How does wealth create poverty?

I saw someone ask earlier “How does one person’s wealth contribute to creating poverty?” So I thought I’d write about it here.

Currency is something that was created long long ago as a way to aid trade. A person with a surplus of say peppers wants some wool from a person with a surplus of wool, but what if the person with the wool is allergic to or just doesn’t like or want peppers? Currency was created as a way of creating a standardized value for goods, where surpluses could be exchanged for their value in currency and that currency then exchanged for equivalent value of someone else’s surplus. Thus economics was born, and this currency system evolved over time until it became the global economy we have today.

Now, this was during a time where mass communication was very difficult and population density was much lower. Now that we have the booming global economy we have today with the instant communication to any part of the world and products from the opposite side of the planet available within just a couple days currency is becoming our enemy and actually creating poverty. See, currency relies on fluidity, circulation and distribution. Without circulating, someone somewhere loses out on it’s value. Now when someone amasses a great amount of wealth, and I’m not talking about just you’re average middle class guy who has a few thousand saved up for a vacation but the kind of wealth where a person could comfortably live 20 lives and still have enough left over for their kids to live on, that currency does nothing so it’s value becomes void. This means that somewhere someone created value by raising their sheep or growing their peppers, and somewhere along the line it got caught in the sinkhole of someone’s enormous bank account and became stagnant. It’s like the old story of the miser. Every day the miser would go out to his yard, dig up his gold packed in jars, count it and then bury it again. One day he went to his back yard, dug up the jars, and they were empty. The miser went to a local authority and told them his situation, and the local authority simply said to just do what he normally did and it would make no difference in his life. Or something along those lines, my grandfather told me that story many years ago.

So, currency is value. When someone locks away an amount of value that they could never possibly spend, every amount of value added to that is basically deleted from our economy and that value is lost. This is the mechanism by which poverty is created by wealth, because we’re in a world where there are plenty of resources to go around but not plenty of currency to afford it evenly. This means our system of currency has failed. The whole point of currency was the distribution of goods, yet now a lack of currency in circulation leads to those goods not being distributed. This means, logically, that the system is flawed and needs something to replace it.

Humanity has a problem. We are stuck on doing things in ways we’re used to, staying in our comfort zones. Problems that could be fixed go without being fixed in order to save the discomfort of doing things differently because people fear and distrust the unknown. This goes for currency, government, religion, science, everything. Sure, society tries to patch things, to make things that don’t work better so they can continue to be used, but at some point you just need to scrap the car and get something new. Sure a train from the 1800’s would be able to be patched and modified enough that it would be at least somewhat functional today, but isn’t it a whole lot easier to just get a bus or a truck instead? Really it is that simple, its just that with broader concepts or aspects of our society it creates too many potential unknowns and people are scared. Sure the person with the old train would be worried he’s not going to like the smell of the bus, or be good at driving it, etc. but the person would still do it because in the long run it is better. The same with our economy. Sure doing things differently than they’re done now, getting rid of currency all together and creating some sort of new system of distributing goods and value so that everyone has plenty to meet their needs, would be a difficult transition with a lot of unknowns that will arise and a lot of unexpected variables that will cause difficulties during the transition. That doesn’t mean that it won’t be better in the long run or we shouldn’t do it.

As they say, out with the old and in with the new. Are you willing to give up your comfort zone to ensure that future generations have it better than us? It’s going to be hard, it’s going to be a struggle to make something new that works, but the benefits far outweigh the initial discomfort. Over time change will happen anyway, but if you become an agent of positive change instead of a hindrance to progress you can move with the change instead of being run over by it.

 

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