Democracy should include economic equality.

With a great deal of disgust I opened the website of the Guardian and stumbled upon this article: http://www.theguardian.com/business/2015/jan/19/global-wealth-oxfam-inequality-davos-economic-summit-switzerland

Now these powerful and wealthy people can gather to discuss inequality all they want, but the statistics of disproportionate wealth inequality are racked against them. Neither I nor any other informed person should be under any illusion regarding the motives of these ‘philanthropists’.

Here are some statistics from the Oxfam report outlining wealth inequality and the centralization of wealth by a tiny elite:

https://www.oxfamireland.org/blog/inequality

  • The richest 1 per cent have seen their share of global wealth increase from 44 per cent in 2009 to 48 per cent in 2014
  • At this rate the richest 1% will own more than 50 per cent of global wealth in 2016.
  • Almost all of the remaining 52% of global wealth is owned by the richest 20%.
  • This leaves just 5.5%  of the global wealth for the remaining 80% of people in the world
  • The wealth of the richest 80 people doubled in cash terms between 2009-2014.
  • More than a third of the 1,645 billionaires listed by Forbes inherited some or all of their riches.

A person in denial could be creative with these statistics but the underlining feature to each one is that our current political and economic system facilitates the accumulation of wealth by a tiny elite. Democracy requires economic equality, not just equality at the ballot box.  Further below I’ll try to elaborate on how Capitalism is cyclical and make an analogy I believe is suitable.

Envisage the world economic system as the four climate seasons with which we’re familiar with.

Spring – Summer – Autumn – Winter.

Capitalism is on a cyclical pattern where one ‘season’ comes after the other and it has been this way since the development of global banking and the industrial revolution.

  • Spring, we see revived economic growth after the ‘Winter’ period and fresh initiative being taken. Spring is the period of ‘build-up’ towards the development of the economy, in particular by the government and the private interests. Note: Much like on an individual basis, it’s the people who have great wealth who survive these ‘Winter’ periods of economic turmoil and return in Spring to plant once more. It’s definitely not the people who suffered the most throughout the ‘Winter’ period.
  • Society develops and those who plant are capable of reaping what they sow. Simply put, the economic elite – those with mass amounts of wealth will be able to grow exponentially, mostly because those without the same amount of wealth don’t really have the space to do so! They can however take out loans and this is highly encouraged by both state and the establishment parties.
  • Autumn. It’s at this point where a change comes from, the ruling economic elite, well aware of the cyclical nature of capitalism begin to consolidate their gains and prepare for the downturn. It is arguable that the downturn of an economy is artificial i.e if capital is removed from weak financial institutions this has a domino effect. But more to the point, in Autumn people prepare for ‘Winter’ and the debts that were taken out by the middle/working class remains, gathering interest.

In Ireland it’s worth noting that the credit people took out was hugely disproportional to wages and unrealistic to repay. The “easy” attitude that both state and banks portrayed encouraged citizens to take out these greats which they would not be able to repay.

Of course those who are or were allies of the bankers and the high level politicians largely went away unscathed. The politicians who oversaw this great damning period are also on great fat pensions, ranging from 160,000 euro a year to 30,000, varying on ministerial portfolio.

This debt in Ireland has a variety of sources but the most important fact at this stage is who is paying the debt. It’s not the government officials which acted as guarantors for this credit, it’s not the big business which continues to evade corporation tax in Ireland and it is certainly not the big businesses that will pay.

We are all witness to who is paying the ‘national debt’ of every country; these are the average working class who during the ‘boom’ periods obtained only short term benefits while generally amassing quite significant debts. You might say that the people who took out debts for new cars, second houses and other luxuries “deserve” the debt they have and to some degree I’d even agree.

The role of the government as facilitator of debt

When society is wholly backed by the government and banks to encourage people to take out debt there is a dangerous trend. Long term interest rates and loans are so well promoted that not only do they stop sounding like ‘loans’ in the traditional sense, but they actually look appealing! Essentially, the significance of you as an individual taking out a loan and the repayment it entails is dumbed down to such a point where the threat is non-existent.

In such an atmosphere it’s hard not to take out some sort of credit for a luxury you or your family wanted. After all, the ultimate guarantor, the elected government encourages you to do so.  This series of events only re-affirms that the government acted on the interest of a small group of citizen’s i.e wealthy, powerful and influential. So what we ultimately have is a state backing the very generous temporary distribution of wealth – only to ruthlessly take it all back within a decade.

The above atmosphere can be clearly defined as the artificial generation of wealth, wherein large bank’s issue loans will then look at the loans, add on the interest and issue this new wealth as something that exists. Let me illustrate the point a bit better via an example:

I take out a loan from the bank worth 350,000 euro with an interest rate of 10%. What the bank does (quite cleverly) is take this sum, add the interest and work with it as already existing wealth. As in, before you pay anything back this wealth already exists in the books of the bank, ready to use. They take this wealth (not repaid) and use it in another venture. Now multiply this by a thousand times and you have huge amounts of unpaid loans. Worse yet, the loans that have not been repaid were used in other projects, well spread.

But it’s not the middle or working class that are at fault when it comes to small indulgences, it is those who withdrew millions on credit and escaped without repercussions. It is those politicians who actively facilitated this scam and subsequently defended their economically powerful friends from consequences.

Do not forget the role of the media which lies largely under the thumb of a few powerful financial institutions, individuals or indeed the State itself, which actively facilitates this farce.

This is only scraping the iceberg of how corrupt and self-serving politicians are – but I’ve come to realize that we ought not to misinterpret the patterns and connections. The statistics provided show that our social democratic governments have not been working in the best interests of humanity, but in the best interests of small select elite.

True and robust democracy ought not to be limited to the ballot box, but should also extend to economic equality.

One thought on “Democracy should include economic equality.

  1. Reason why the fact that super rich elite controls most of the world’s wealth should be worrying is that it is throwing us back to the medieval system of society. It is throwing us back to the feudalism, where the upper, privileged class held all the resources and properties, whilst the lives of the common folk were placed in the landlord’s hands. Though, it is quite obvious that the rich and powerful will not voluntarily give out their money for the sake of equal distribution of wealth, it has to be taken from them!

    Capitalism has developed and infested the world like a cancer, it became much more than a mere economic system. It actually started to decelerate the development of the human civilization by destroying planet, nations, homes, families in the name of the profit for the selected few. It is a cancer that has to be removed and I firmly hold to the belief that this once again falls on the shoulders of no other than the working-class!

    To conclude my comment with the quote of the good old Vladimir Lenin:

    “The best way to destroy the capitalist system is to debauch the currency.”

    Liked by 1 person

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