28, 2007 Section:
Business Edition: MAIN Page:
policies deliberately cater to the super-rich CHUCK
items on page one of the Business section of June 18 are
related, although many readers may not see the
connection. "New luxury standard: $700K pens, $40K
handbags," and "Mortgage rates push buyers out of
market" illustrate the zero-sum nature of
wealth. In some of the most important aspects of
life, the more money other people have, in effect, the
less you have.
Of course, apologists
for the wealthy and powerful claim that wealth is
not a zero-sum game, and they've convinced the
public that the huge incomes of the wealthiest Americans
are irrelevant to those who make moderate-to-low
incomes. They even claim that the more money the
wealthiest Americans make, the more wealth will
trickle down to the lower classes.
Sure, money is unlimited and it can multiply like
crazy, and devalued money does trickle down. But there
are only so many things in the world, like real estate
and homes. All across this country working-class
Americans are finding that they can no longer afford to
buy or rent decent housing near where they work,
especially if they live in a desirable location like
Asheville, Myrtle Beach, San Diego, and so on.
Priced out of the market
The popular fiction that it doesn't matter to you
how much money other people have ignores the obvious. We
live in a world of auction markets. As those with more
money increase the demand for housing, gasoline, scarce
foods, medical care, education, etc., those with less
money get priced out of the market.
The people who are buying $700,000 pens and
$40,000 handbags are buying a few houses with a view,
tearing them down, and building a single mansion for
themselves and their dog. And they're doing it in
multiple states and countries. But that's just the
beginning of the story. They also make sure that real
estate represents a significant part of their investment
It's not unusual to see an ad in the classified
section of a newspaper like this one:
27 rental houses, singly or as a total package.
Excellent rental histories, great tax advantages.
Real estate disparity
Real estate is one of the greatest creators of
wealth for those who have it or can get it, and
it's one of the greatest creators of poverty for those
who find themselves priced out of the market, either as
buyers or renters.
Of course, the most important aspect of the
zero-sum nature of wealth is in the
original distribution of wealth to begin with.
The exploding wealth and income gap is no
accident, and is not a result of the movement of the
stars or some unexpected economic fluke. It is the
direct result of economic policies that are deliberately
designed to redistribute wealth from those who
work for a living actually handling and producing
products and services to those who have money to
invest. Of course, those who serve investors, like
top-level corporate executives, are also on the gravy
Keeping wages down
Our federal policies of manipulating the prime
interest rate (to make sure the unemployment rate keeps
"wage inflation" from occurring), our expansion of legal
and illegal immigration, globalization and a host of
other actions are deliberately designed to keep wages
from going up thus maximizing profits.
If wages don't go up along with rising corporate
profits, then investors become wealthier faster. If
workers make more money, the businesses and corporations
make less profit and the investors don't become so rich
so fast. Corporate profits always equal income minus
expenses (including labor). Subtract the left side of
the equation from the right side and you always get
There is no getting around it; wealth is a
zero-sum activity at both the front end when
income is distributed, and at the back end when
products and services are sold in an auction market.
Right now our government's economic policies
favor the super-rich, and they're using their unfair
advantages to demand far too great a share of our
Chuck Kelly has a Ph.D. from Purdue. The author
of "The Destructive Achiever; Power and Ethics in the
American Corporation," he is a retired management
consultant and college professor. He recently moved to
Burnsville and can be reached at email@example.com.
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