Oligarchs and Poligarchs - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 19 May 2014
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Baltimore, Maryland

When we left you on Friday, we were delighted. We had found a kindred spirit...a like mind...a man as cheerful and as light-hearted as we are...

...in the person of Mr. Charles Hugh Smith.

We were pleased to see that Mr. Smith doesn't merely whine about 'inequality' or call for 'redistribution' like the numbskulls on the editorial pages. Instead, he opens up the drain lines to see what is down there.

First, no society has ever successfully eliminated sewage or inequality. You can redistribute wealth. Money is fungible. Money is divisible. Money is quantifiable. Money is easily shared out. But giving everyone the same wealth would only magnify the unfairness of the rest of life.

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One man would still be blessed with a full head of hair and a fetching wife. Another could hold his liquor. And a third would be struck by a cross-town bus on his way to a prayer meeting.

Occasionally, a particularly ambitious world improver tries to erase these particulars. He proposes a society in which we all wear the same clothes and get the same haircuts, and where women (and men) are shared equally too. Utopia sometimes sounds good on paper. But it is always disastrous in practice.

But "too much inequality" is considered abhorrent.

How much is 'too much?' We don't know. Most people accept a substantial gap between rich and poor as a 'fact of life.' Most poor people know they are poor for good reason. They know they didn't work as hard as they might have...or didn't save as much as they should have. They accept their lot in life because they know they deserve it.

Rich people, on the other hand, are often embarrassed and guilty about their wealth - especially if they didn't earn it themselves. That's why so many are eager to get rid of it - either by spending, charity, taxes, or investment. Other rich people fear that conspicuous inequality could make it more difficult for them to hold onto their status and wealth. They are the clever ones - Bill Gates, Warren Buffet, Mark Zuckerberg. They have so much wealth that their marginal billions are almost worthless to them. But by giving away these low-value dollars, they gain status. In other words, by giving away money, they actually pull further ahead of the hoi polloi in status and power. Inequality grows.

Even in purely material terms, inequality can be difficult to obliterate. In the Soviet Union, 'equality' was enforced by a group of implacable levelers. Titles were abolished; in favor of 'comrade.' Fine clothes were replaced by drab uniforms. Apartments, education and job assignments were awarded at the discretion of the party bureaucracy. These things were all more or less equal, at least in the sense that they were all uniformly horrible. Nevertheless, in the 1980s researchers found that the gap between rich and poor - in terms of housing, transportation, household help and consumer goods - was actually greater than it was in the United States and Europe.

But it's not the fact that some people win and others lose that bugs people. It's not the lottery winner or the hard worker whom the losers resent. It is schemer, the chiseler, and the cheat that set them off. They don't mind winners... and don't worry about losing. But nobody likes a rigged game, not unless they rigged it themselves. And that is why the solution offered by the world improvers is so unsatisfactory. They rigged the game; now, they're offering to rig it some more.

That is the charm of Mr. Charles Hugh Smith. He sees that it wasn't just bad luck that undermined middle class wealth. It was also dirty dealing.

The bad luck came in the form of competition from low-wage workers in Asia and Latin America...and no-wage technological substitutes...

...the dirty dealing came from the oligarchs who control America's government and its major industries...

The bad luck is well documented widely understood and taken in stride. It's the dirty dealing we trip over... still largely mysterious to most people. And to fully understand it, you have to understand a neologism we just invented: poligarchs. You see, modern democracy takes two to tango. It has its elite, who control the system and take most of its benefits. But it needs masses of poor, dependent people whose eyes can be covered with claptrap slogans and whose votes can be bought cheaply.

That's why we have food stamps...and unemployment...and Obamacare...and Fannie Mae...and wars on terrorism...

And that's why we have such an interest in 'inequality.' The poligarchs can't be bothered to think too much about who rigged the system...or how. But maybe they can be rallied to oppose "inequality" and to vote for the clowns who propose to do something about it. More tomorrow...

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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