Part I: Survival of the Financially Fittest
I: Income Inequality & Un-Natural Selection
As society develops, so must the individual. The faster it changes, the quicker we must adapt. In theory, our adaptation should be formed by the state and the institutions that constitute our government — primarily, the political and educational system. What we see in many societies, is a system that is governed for the benefit of a small minority, to the detriment of the majority which are left fending for themselves. The survival of the financially fittest is about adapting to a new kind of society characterised by an unregulated capitalist system, an unequal distribution of income and where technological advances are making some workers obsolete. The selection of who prospers in this society is artificial/un-natural and depends upon factors often completely outside of our control such as the country or the social class we were born into. The purpose of this article and the articles that follow is to speak about inequality, what we can do to improve our position through investments, and some basics of how to approach it.
In parts of the 1900s, what was crucial for the financial progress of the wealthy was also beneficial to the rest. In part, due to a manufacturing system that required cooperation because of the labour-intensive nature of the production process. With the advancements of modern technology, we now have an increasingly capital intensive production. Also, an accelerated pace of globalization has moved many of our manual labour jobs to low-cost countries and has left domestic workers behind. This has led to a situation where the previous cooperation between workers and investors have faded as a consequence of decreased co-dependence. As investors made larger capital profits off of cost-optimization and rising productivity, workers met unemployment or income stagnation. Inequality rose.
(Of course, this is a simplification)
As the rate of return on capital has surmounted that of income, the concentration of wealth has increased. As politicians have failed to redistribute wealth and lessen the gap between the rich and the poor — inequality has risen. One solution suggested in an article by Branko Milanović called “Rising Capital Share and Transmission into Higher Interpersonal Inequality”, is deconcentrating capital ownership. But the lack of political will is a problem, which Milanović also points out. Increasing the rate in which workers are benefitting from capital income through shareholding and investing is therefore crucial and preferably not left to the slow and hesitant hands of politicians. When the political system is no longer working for the benefit of the people, it is up to the individual to take action and to create an opportunity for upward social mobility. Not only for the sake of personal gain but to commence the process of creating generational wealth for the benefit of future generations.
The evidence is increasingly clear that the era of co-dependence is slowly coming to an end which is why topics such as guaranteed basic income is now often debated. As I alluded to in the beginning, a societal change requires a change in behaviour and a different approach to life. The way to implement this change is by understanding the fundamental worth of investments, shareholding and earning a capital income. Only then will we allow ourselves to adapt to societal changes and work towards a financially secure life.
These subjects will be the focus of my coming articles which I hope will be of interest to you.
