Kort Explores conundrums of the human condition

There is a paradox embedded in modern society that impacts nearly every aspect of our socioeconomic system, but which seems to have passed beneath the awareness of most of us. The paradox revolves around the diametrically incompatible perspectives of those who built our modern world, and those who seek to manage our present and guide our future. One side of the paradox came to us out of humanity's past, while the other side is a relatively recent arrival resulting from the extraordinary productivity of the modern world.

The paradox manifests itself at all levels of our society - from domestic relations, to differing approaches to business management, to the policies of our government. Which side of the paradox an individual most identifies with can largely define that individual's world view, and dominate his every action. Perhaps most importantly, the perspective adopted by policy makers today will determine the direction of human civilization in the future. The core of the conflict results from the efforts of at least some participants in modern society to preserve a traditional mentality of scarcity in a world built largely by those operating from a mentality of plenty.

The mentality of scarcity has been dominant down through most of human history, and is probably still the perspective held by the majority of people today. Scarcity mentality sees the wealth of the world as finite and limited - there is only one pie and the larger the slice appropriated by one individual or group the smaller the resulting slices left over for others.

To the extent wealth is linked to power, those able to acquire the greatest slice of the pie also acquire the greatest power, and are best able to acquire additional wealth and power. In an primarily agrarian society where the use of land is the primary means of producing wealth, and wealth is itself best expressed as the possession of land, the connection between wealth and power is direct. Equating wealth with control over the means of production expands the usefulness of wealth as a means of acquiring power far beyond the simple financial value of wealth.

The increasing concentration of wealth and power in the hands of a limited number of individuals sets up an ever tightening spiral that inevitably leads to some form of feudalism. The concentration of power inevitably leads to tyranny which eventually requires a revolution to restore a fair and equitable distribution of power and wealth. And then the process starts all over again.

Within the mentality of scarcity, civilization becomes an endless cycle of the rich getting richer and more powerful until the poor rise up in revolt. The good times are the all too brief periods between recovering from bloody revolts and the point where wealth and power become concentrated sufficiently to support tyranny.

From the perspective of scarcity, the only way to delay the descent into feudalism and sustain the good times is to obstruct the concentration of wealth, and encourage the widest possible distribution of the scarce wealth and power. To this end, society creates artificial conditions that hobble the efforts of the most ambitious while providing advantages to those less able to acquire wealth. Those unrepentant ambitious that succeed in slipping their hobbles and acquiring an "unfair" hoard of wealth are relieved of their burden through progressive taxation and income redistribution.

Scarcity mentality was probably appropriate down through most of mankind's history when the very limited ability of primitive agriculture and manufacturing to create wealth was unable to supply the rapidly expanding demand for wealth by a growing human population. Only a very limited variety of goods were available in very limited quantities, and the man hours of labor required to produce an object of wealth put the cost of ownership beyond the reach of most of the population. The world was by definition supply driven with demand far outstripping the scarce supply. In a scarcity mentality, the focus of the ambitious had to be on acquiring and controlling existing old wealth. The creation of new wealth is not seen as a viable or significant factor.

The historic roots of the mentality of plenty grew out of the unique confluence of the industrial revolution and the western expansion of the 18th and 19th centuries. The growing efficiency of industry lowered the man hour content of objects of wealth to the point where they became available to the common man, while the western frontier offered "free" land to anyone willing to work it.

The rise of industrial agriculture created a demand driven situation with an over supply of food chasing relatively limited demand, resulting in lower costs and diminishing the power of land ownership. Land owners, instead of holding monopoly control over the key to survival for the rest of the population, were transformed into food producers selling their products into a highly competitive market.

The rise of industrialized manufacturing created whole new sources and definitions of wealth independent of land ownership, creating in the process the potential to endlessly expand the amount of wealth available to society. In a free enterprise system, new manufacturers are created to fill any shortfall in supply. In today's world, supply will generally rise to meet any demand - ie: if people want something enough to pay for it, someone will find a way to supply that demand.

Even more important to the mentality of plenty is expanding the variety of products and wealth. Down through most of human history, the variety of artifacts considered a necessary part of life, while varying in detail as expressed by different civilizations, were very limited. The human world primarily consisted of pots, hand tools, weapons, clothing, basic furniture, simple housing, religious artifacts, and sometimes secular art objects. The variety of goods found and/or produced by man was pretty stable from generation to generation, with artisans often passing their unchanging craft down through a long line of decedents over hundreds of years. With population growth limited primarily by productive capacity - especially in the food sector - demand by definition always exceeded supply.

Since the industrial revolution, supply has expanded to exceed demand in most of the old categories, lowering the cost of acquiring wealth and setting loose an avalanche of innovation. Today the creation of whole new categories of products has become an accepted aspect of everyday life. Where in the past established dominance in a particular segment of the economy could be used to block the entrance of others, in our modern dynamic economy dominance in any sector at any given moment is no guarantee of continued dominance.

Any attempt to unfairly exploit control over any given market segment will generally invite a competitor to attract away the customer base of the would-be exploiter - unless the market is distorted by artificial government intervention in support of the exploiter. The arrogant dominant economic powers of today will likely be the fallen heros of tomorrow. Standard Oil, US Steel, IBM, the various Railroad Barons, and a long list of other formerly powerful names demonstrate the transience and brittle fragility of power in our modern dynamic economy - especially when it is based on the arrogant abuse of concentrated wealth.

In addition, the changing technology base of our civilization constantly obsoletes whole categories of previously viable industries while spawning even more new ones. Whole new sources of wealth appear on an accelerating rate displacing and often destroying the former sources of old wealth. In our modern economy, the tattered remnants of old wealth have become only a minor part of the overall society, vastly overshadowed by the new wealth flowing out of new industries. And as we enter the information age where profitable businesses can be based on increasingly modest investments in physical plant, access to existing capital is being further eroded as an obstacle to the creation of new wealth.

Some of the most profitable businesses in our current economy were launched out of humble garages with almost no start up capital. These sources of new wealth bootstrapped themselves into existence without having to make any accommodation with old wealth, further confirming the obsolescence of the old world attitudes where scarcity equated existing wealth with the power to control the means of future production. Today, the preferred path to wealth is not to compete to take a slice of the existing pie away from someone else, but rather to create a whole new pie from which it is much easier to acquire a generous slice.

The rich of today tend to be the residue of past successes, and in our dynamic economy the parasitic rich living off their inheritance tend to lose the bulk of their wealth within three generations. As factors in the overall economy, the parasitic rich are insignificant. There have been a small number of the already rich who have continued to leverage their advantages into becoming even richer, but they are the exception not the rule.

From the perspective of scarcity aggressively progressive tax policies are necessary to delay the concentration of wealth. However, this policy has the worst possible effects on a system of plenty. In our modern industrialized society where plenty is the actual condition, it is in everyone's best interest to encourage ambition and innovation by maximizing the rewards realized by those who work hard. Only tax and social policies that allow the ambitious to retain the maximum percentage of their earnings provide the kind of motivation that fueled the unparalleled expansion of wealth and increase in the overall standard of living seen during the last couple centuries in America.

Progressive tax policies punish the ambitious just as they are intended to do, suppressing innovation and the motivation to create new wealth. And as the creation of new wealth is suppressed, the power of old wealth re-emerges and the old spiral into disaster is restarted. The steeply progressive tax policies being abandoned by many troubled formerly socialist systems around the world have repeatedly demonstrated that punishing the accumulation of wealth actually creates islands of scarcity in a world of plenty - becoming a self-fulfilling prophecy.

If in our desire to punish those we see as being undeservedly rich we inhibit the expectations of being able to retain the fruits of their efforts among those who want to become rich, we destroy the very basis of our free enterprise system and put the brakes on innovation and progress. Obnoxious as they may be, as an unfortunate side effect of properly motivating those most valuable individuals who in their enlightened self interested seek a better life for themselves and thereby improve the lives of the rest of us in the process, we must tolerate the currently rich until they spend themselves out of money. What is important in not punishing the acquisition of wealth is protecting the potential to become rich. The real potential of becoming rich through innovation and/or hard work has always been the most powerful motivation for progress.

Those enlightened societies who abandoned scarcity for the perspective of plenty have prospered to the extent they're willing to truly embrace the change. Those societies who continue to cling to the mentality of scarcity continue to decline. Those economic systems that abandon their mentality of plenty for one of scarcity end up creating through progressive taxation and artificial income redistribution exactly the scarcity, stratified social structures, and diminished opportunities for the poor they sought to eliminate.