Adam Smith statue
Where the money goes in the current economic system, and why it matters.

Presidential candidate Bernie Sanders initiated a debate among people who can afford broadband when he stated in September that “Billionaires should not exist.” Economist Michael Strain of the American Enterprise Institute demonstrated the gritty spirit of capitalism when he jumped to their defense, saying, “It’s their money—they earned it” (there’s always one). But “earned” is a very strong word. I am reminded of the Ricky Gervais joke:

The CEO of Nike has amassed $5.2 billion, and for a female worker in one of his sweatshops in China to earn that, she’d have to work 7 days a week, 8 hours a day, for 10,000 years. But they don’t want to! Lazy.

Hard-working though Phil Knight might be, he obviously does not work such orders of magnitude harder—or more resourcefully—than a Chinese sweatshop worker. There is something disproportionate about the way the global economy rewards its elite.

Here’s a question I’ve struggled to get an answer to: over the last nine years, where has the United Kingdom’s money gone? From March 2010 to March 2019, the treasury signed IOUs for some £744.7 billion, an amount almost equivalent to that of the previous three hundred years combined. During this time, the number of men, women, and children sleeping on the streets of England rose by 165%, while funding for public services was slashed, and welfare payments were frozen.

All of this happened in William Blake’s “green and pleasant land,” despite rising GDP; all this despite recouping £110 billion from the taxpayers’ bailout of the fractional reserve banking system following the crisis of 2007-2009 in which supposed entrepreneurs ran out of other people’s money. So we’ve borrowed more, recouped more, and spent less on the essentials—how many of us feel richer? Where does the money go? 

It goes up. Economist Gabriel Zucman finds that $8.7 trillion USD—some 11.5%—of the world’s financial wealth now competitively rots in the offshore accounts of the frivolously rich, while 11% of humans cannot afford clean drinking water. Eight men now own as much wealth as the poorer half of the world. Are these exhausted hard-earners any better off for being better off? Polls find that the loaded are the most likely of any income group to agree that “seeing other people with money” makes them feel poor.

Just imagine, if you can, how they must make each other feel.

Perhaps this melancholy springs from their having no idea how to spend it. Amazon’s Jeff Bezos—whose warehouse staff are frequently reported to be working under oppressive conditions—has a net worth of $108.5 billion and employs some 647,500 people. If he gives every member of staff a bonus of $100,000 this Christmas, he will be left with a meager $43.8 billion to his name. And yet, here he is, being interviewed by Mathias Döpfner:

The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space travel.

Once again, the only way is up. Meanwhile, Prince Mohammed bin Salman hopes to attract investors worldwide to build a brand new futuristic” city in the Saudi Arabian desert. The project’s proposals include robot dinosaurs, glow-in-the-dark-beaches, hovercars (up we go again), the highest ratio of restaurants to people anywhere in the world, and a giant artificial moon (because, you know, fuck the real moon). He only needs half a trillion dollars—that is to say, almost one percent of all the “surplus” wealth anybody has ever labored to create. The workers set to this task are “housed six to a tiny room,” so one need not ask if they will be able to afford to live in the city they have built.

Opponents of any attempt to restructure the distribution of money—either as or after it is earned—argue that the overall purse will deflate as a consequence. It is true that Milton Friedman, perhaps the father of this school of economic obsession, conceded in 2003 that “the use of quantity of money as a target has not been a success. I’m not sure that I would as of today push it as hard as I once did”. More to the point, if the money went to those who actually needed (and knew what to do with) it, an economy producing half the cash might feed twice the people and without creating a new class of baron who can glance down from the Earth’s orbit and decide whether you live or die.

Any new law that comes from financiers has “generally an interest to deceive,” Adam Smith warned in 1776, “and even to oppress the public.” In 1920, Bertrand and Dora Russell observed that “Individualists, having freed business from the control of the State, discovered that they had subjected the State to the control of business.” Last year the richest man in the world, who can think of only one way to spend his capital, bullied the council of Seattle into abandoning its $275-per-head tax on large companies, drafted for the purpose of housing the homeless.

Meanwhile, across the Atlantic, landlords organized a collective boycott of homelessness charity Shelter and the retailers who dared to support it. Behold the intellectually and morally bankrupt complaints of Dr. Ros Beck, and do not think of the guillotine:

I am a private landlord who has known for some time that B&Q has been helping to fund Shelter. So far, I have chosen to ignore this unpalatable fact, but frankly, I have had enough now.

“Well, frankly, the only way [Shelter can house the homeless] is by persuading private landlords to take the risk of housing homeless peopleas there is practically no social housing available for this purpose.

In addition to allegedly helping people into housing we have also heard how they and others “help” tenants remain in their housing by informing them that they can wait for the bailiffs in cases of evictiona process which is ruinous and devastating for landlords.

Dr. Beck also opposes more social housing, by the way. Do not pass go; do not collect £200. If you want a vision of the future, imagine a robot-dinosaur stamping on a human face—forever. The work of Thomas Piketty gives us reason to believe that rising inequality is a feature of capitalism, not a bug. If the disenfranchised masses are ever to free themselves from the grip of the “invisible hand,” then we will need an economy in which money actually is earned—not merely accrued or extorted—to free us, as Oscar Wilde once wrote, from the “sordid necessity of living for others.”