Here's the most important loop that's been driving up staggering wealth inequality in our lifetimes:
- Corporations and the ultra-rich tend to be the ones who try to profit-maximize the most (because people who care about other things, don't work as hard to accumulate wealth, and because corporations that profit-maximize the best tend to survive and grow better)
- National governments since WW2 had done a decent job of redistributing wealth, but since there are increasing returns to scale on investing in tax avoidance/evasion, it is the richest individuals and corporations that are best able to avoid taxes and move wealth offshore
- It is cheaper and easier to cut a sweetheart tax with a corporation or a rich individual to temporarily attract capital to a nation-state than to generate wealth the hard way through education and infrastructure investment
So our global capitalist system for the past few decades has simultaneously selected for the most selfish, profit-maximizing institutions and individuals, while also setting up a race to the bottom between nations (and even cities and states -- see Amazon's bid for a 2nd headquarters or Tesla's Gigafactory) to see who can give the biggest tax breaks to those at the top.
> That's not the result of 'loops in the network'. That's the result of the memory effect of wealth. See, this is the problem with handwavy gibberish.
I'm not sure if you're intending to be ironic, but you've achieved a gold star for irony nonetheless. Google "memory effect of wealth" to see if you come up with any meaningful, non-handwavy definition if your post was actually sincere.
A real-world example of such dysfunction happening right now is that most of the money that could be used by all people to signal demand via cash "messages" is now tied up in a small loop of messages sent between the wealthiest people a "Casino Economy". See for example "Money as Debt II": https://www.youtube.com/watch?v=6MwHgpFSQMo
Money can be seen as a form of kanban unit or ration token for signalling demand. Essentially, the richest 1% or less of investors now use their "messaging" tokens (cash) for speculative investments in games against other wealthy investors in the financial sector (foreign exchange, derivatives market, etc.). That starves the rest of the economy for kanban tokens (cash) so it can't function. It would be like you walked into a Toyota factory using Kanban tokens and randomly removed 90% of the tokens -- that would prevent each industrial operation from signalling its need for required parts from other operations, causing all operations to slow down as they wait on all their dependencies to arrive.
https://en.wikipedia.org/wiki/Kanban
Almost any economist will agree that if 90% of the money supply suddenly disappeared we would suffer a great economic depression in the USA. But the same economists seem unable to accept the same depression will happen for the 99% if the richest 1% take most of the money supply out of general circulation and just use it to play poker with each other. There are other complexities (including velocity of money message passing), but it seems to me the big issue many people overlook -- it is not just the total amount of money supply but how it is distributed.
Unfortunately, most of the governmental solutions (to satisfy wealthy donors taking part in legalized bribery of campaign donations) are based on supply-side "voodoo economics", like giving trillions of more dollars to the wealthy via bank loans or tax cuts. This is done in a foolish unfounded hope the wealthy will use extra money differently than they already have in the casino economy disconnected from meeting the needs of the 99%.
Even the slightest amount of thought will show how absurd supply-side economics is compared to demand-side economics. Almost anyone who can show a predictable demand for a good or service (like booked orders) can get a bank loan to fulfill those orders -- and to get orders, the customers need to have cash to signal demand. It is demand that makes businesses successful -- not supply.
Markets can work well to meet needs and wants, but they only hear the needs and wants of people who have money. Thus the value of a basic income to ensure all people's needs and wants are heard by the market to at least a basic extent.
Other options for dealing with the cash crisis caused by the triumph of the Casino Economy include strengthening non-market parts of the overall society such as: subsistence production (home 3D printing, home robotics, home gardening, home power via solar panels); the gift economy with more volunteering, freecycling, and sharing knowledge via the internet; and better democratic planning.
Unfortunately, with the big move of women into the workforce in the USA over the past few decades, home production, volunteering, and civic participation have all been reduced. Expanded entertainment options as a form of "Supernormal Stimuli" also distracted many people from physical daily life, also reducing participation in those other three sectors of society. Thus, a growing percentage of total societal interactions take place via exchange in the market instead of via subsistence, gift exchange, or civic planning.
Ironically, the "Two Income Trap" means families have very little to show for the second income between extra expenses involved in working outside the home, two-income families bidding up the price of houses and other items, and an increased supply of workers leading to lower compensation and poorer working conditions for everyone. See Elizabeth Warren's book on that:
http://www.motherjones.com/politics/2004/11/two-income-trap/
With an increased supply of workers, there was decreased power of workers to demand wage increases in parallel with ongoing productivity increases. This in turn created the situation whether the owners of capital could take profits and lend them to workers instead of paying them in wages. Richard Wolff talks about in "Capitalism Hits The Fan", (whatever one thinks about his proposals for reform):
http://issuepedia.org/Capitalism_Hits_the_Fan
To be clear, I'm not saying women should not have a choice as to what they do with their time. This is just about the societal implications of certain trends given men did not leave the work force to stay at home and be subsistence producers, volunteers, and civic actors in the same numbers as women who joined the work force.
How we deal with that situation is a political question -- but to deal with it, we first need to acknowledge and understand what happened. And beyond a decrease in activity in the non-market sectors of society, one of the consequences of multiple trends has been a concentration of wealth in a smaller number of hands which has made the shift to a Casino Economy more likely.
Automation also has a role to play in that concentration of wealth from a different direction. Marshall Brain talks about that in "Robotic Freedom":
http://marshallbrain.com/robotic-freedom.htm
Better technology has also increased options for participation in those three non-market areas (via cheaper tools, cheaper robots, and cheaper communications), so it is hard to say the entire trend has been downward for those non-market sectors. We may yet see them rise again as those other costs continue to fall -- and perhaps if people learn to move beyond the supernormal stimuli of mass-produced entertainment and back to making their own fun and using their own creativity.
While this won't directly break the tight loop of the 1% and the Casino Economy, it may bypass it so it does not matter as much -- in which case all that vast amount of money controlled by the 1% may just becomes like Monopoly money -- meaningless to most people most of the time because their life is built around non-market interactions.
- Corporations and the ultra-rich tend to be the ones who try to profit-maximize the most (because people who care about other things, don't work as hard to accumulate wealth, and because corporations that profit-maximize the best tend to survive and grow better)
- National governments since WW2 had done a decent job of redistributing wealth, but since there are increasing returns to scale on investing in tax avoidance/evasion, it is the richest individuals and corporations that are best able to avoid taxes and move wealth offshore
- It is cheaper and easier to cut a sweetheart tax with a corporation or a rich individual to temporarily attract capital to a nation-state than to generate wealth the hard way through education and infrastructure investment
So our global capitalist system for the past few decades has simultaneously selected for the most selfish, profit-maximizing institutions and individuals, while also setting up a race to the bottom between nations (and even cities and states -- see Amazon's bid for a 2nd headquarters or Tesla's Gigafactory) to see who can give the biggest tax breaks to those at the top.