There’s been a viral video going around the internet in the past few weeks,
Amazing infographics aside, this video is very powerful, and is just the next step in a debate that has been going on for months if not years. Unfortunately, it doesn’t look like this debate is going away.
This video is very convincing. Because the 1% has so much, we are all worse off, even the already uber-wealthy, right? That makes complete logical sense. The more the wealthy have, the less there is to go around. Well, I think we need to ask a number of questions before jumping to that conclusion.
Firstly, we must define wealth. Wealth, according to Webster’s, is “abundance of valuable possessions or resources ” firstly. But for our purposes, we are going to use the next definition which is, “All property that has money value or exchangeable value.”
So the graphics in this video are cool, but stacking up money to represent the 1%’s wealth is misleading. Wealth isn’t just cash money. Wealth is any property that has money value. The bills in my wallet, the bed in my room, and the beer in my hand all are examples of wealth. Let’s use an example to demonstrate wealth that’s close to home, Stan Kroenke.
Most of you probably know, but Kroenke grew up right here in Columbia, Missouri. He got his BA, BS, and MBA all from Mizzou, and he made a fortune developing real estate in Columbia even before marrying into the Walton Family (receiving a significant inheritance). Now, he owns the Denver Nuggets, St. Louis Rams, Colorado Avalanche, Colorado Rapids, and is the majority shareholder for Arsenal Football Club (English Premier League). He also owns biggest ranch in Canada. Kroenke’s net worth is over $5 Billion. He is the #92 Forbes wealthiest person in America. He is the 1%.
Stan Kroenke doesn’t have $5 Billion sitting in a bank account at Boone County National Bank on Broadway. His wealth is spread all over the world. His wealth is employing people in Columbia. His wealth is bringing in tax revenue in Denver. His wealth is helping hooligans in England have a team to be passionate about. I’m jealous as hell that Stan has all that, but I’m glad he does.
I’m glad he has the money to donate to Mizzou to make the best on-campus basketball facility in college basketball. I’m glad he has the money to help develop three Walmarts in Columbia. If there were only two, they’d be overcrowded. I’m glad he has the money do develop the shopping commons where I saved 50% off ski gear at Dick’s Sporting Goods. In a small way, Stan Kroenke’s wealth has made my life better. If he wants to own a dozen houses and private jets, more power to him.
Wealth creates more wealth. It’s just how it goes, if you’re smart with it. The 1% is very smart, very lucky, and yes, very greedy. But to quote Gordon Gecko, “Greed, for lack of a better word, is good. Greed fuels us.”
Back to the video. The implication that wealth is shared and not created is flat wrong. Wealth is not a zero-sum game. Land, on the other hand, is a zero-sum game. The more land somebody own in Missouri, the less there is for the rest of us. If I buy 1,000 acres between Columbia and Kansas City, that’s simply less that there is for the rest of us. Wealth is not like that. There is not a set number of wealth available in the United States. Wealth is like…. coats. If I love coats and want to buy one every day for the rest of my life, that doesn’t mean there is any less for anyone else. Supply and demand takes its course and more coats are created. Just like wealth. Wealth is not shared, it is created. Just because Stan Kroenke has created massive amounts of wealth for himself doesn’t mean there is any less for any of us. We must create our own means to get coats, and we must create our own means to get wealth.
Unfortunately, it is disturbing the greed of the 1%. But like I said, wealth creates more wealth, and eventually you get the 1% that owns a lot of the wealth in our country. This simply happened because of the market we operate in. I don’t think it’s necessarily a bad thing, but it’s the way it is.
Where does Plato factor into all this? Well, Plato had theories that are amazingly applicable to today’s world. Plato believed that as wealth increased, so does greed. I agree with this, and I also believe that some people’s greed needs to be regulated. Look at all the white collar crime out there, (Including another Mizzou guy – Ken Lay of Enron). Plato believed this greed of the wealthy needed to be regulated by another class of citizens: The Guardians. These people will defend the general public from domestic and foreign threats. In order to do this well, defense must be their sole occupation. They must not hold two jobs. In fact, they must live a strict lifestyle so that they will never even be tempted by greed. Qualifications for the position of guardian include physical prowess, fierceness toward the enemies of the state, and gentleness toward the citizens of the state.
Sound to me like the government is our guardians. It’s unreasonable to make our officials do not hold just one job (at least not throughout their life). They do not live a strict lifestyle, and they certainly are tempted by greed. Fierce towards enemies, gentle towards citizens. I like to think Plato is not necessarily a fan of big government and big regulation, but smart government and smart regulation. I agree with this view of Plato’s guardian theory.
I think one smart regulation we can do is controlling CEO’s compensation. This goes along with the last part of the video. I don’t think that the CEO is working “380x harder than the average worker.” This is just what happens in a free market. To understand CEO compensation, one must understand how businesses work. The CEO doesn’t sit around with all the executives saying, “Hmm, I think I deserve another million, mark it down.” CEO compensation is decided by the Board of Directors, a group people that may or may not be paid, and may or may not have any historical connection to the company. The Board is voted on by the shareholders. If you go buy 2 shares of Facebook stock, you get a vote on the Board. It’s how the game works. It’s not “how hard their working”, it’s what their worth. Albert Pujols doesn’t work 500x harder than I do. But his work is worth 500x more than mine is. Or at least the Angels think so. It’s a fact in our market that people don’t get paid how “hard they work,” but rather what their worth. Even still, I do think executive compensation could use some regulation. But this doesn’t mean the average worker is going to get paid more, or that more jobs will be created. The day the US government tells business who to hire and what to pay all of them is the day I lose faith in the entire American economy. It will crumble.
So, after three very long tangents, I hope you have a little understanding of what wealth is, where wealth comes from, and why we shouldn’t blame the 1% for creating it for all of us.
1,000 words later, that is what I think I think.