10/17/2012 10:30 PM ET|
Is the economy a lost cause?
Can the rich save us?
Last week, in "Vote for the Romney economy?" I talked about supply-side measures needed to boost capital investment and labor productivity. The discussion above underlines the importance of encouraging CEOs and small-business owners to take risks, buy new equipment, hire new workers and spur innovation by lowering the cost of growth efforts and the potential tax burden when new initiatives succeed.
Government can play a role -- not by giving cheap loans to companies like A123 (AONE) so it can try to sell its taxpayer-funded battery technology to China when things don't work out but by rewarding successes by fostering competition and buying the results. Why not emulate the strategy of the X Prize Foundation, which offers prizes for private-sector successes in fields like space travel.
Human ingenuity remains undiminished. Consider this year's Nobel prizes for work in quantum physics and adult stem-cell research. Quantum computing holds great promise, given the ubiquity of microprocessors, including self-driving cars and humanoid robots that can finally cross the "uncanny valley" and become true human proxies. Stem cells could advance regenerative medicine as the populations of rich world economies gray.
A trickle-down solution?
But what about demand?
While most people are suffering because of the stagnation outlined above, the wealthy are doing just fine as we regress toward the stratified social structure of the pre-industrial era. Consider the latest Federal Reserve survey of consumer finances. Between 2001 and 2010, the wealth of the median middle-income family fell by more than 20%. For the median family in the upper 10% of income, wealth increased 17% to $1.2 million.
Globally, Credit Suisse expects global wealth to increase 50% over the next five years. Most of this will accumulate to the elites, since just 0.6% of the global population controls more than 39% of overall wealth. According to its estimates, 18 million new millionaires will be created.
The ugly truth is this: The only solution I see, outside of a wealth tax and a rewriting of the social contract between the moneyed and the rest, is encouraging businesses to push the boundaries of possibility to satisfy the desires of the ultrarich. They'll want new organs and cybernetic servants. They'll want first-class seats for travel into space. Hopefully, thanks to the trickle-down of technology and the new jobs created along the way, the middle class will come along for the ride.
At the time of publication, Anthony Mirhaydari did not own or control shares of any company mentioned in this column in his personal portfolio.
Be sure to check out Anthony's new money management service, Mirhaydari Capital Management, and his investment newsletter, the Edge. A free, two-week trial subscription to the newsletter has been extended to MSN Money readers. Click here to sign up. Mirhaydari can be contacted at email@example.com and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.
Stock mentioned on the previous page: Facebook (FB).
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There is another cog in this...situation, problem, whatever you want to call it. The world is moving toward a unified global economy, whether we like it or not. And when you start averaging world-wide per capita wealth--we're gonna' be the obvious losers, whether or not there is any sort of new technological revolution. Unless it's big enough to raise the standards for everyone, our living standards are going to go down...a lot.
"and our best shot might be giving the rich everything they want."
Let me guess who paid for this advertisement, disguised as independent economic analysis.
... or we start to scrape back the wealth from the top 1% that they have accumulated by gaming the system (tax cuts, insider trading, etc.). Think about it - per capita GDP growth is nearly stagnant, yet the rich continue to get richer. The rich have been soaking up the gains and leaving the crumbs for everyone else.
what an absolutely ludicrous article anthony - simply absurd. and all of you early adopters who think this is a viable course of action are insulated dullards.
my God man, read a little history. just how did that philosophy work out for Argentina? how did it work out for the Great Roman Empire? what became of the tens of thousands of Aristocrats in the French Revolution and Marie "let them eat cake" Antoinette? just how is Anastasia and Tsar's family these days in Russia? for the slave-owning plantation owners of the America South? history is replete with these kowtow-to-the-rich abominations and every single one of these grotesque social experiments has ended in disaster and years of human misery.
grow up and put your big-boy thinking pants on Anthony and stop being such a prolific intellectual miser feeding the masses of insulated sheeple what they want to hear ... yeeeesh ......
Increases in productivity have not been shared equitably with workers since Reagan's time. Tell me how further increases in productivity won't just be consumed in the same way.
As thoughtful as the article is, one important fact cause was omitted. The rise of environmentalists and the leisure class has had a pronounced effect since it's rise in the early 1960's. The leisure class tends to impede growth or progress if it could damage their sense of power or well being. They have employed environmentalists to sue, thwart or misrepresent environmental causes which has fueled a wide variety of environmental regulations which have little if any beneficial impact except to grow their respective bureaucracies.
No wonder Apple, HP, Intel and other high tech firms have outsourced thier production and high paying jobs. It's just too hard to do buisness here relative to other countries. They are becomming shell corporations marketing foreign goods and technology under American sounding tradenames. It's also too easy to substitute entertainment as a diversion for our countires ills.
As the rate of technology increases exponentially, our ability to regain some of what's lost may be too costly for our society to support permanently disenfranchizing larger segments of our society until the social safety net and society disentigrates. That is the lesson history teaches us again and again.
We can't delay, defer or cheat our way out of this any longer. It's everyone's responsibility to promote local growth, education, economy, enterprise, and public safety.
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