History proves that to maintain a civil society it is wise to keep the wealth gap between rich and poor to a reasonable level. Every culture has a different optimum wealth gap. For example, Japan’s optimum wealth gap is lower than Europe’s.
The wealth gap has been increasing around the world and is at dangerous levels due to the financialization of our economies and the low interest rate policies we are using to try to maintain business as usual. The wealth gap has been increasing not due to the skill of the rich or fault of the poor, but rather is a predictable outcome of our monetary policies.
Traditional socialist policies maintain the wealth gap by redistributing wealth from the rich to the poor, but in today’s world this policy will make things worse.
Much of the wealth of the rich sits idle. If this wealth is redistributed it will be immediately spent which will increase inflation, resource depletion rates, and CO2 emissions.
We need a Socialism 2.0 that understands limits to growth and the relationship between energy and wealth.
To maintain the wealth gap in our growth constrained world the correct policy is to tax excess wealth from the rich and pay down public debt while not permitting governments to re-borrow the funds, or to convert the excess wealth into cash and bury it.
Here are a couple more excellent talks by Nate Hagens. He is now concluding his talks with some modest advice on what people can do to prepare.
The Converging Economic and Environmental Crisis (10 July 2014)
Limits to Growth: Where We Are and What to Do About It (15 October 2014)
When a person learns that over-population, over-consumption, and resource depletion are leading to collapse of civilization and extinction of many species, what should they do?
One response is to work hard to maximize income and to invest as much as possible to increase the probability of a comfortable life after the collapse.
Another response is to voluntarily reduce income and consumption and to have fewer or no children.
The problem with the latter response is similar to why efficiency alone cannot solve our energy or climate problems. If total consumption is to be reduced through frugality and/or efficiency then there must be a mechanism to prevent the newly freed resources from being consumed by someone else.
No such mechanism exists today.
In today’s global world if I choose not to consume a liter of gasoline it almost certainly will be consumed by someone else.
Despite this pessimistic view of the impact an individual can make, I have concluded that frugality is still the correct strategy.
It is probable that much wealth will be lost in the coming collapse as paper claims (money and investments) on future wealth vaporize. Any wealth that escapes the initial deflation will be threatened by the inflation that is likely to follow and/or governments in desperate need of taxes and/or angry mobs.
By voluntarily reducing consumption one builds material resiliency to coming shocks because less is needed to maintain your lifestyle, and builds emotional resiliency because less pain is associated with voluntarily doing something than being forced to do the same thing.
A modest lifestyle also sets a good example for family and friends. If enough people admire and emulate your actions then a meaningful positive impact might emerge.
You might also sleep better knowing that you did what you could.
Many people understand pieces of our predicament. Very few understand all of the pieces.
Nate Hagens has the best big picture understanding of anyone I know.
Nate has a new blog called The Monkey Trap that he set up after the The Oil Drum closed down.
Over the years I have collected a large library of books, articles, and video. If I had to chose only one item that best explains what is going on, this talk by Nate Hagens would be it.
And here is a different version of the same talk targeted at a younger audience with less background knowledge.