Sunny.Molini

We are the 99%! The 1% make all the money and kick us out of our homes for not giving them more. The 1% is the elite secret society that controls our destiny. They ship our jobs overseas and borrow the money back to (insert bad thing here).

The Occupy movement provided a valuable service to our national debate. With 1 word, we can now imply a whole world of economic reality, perception, and opinion. I want to say that I don’t just feel for the unemployed masses now demonstrating their ire against the rich, but I also think they make a valuable point with a misguided interpretation.

The fact that the world has changed is so obvious as to be cliche. Since the first factory started up, serving as a system for churning out products people needed, wealth has been migrating from those without wealth creation systems to those with them. The ‘means of production’ is not a magic box that prints money and costs a million buck to obtain, but rather a system for meeting the needs of the market, for which the inputs are labor (employees) and capital (tools, machines, generally stuff bought with money). For a long time, the advantage of capital over labor was the strength it could grant to the superior mental power of the employee. What happens when that isn’t true?

The statistics thrown around Occupy mostly seem to stem from a key bit about the top 1% owning 40% of the world’s wealth. The first source I can find for this seems to be a report from the World Institute for Development Economics Research published in 2007 by Davies, Sandström, Shorrocks, and Wolff. That report also indicates that as of 2001, the top 10% of families in the US owned nearly 70% of the wealth in the US. The purpose of the report was to establish what the facts were regarding worldwide wealth distribution. There is a similar though somewhat less scary story about income in the US. According the US Census, the top 8% by income of households earn 28.5% of the nations income. The bad news is that not only is this the case, and that it has been getting worse over time; but that I believe it is neither possible nor a good idea to try to stop it.

Topio playing Ping Pong at the International Robot Exhibition of 2009

Over the last 30 years, information focused capital (read ‘computers’) has grown from curiosity, through mainstream, to mindbogglingly pervasive. With an economy based on systems, improving the system means either improving the labor, or the capital. Priests and educators have been trying to improve people for millennia with mixed results in the short term. Capital on the other hand, can be reprogrammed, replaced, redesigned, reinvested, etc.

For most of the electronics components I buy (capital investment) the first thing I do is find out if there is a software update I can apply, as that will usually improve the functionality of the device. Software updates to existing hardware have been known to improve battery life, system speed, and general useability, all by changing the way the same hardware is used. The device is designed by a team of very smart engineers, many of whom are in the top 10% income earners. The software that powers it is written by also smart programmers, many of whom are also in the top 10% income earners. The device is finally produced in factories owned by the top 1% and sold to the top 80% for $X. Then, while the 80% are using it for the next year, the engineers are busy designing a new version that can do 20% more and will cost slightly less; and the programmers are writing better updates to use the device.

The cumulative effect of that type of capital improvement lifecycle, is that capital can do an increasingly large portion of the productive system. $1 of capital ends up being able to do more work than $1 of labor. I’ll ask you to now change your perspective from that of an employee to that of an investor. Which would you rather be selling, labor or capital? If the value of capital is improving every year, and the value of labor is only improving at a much slower pace, then as an investor, wouldn’t you rather be selling capital.

Humans mostly are not born with much capital, we are all born with some amount of labor. We can think, we can do work, and since we all have labor to sell, we have to choose what we want to do to improve the quality of that labor. If we make our labor the type that competes with machines, then expect that you’ll get paid a lot less for it over time. If you make your labor the type that doesn’t compete with machines, then you’ll enjoy a decent wage for as long as it takes to build a machine smart enough to do what you do. In the meantime, save as much as you can, and invest it carefully. Build up your capital, because not long from now, it will be worth more than you are.

In the absence of any stated demands by the occupiers, many have surmised that since it is a demonstration, the best way to pacify the crowd would be some kind of political change that addressed the disparity between the rich and poor. However, redistributive programs like higher taxes on the rich, and better services to the poor are just examples of taking buckets of water from the lake at the bottom of a waterfall and putting them back into the river at the top. The structure of our economy is moving things in 1 direction and compensating for that tide will be logistically daunting.  Probably the only thing government can do that would make any difference at all for the 99% would be job training programs for the bottom 25%.

No amount of job training will address the structural problems that come from a political system where the top 1% can exercise adequate control over the law to protect themselves from competition. This is one area where I am truly optimistic. I’m of the opinion that the same information technology that will make the human body obsolete will also put more information in the hands of voters in than has ever been possible before. What we lose in that is a certain degree of reliability. Social networking can spread lies just as fast as the truth, the biggest advantage this brings to the 99% is the fact that it is more difficult to control with money than the mass media is. The lies will be rather equally distributed, and the truth can be announced through credible channels and distributed just as quickly as the lies.

I have recently started changing my life around this concept. I believe that the most rewarding area of work is going to be in the that field of making capital do more, ie. programming. If I am one of those who can make the machines more powerful, then making a machine that can do my job for me won’t be a threat, but a profound accomplishment.

You can look at the world ahead 2 ways. It can be a scary world where the machines put all the humans out of work and only the super-rich who own them get any value out of life, or it can be a dynamic world where ideas and creativity are the only problems worth burdening the human mind. Don’t occupy Wall Street, occupy your mind with solutions to the very real problems in the world.