,000) the disparities are even greater with only 4% self-identifying as Black.
There are a lot of poor people in the richest country on earth.
If you look closely you can see a dark blue overlay in the bottom right corner. That’s the 38.1 million people who live in poverty. For most of them every day is a struggle to survive. 12 million are children. More than half a million people will sleep on the street tonight.
It’s not necessary. There is plenty of wealth to share in this country.
When you look at the image above, imagine that the tiny squares you can’t even see in the bottom right corner are each just large enough for a person to stand shoulder to shoulder with her neighbor. When you get to the top left rectangle, each person is standing more than two football fields apart. They would feel completely alone. They couldn’t see the next person without binoculars. This is America in a way that we rarely get to see it (we’ve designed poverty to be hidden).
This radical inequality is the root of so many of our problems, including partisanship, crime, incarceration, homelessness, entrenched racism and xenophobia (looking for others to blame for your misfortune), poor health, substance abuse, poor quality education, and the politicization of issues like public health.
In her book, Doughnut Economics, Kate Raworth runs through the research that verifies that more unequal nations, “tend to have more teenage pregnancy, mental illness, drug abuse, obesity, prisoners, school dropouts, and community breakdown, along with lower life expectancy, lower status for women and lower levels of trust.”
This makes sense because all of those social ills could be mitigated through investment in education, health care, treatment centers, community projects, infrastructure, and social programs that rely on public spending by government agencies. The hoarding of wealth by the top 1% of income earners limits our ability to fund such programs.
Inequality also impacts democratic elections when money is considered speech under the constitution, hinders our ability to act collectively to address environmental issues, and promotes conspicuous consumption. By separating classes of our society to such polar extremes, political divisions also become magnified. When access to capital is equated with free speech, then a kind of absolute power will inevitably corrupt the system, leading to kleptocracy and oligarchy.
The above image is a tree-diagram of after-tax income during one year. It does not address wealth, which is accumulated income year after year. The households who are in the top groupings in the upper left of the image were most likely born there and will most likely die there. They get to keep piling on year after year and using more and more of their growing capital to accumulate more capital, while those at the bottom struggle every day to get out of debt. There is not much mobility across this chart. A similar diagram of wealth (the link does not break down the top 1% into finer detail) is even more skewed and it would need to show the negative wealth (the absolute debt burden) of the lower 10%.
If we all took a vote, would the households taking home $41,000 or less every year (the majority of Americans) be in favor of designing a more equitable economic system?
The bottom half of our nation’s income earners includes Americans we have come to call “essential workers” during the coronavirus pandemic—the farmworkers, meatpackers, medical workers, sanitation workers, retail workers, first responders, postal workers, and bus drivers. According to the Federal Reserve, “Among people who were working in February , almost 40 percent of those in households making less than $40,000 a year had lost a job in March.” Can we instead design a socioeconomic system that provides a sense of security and a living wage to these foundational members of our society?
Half of the population experiences almost daily stress related to money and basic survival.
The intergenerational trauma brought on by unnecessary poverty and extreme inequality has negative impacts on all tiers of society, entrenches class immobility, and reinforces what Isabel Wilkerson calls a modern caste system. Studies of inequality in educational outcomes have pointed to early childhood education as a defining factor. Children whose parents struggle to make ends meet do not have access to the kind of pre-kindergarten learning experiences of children from more affluent households. Those who are fortunate enough to live in the top 10% are mostly able to live lives secluded from reminders of poverty. They are able to provide opportunity and education to their children. But the global coronavirus pandemic has shattered this illusion of insulation. We can see now how interdependent we all are upon one another.
A part of the design of our present socioeconomic system is inherited from earlier systems. It is born of a fetishism of the aristocratic class, and the normalization of nepotism and cronyism in life and politics that is related to it. In the modern era this design feature has invaded the zeitgeist of nearly all political commentary with a media class and political class ensconced within a top 1% information echochamber with a megaphone of unprecedented proportion.
The divide between class perceptions has fueled conspiracy theories and allowed demagoguing politicians to create expanding layers of rhetorical wedges between people, redirecting blame for personal misfortunes brought on by the structural failings of capitalism onto traditional scapegoats of white supremacy, BIPOC, and immigrants.
The divide between class perceptions enables the use of words like “criminal” and “inmate” to dehumanize people of lower classes who are in many cases themselves victims of our present system of injustice that locks people away for nonviolent infractions and deports people for minor drug possession—people with families who then suffer generational trauma—while failing to hold criminals of higher class accountable when they commit fraud, wage theft, bribery, or other crimes with far more social victims.
“Crime is a problem of a diseased society, which neglects its marginalized people. Policing is not the solution to crime.”Rep. Alexandria Ocasio-Cortez
The above words ring true to many of us. We feel deep down that if only we could remove the social conditions that give rise to acts of desperation and avarice, we could do a far more efficient job of reducing crime rates than is possible through further expansion of the police state. At some point there is a limit to the draconian military tactics that law enforcement can take to stem the social unrest that results from massive income and wealth inequality. We may be running up against that limit today in America.
Design can change the world.
It can also rig the system.
There is not much that we’ve left to chance over the years. We’ve designed it all. Those making design decisions, however, have not always had at heart the interests of the working class or of mother nature. More often than not they were redesigning one small part of an overly complex system already full of loopholes.
The result is that the design of our socioeconomic systems over the past 60 years has intentionally rigged our economy to siphon income up to those who already hold the vast majority of the nation’s wealth. Many economists, like Thomas Piketty, make the convincing case through data that ever-expanding inequality is a fundamental design feature of capitalism—a feature that must be transcended through progressive taxation, public investment, pro-labor policy, and regulation. He writes that “extremely high levels” of wealth inequality are “incompatible with the meritocratic values and principles of social justice fundamental to modern democratic societies.”
Our present system has also been designed to exploit nature as a resource to the point where we will soon witness major ecosystem collapse and the most dire effects of climate change if we maintain our rate of increase of consumption and pollution. It has led us to the point where we have locked in 1.5 degrees Celsius of global warming even if we stopped burning fossil fuels this decade.
This site is a collection of thoughts on inequality and the incompatibility between modern capitalism and environmental sustainability, with some sketches of potential solutions.
In thinking through new systems, I try to maintain the best parts of capitalism and leverage the power of the marketplace of goods, services, and ideas, while eradicating poverty and all of its adjacent social problems. It’s my hope that my ideas will find resonance across the political divide. They are non-partisan. Still I have no illusion that Congress would enact a new Terrametric monetary standard anytime soon. These are most likely policy proposals for a decade or more in the future.
In these writings you’ll get to see what your after tax income would be under two new systems of taxation. You’ll learn about a new system of wealth creation, terrametrism, that can replace the one we currently have. The new system replaces the broken foundation of capitalism with a revaluation of value to align social wealth of human economies with our sustainable stewardship of the planet.
I invite you to add your own thoughts and comments, and I hope to collaborate with you on the design of this new system of political economy for a woke and climate conscious world.
It is my intention to make this site public after I’ve had some time to respond to constructive criticisms and arguments that point out the weaknesses and unanticipated consequences of these ideas. The eventual goal is publication of these and similar writings in a book that can help provide a blueprint to a truly sustainable and equitable future.
Robert Ferry is a LEED accredited architect and the co-founder with Elizabeth Monoian of the Land Art Generator Initiative, a non-profit that is inspiring the world about the beauty and greatness of a post-carbon tomorrow.