I hear what you’re saying, but the fundamental flaw with the wealth distribution argument being behind it is the main reason for the rich being so rich is due to the rapid race to globalisation. It is often a missed factor behind why the wealth gap is becoming so wide.
For example, Apple now has an addressable market of eight billion people, which means it can sell to everybody on this planet. Facebook has a reach everywhere apart from China and Russia and a few other small nations. The majority of big companies have enormous reaches now, even small companies are enormous by comparison to what they used to be because of the enormous reach now available to them.
In a way think of it like this, prior to the last few decades, the majority of companies mainly only sold to their own countries, with only the biggest ones being able to sell to more than one. But even the biggest ones didn’t sell to every country on the planet. Even if they could, there were a lot fewer people on this planet even 20 years back — 2 billion less — 200 hundred years back there were less than a billion people.
If you add rising population sizes, to the fact that companies are able to sell to much wider audiences due to gaining access to every country on earth, you get the main explanation for why the wealth gap is becoming so wide.
If you took the big companies, and you broke them all up into national versions of themselves. So each country's division of the business becomes a business in its own right, you would see a big reversal in the wideness of the wealth gap simply because the people at the top would no longer have businesses of such substantial size. Instead, you’d have a lot of smaller national-sized businesses. The problem with this is inevitably you lose all the interconnectedness and the benefits that come with that of globalisation.
It should also be noted that rather than being hollowed out, the middle classes have expanded, for example, globally in developing countries due to the rise of middle classes in those countries, there are more middle classes globally than ever before and the numbers are rising.
One of the big realities developed countries are experiencing is that as this happens, all the cheap labour that has been fuelling their ability to buy things on the cheap, are becoming more costly as the people building them are rising up the development tables and thus demanding more wages.
So, it’s rather a rebalancing due to the end of such an abundance of cheap labour which is affecting the middle and upper classes in developed countries.
But all it’s really doing is revealing a problem that has been there for a good while i.e. with the mask of cheap labour fading away, the reality is starting to show itself.
The reality is, technological advancement is fuelling a massive rise in the cost of living.
I think the best example I saw of just how much it is technological advancement and everything that comes with it that is creating the problem, is a post I read a while back. I can’t find the post, but a guy mathematically worked out whether a person on a minimum wage in the UK could sustain a family of five on that wage alone if he got rid of technology.
The answer was resoundingly yes. If you got rid of your heating system and gas and reverted to a coal fire and blankets for warmth, if you got rid of the TV, the smart phones, all the technology. If you reverted to getting clothes that were designed to last rather than be replaced all the time, it would be possible to provide for a family of five on a minimum wage job and still have money left over.
The problem is, if a person did that, they would put those children and themselves at a massive disadvantage. So, it was a theoretical example it’s not actually a viable reality.
But what it showed was that the problem is the sheer enormity of the time money and resources that need to be put into children to educate them and ready them for adulthood. So, it’s technological advancement, and the number of resources needed to be put into children to educate them and ready them for the world that comes with those advancements, that is causing the problem. It is simply making having children insanely costly.
Not just in resources either, in time spent. People have less time than ever to spend with their children simply because people themselves, to keep up with the constant technological evolution of the modern world, are constantly having to go through re-education of a sorts otherwise they fall behind. If you fall behind, you get left behind and so find yourself in trouble.
So, only by breaking the trend of technological advancement constantly increasing the cost of living and as such of having children can we sort the problem out. So, we need solutions whereby technology makes living and raising children easier and less costly not more difficult and more costly.
Finding ways to increase productivity to give more people more free time would be very useful. The problem with the productivity advances of the last several decades is that they have all been erased due to the fact that we have not become productive enough to be able to give people the time they need to raise children, which means we haven’t had enough of them, which means that younger generations are too few to make up for the loss of productivity of the older generations to retirement.
So, the productivity advances have not been enough to outweigh the cost that the technology that led to the productivity advances has created.
AI potentially could change that, but it will be difficult because the more technologically advanced we come, the more education that is needed to prepare a person for that world. The more education that is needed to prepare a person, the more time and money that will be needed to be spent on that person.
If parents have to pay this to keep themselves up to date, and they have to pay it to try to educate their children, you end up with the problem we have.
So, really we need to be able to increase productivity levels to the point that people have more free time which they can use to have families. More importantly than that, we need to lower the levels of stress that comes with that free time which again is likely only to be improved through productivity increases. Either that, or a reversion to a simpler kind of living style.
If you’re interested, I came across this article the other day and found it rather interesting:
