Life in the Rear-view Mirror

Unfettered Capitalism

Enslavement of the mind is a far more heinous crime than enslavement of the body, yet we celebrate one and punish the other.

------------------------------------------------------------------------

Without question, the technological advances of the last fifty years have made life more comfortable, and even more enjoyable, but they have come with a big price. The U.S. economy, an engine of growth, created a large number of new billionaires and stimulated overconsumption. The fall of communism proved that capitalism is king, and ushered in the age of unfettered capitalism. Everyone is now an entrepreneur! But unbridled capitalism is leaving too many people behind. It generates a lot of wealth, but now more than ever, within my lifetime, it’s very unequally distributed.

In 2012, the U.S. Gross Domestic Product (GDP) was an astounding $16 trillion, or about $50,000 per capita. With the labour force being about half of the total population, the average working American produced $100,000 of wealth that year. However, those working for minimum wage earned less than $20,000, or only 20% of the average wealth produced. The average American earned about $40,000, or 40%, while the financial sharks on Wall Street took home $40 million, or 40,000% of the average. That’s the degree of income and wealth inequality existing in the U.S. nowadays!

How does it happen?

To understand how such inequalities can occur, one needs to look at how our natural wealth is exploited. Natural resources, such as fossil fuels and minerals, for example, can be found all over the world. Of course, some areas are more endowed than others.

One might ask, who owns those natural resources?

It’s reasonable to posit that they belong to the community at large, and not only to the present generation, but also to future ones. Community ownership is an important concept, whether or not there is a physical community near the resource. The local, regional, and state governments are not the owners of the resource, but the voice for the community, region, and country, respectively. Some governments, however, treat resources as theirs to do as they wish, and frequently act on self-interest, rather than common good.

As an illustrative example, consider what happens when a new mineral deposit is discovered. Someone, acting individually, or on behalf of some entity, discovers a mineral deposit and lays a legal claim to it. Subsequently, the government awards the exploitation rights to the resource, catapulting the individual or entity to unimaginable riches, while the rightful owners of the resource, the community at large, get nothing or very little in return. 

This system is neither fair, nor just, as the government takes a valuable resource, held in trust for all people, both present and future, and transfers it to others without adequate compensation. Don’t the people, the rightful owners of the resource, have an equal legal claim to it? Occasionally, someone stumbling over a rock can identify a desired mineral resource, jacking up its value immensely. Yet, the government grants exclusive rights to the discoverer, without having invested one penny of capital. This is plainly wrong. There is no question that the prospector should be amply rewarded, but not to the exclusion of everybody else.

Voisey’s Bay offers a concrete example of the riches that have been transferred, from public hands into those of the few, without adequate compensation to present and future generations. It’s a large mineral deposit in Labrador containing vast quantities of nickel, on land owned by all Canadians. The discoverers were two prospectors hired by a company, Diamond Fields. They literally stumbled on it while prospecting for diamonds. Once legal claims were made and granted, Diamond Fields sold the resource to Inco, a large mining company, for $4.3 billion dollars. The discoverer got a huge amount of money and the people of Labrador and Canada got nothing.