For richer or for poorer

“The rich get richer…the poor get poorer.” That’s a universal lament that you’ll hear a lot in Saipan, and the gripe is even more commonly aimed at the Philippines.

Seeing some get ahead while many others fall behind violates a fundamental sense of “fairness” in many minds. Without getting into that aspect of the gig, let’s contemplate the economics of wealth polarization.

We’re not the first one to arrive at the point this month. The irreverent, clever, and insightful Bill Bonner, an economics writer, has neatly analyzed the polarization and globalization issue by observing that rich folks, who live off their capital (investments), are free to send their capital anywhere in the world to secure the highest returns. That makes sense. That’s what capital does, it seeks the highest returns. Up it goes. Up it grows. So: The rich get richer.

OK, so what about the poor? Well, they’re the folks who live off the sweat of their brow. These laborers can’t easily send their labor to where it earns the highest returns. They’re at the mercy of the local market. Not that the local markets have to show any mercy: Many American workers are losing their jobs as the great “offshoring” march continues. This parade isn’t limited to factory workers; it has crept up the economic food chain to professionals such as computer programmers.

Such is the nature of competition, the very basis of the free market. Even middle America, usually known for its insular smugness, is getting a whiff of worry over the exodus of jobs. Little wonder, then, that some statistics point to a “rich get richer, poor get poorer” situation in the good ol’ U.S. of A.

I’ll taste some of that data, but I won’t make a meal of it. The U.S. has imported waves upon waves of poor illegal immigrants, so it only makes sense that the ranks of the poor are getting poorer. When you race to the bottom, the bottom gets deeper. Nobody, of course, will point this obvious fact out. It’s not politically correct.

Meanwhile, be it on Saipan, the Philippines, or the U.S., we have to confront the fact that it is labor, not capital, that holds the vote. Corporations don’t vote. Only people (labor) can do that. They get the policies, and the leaders, that they choose. If the policies result in economic inefficiencies that reduce the value of labor, hence the money earned by laborers, who is really to blame? The very laborers who did the voting, right?

So while democracies often lurch from one folly to the next, as workers (voters) try to live off each other by collectivizing education, health care, and pensions, capital is silently moving in the background, favoring the efficient places, and snubbing the inefficient ones.

Overall, I think the nature of democracies is to drift into socialism, and under socialism, you’ll always have a ruling and rich elite, while everyone else fights for the scraps. That’s just the way it works. People feel comfortable with the resulting hierarchy and class structure, it gives them a “system” as a security blanket, and their place in the pecking order, even if its lowly, provides them with a sense of identity. Having your station in life defined for you is a lot easier than having to define it for yourself. O, Brave New World…

So, pick your reasons: Fleet-footed capital vs. clay-footed labor…globalization…competition…immigration…politics and democratic governance…it looks to me like the rich will usually get richer, and the poor will usually get the short end of the stick.

You might say it’s fair. You might say it’s not fair. Either way, when it comes to the muscle of capital, and the realities of human nature, being the Man will always beat working for the Man.

(Ed Stephens Jr. is an economist and columnist for the Saipan Tribune. E-mail him at Ed@SaipanEconomist.com.)