Saturday, May 25, 2019

All In

Anand Giridharadas, author of Winners Take All: The Elite Charade of Changing the World, posted on Twitter last year: "The solution to our winners-take-all economy is an economy in which the winners take less." Which is a nice sentiment, but I suspect that it's about as likely to happen as an economy in which the broad masses of people put less into the pot for the winners to scoop up.

For Mr. Giridharadas, the solution is "vigorous reform of law and policy," but I'm dubious about that as the answer. Legislating social good is rarely viable. Especially in situations where many high-ranking corporate executives earn modest cash wages, but large equity stakes in their businesses. But more to the point for me, it lets the rest of us off the hook.

As much as its fashionable on the American Left to complain about corporations "reaping unfair profits," instances in which businesses pad their bottom lines with openly dubious practices are about as rare as they are newsworthy. (And many of those are side effects of intellectual property law, which many people I've spoken to about the subject are in favor of, despite the ease with which government-enforce monopoly power tends to break things.) A lot of corporate profitability comes down to sheer volume of sales. When a business moves enough merchandise, they don't need to make a high margin on the individual items to make a killing. And large businesses consolidate, their volume grows. And this is in no small part due to the fact that people understand economies of scale to be good for them. While, like a lot of recent business success stories (or would-be success stories), Amazon was able to manage some of their cost savings over their brick-and-mortar competition by flouting sales tax laws (I'm always impressed at the degree to which people view tax evasion as no different from any other discount or promotional price), online retailing simply doesn't come with the same level of overhead that in-person selling does. And people's willingness to go to a physical store, where they can handle the merchandise and ask questions, to shop for goods, and then turn around and buy online also drives the problem.

It's in many people's interests to pay $9.50 for an item online, rather than $10.00 at a local store, and then demand that the shareholders and executives of the online store share their profits. But being willing to spend more to spread money around would get us neatly past at least some of the problems of winner-take-all. Smaller pots, more evenly distributed, would likely result in fewer super-wealthy and super-poor people, which, in turn, would reduce the need to request charity.

But an efficient society with a sophisticated division of labor is always going to have some reliance on charity. Spending that extra 50¢ to shop locally is, basically, a charitable action. So the case can be made that it doesn't much matter where, precisely, the charity occurs. In the end, a lot of this comes down to: "If you want something done right..." for that reason. Still, I do think that if we want a more equitable society, directly funding it is worthwhile.

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