By ALAN J. ORTBALS
Pure capitalism is like a poker game. If you play long enough, eventually all the money will end up on one side of the table. In the poker game, one person goes home happy; everyone else goes home sad but hoping for better luck next time. That’s where the analogy with capitalism breaks down.
In capitalism, if the consolidation of wealth becomes so skewed and goes on for so long, the masses don’t go home hoping for better luck next time, they take to the streets and social and political upheaval is the result.
Last summer, I traveled to Paris. While there I visited Versailles, the summer getaway of the Bourbon kings. It consists of a 721,000-square-foot palace on 8,000 acres of land, every square inch meticulously landscaped. The kings weren’t alone in their opulent lifestyle. The French royalty and clergy also enjoyed the luxuries of their station. Meanwhile, most Frenchmen lived in poverty. When a series of bad harvests turned things from bad to worse, the masses revolted; a five-year Reign of Terror ensued; and the king and scores of others lost their heads to the guillotine.
A similar scenario played out in 1917 in Russia. The czar, his family and the Russian aristocracy lived lives of extraordinary luxury while most Russians toiled in poverty. That, too, ended in revolution and the Romanov family ended up at the bottom of a mine shaft.
We have been smart here in America. We’ve had the good sense to modify the capitalist economy to prevent conditions like those that heralded the French and Russian revolutions. We broke up monopolies, created a progressive income tax, authorized labor unions and adopted a minimum wage among many other tweaks we’ve made to the capitalist economic structure.
I think it’s time for more tweaking.
In December, the National Bureau of Economic Research reported that half of American adults have been “completely shut off from economic growth since the 1970s.” Approximately 117 million people earn, on average, the same income that they did in 1980, while the typical income for the top 1 percent has nearly tripled.
If you look at the wealth distribution in America, you find that the richest 1 percent hold 37 percent of the nation’s private wealth. The top 20 percent own 89 percent of it. That leaves 11 percent for everyone else. The lifestyles of America’s rich and famous rival those of the Bourbons and Romanovs.
These historical and economic facts are not lost on the wealthy and they are taking steps to protect themselves. A growing number of the super-rich on the East and West coasts are making plans to survive what they believe is the pending crackup of civilization.
An estimated 55 percent of the uber rich of Silicon Valley have doomsday plans ranging from stockpiling food and guns to escape hatches. A guy in Kansas has created what he calls the Survival Condo Project, a 15-story, luxury condo development built in a former missile silo. Not only was it built to withstand a Russian missile attack, you also have armed guards and a sniper tower. It has enough food and fuel for five years off the grid and by raising tilapia in fish tanks, and hydroponic vegetables under grow lamps, it could function indefinitely, according to the developer. In a crisis, owners can fly in on their private planes or his SWAT teams will pick them up within 400 miles.
Full floor units go for $3 million and half-floor apartments for just $1.5 million. But, you can forget about it. It’s sold out. On the bright side, he has four more silos under development.
That’s one plan. Others are creating remote safe houses on the other side of the world. In the first 10 months of 2016, foreigners bought nearly 1,400 square miles of land in New Zealand. Since the election of Donald Trump, the Kiwi country has been deluged with registrations from Americans seeking residency.
The emperors of ancient Rome placated the masses with “bread and circuses.” That may have worked two millennia ago but it’s not enough now. Rather than the wealthy living in fear of the common folk, stockpiling food and weapons and planning escapes to underground missile silos, maybe we should raise taxes on them so we could make higher education affordable again, rebuild our infrastructure, create jobs and spread the wealth a little bit.
Alan J. Ortbals is president and publisher of the Illinois Business Journal. He can be reached at [email protected] or (618) 659-1977.
By ALAN J. ORTBALS