Tag Archives: economics

Unsustainable and increasing inequality

Here is page 7 of an OXFAM report, Inequity Kills:

What’s not necessarily well known is that the Forbes and Bloomberg ‘Top 10 Richest’ lists never includes some of the richest and wealthiest families which have accumulated wealth above and beyond anyone on these lists… there is a lot more extreme wealth than these lists suggest.

Add to this the first two sentences in the report’s summary:

“A new billionaire has been created every 26 hours since the pandemic began. 6 The world’s 10 richest men have doubled their fortunes, while over 160 million people are projected to have been pushed into poverty.”

This kind of lopsided wealth distribution simply can’t be sustained. And yet in the hardest times of the pandemic, when many low wage people couldn’t work, prices and inflation skyrocketed while corporations that produce oil, and sell groceries, reported their greatest profits in years. They also returned their largest dividends to stock holders… most of whom are already very rich and can afford to hold a significant amount of stocks. We’ve all heard the saying, ‘The rich get richer while the poor get poorer,’ and it seems that this is more true now than it ever has.

I stumbled onto this report after reading this article on NPR, “Move over, Jeff Bezos. India’s richest man is now wealthier than the Amazon founder“. The Billionaire club used to be almost exclusively a Saudi and USA thing, other than old family wealth, but now it’s a global phenomenon. Everywhere in the world there are small groups of people accumulating wealth in significant size, while there are populations in significant size that are dropping below the poverty line. This simply isn’t sustainable. That said, I don’t see anything upsetting this trend in the near future. Further, I’m at a loss to think of how this will change in the coming years?

At what point does a society with a few people owning more than half of the global wealth become unproductive for the wealthy? The abject poor can’t by the products the rich manufacture. The suffering middle class with less-than-ever disposable income, and more-than-ever accumulated debt soon won’t be able to help either. So what breaks? How does this self-correct?

I certainly don’t have any answers.

Five to Eight Percent

When I think about the modern company with shareholders, I can’t help but think that this system is designed to undermine ethical and environmental progress. There are companies laying off workers right now while providing shareholders huge dividends and returns. The system is flawed. These returns help drive the company stock price up at the expense of ethically growing the company… instead of helping workers keep their job and keep their wages fair in comparison to what shareholders get

What if companies promised shareholders a maximum of a 5%-8% return? Any company profits beyond that are invested back into the company, towards employees, and/or towards environmental or community initiatives. If this were the case, companies would still have the same commitment to meet shareholders targets, but those targets wouldn’t be based on greed. Instead they would be focussed on doing the most good.

I’m not an economist and don’t know all the ins and outs of how this would work? I don’t know what the magic return percentage should be? But I do know that the current model is based on greed and unsustainable growth. If companies capped shareholder returns at a safe investment amount, and promised to do good with what would have been more returns, I think there would still be a market for the stocks… And these companies could help make the world a better place.

Economic mysteries

I don’t pretend to understand economics, but I’m beyond confused about what’s going on in the world? Countries are printing money like mad, but inflation is in check and so are interest rates.

It’s a seller’s market in real estate and price wars are happening. Family members got over asking price for a condo just north of Toronto. A friend of mine just got $100,000 over asking for a townhouse in Vancouver without inspection/conditions.

I understand why companies like Microsoft and Amazon have highly valued stocks, they have truly benefited from remote working/learning and lockdowns, but why is the whole stock market doing well, while retail companies and restaurants are laying off staff and imploding?

I’ve just tried a couple times to explain these patterns, but deleted each attempt. They are pure speculation on my part.

My fear? An eroding middle class and a world divided between the have’s and the have nots. Is this how it starts? It’s shocking how many people live paycheque to paycheque, and I’m not sure those numbers are getting better? Is this upside down and inflated economy going to last? And if it doesn’t, how will this effect the poor? The middle class?

I hope someone is paying attention and looking to the future, because I don’t think I’m the only one that sees this as a big, puzzling mystery.