plawolf
Lieutenant General
That makes perfect sense and is something I have been saying for years, glad someone finally managed to model it, since economists generally would not accept the world is round unless you can present them with a model to 'prove' it.
It should be noted that that is only just the start and the tip of the iceberg, since that only measures basic free flow models of transaction.
It should be noted that especially in the west, wealth and power goes hand in hand. As people accumulate wealth, after a certain point, they also start to accumulate political influence and power in the form of campaign contributions that gives them access if not influence of key politicians, the membership and backing of powerful lobby groups and maybe even the ability to influence or outright manipulate the media itself.
Western politics is increasingly a rich man's game, where millionaires (most of whom inherited rather than earned their wealth) become leaders, who heap all the blame on 'lazy' poor people, who's lives they have zero real life experience with, while at the same time giving themselves and their rich buddies massive tax breaks, lucrative government contracts and/or sell off government assets to their rich buddies at outrageously low prices.
The very laws of most western countries are very skewed against the poor in favour of the rich. Never mind the clearly two-tier system of those who can afford top notch private lawyers and those who have to rely on public legal aid (which is also ruthlessly cut), the very laws themselves are two-tiered.
Take debt and bankruptcy as an example. As a normal individual, being declared bankrupt will follow up for the rest of your life and close all sorts of doors to you.
But anyone wealthy enough to set up a company can effectively ringfence any losses, and pretty much declare corporate bankruptcy as many times as they want and have no lasting repercussions beyond loosing whatever capital they initially injected (which they could easily have clawed back with some clever accounting and tax trickery - again, an option effectively exclusively available to the rich, who can employ top accountants to ensure they pay almost no tax while the average person gets thrown in jail for such antics).
I think this is the primary problem with western, especially American economic theory and policy.
The free market model only works when everyone is equal and fighting as hard as they can to maximise their own benefits.
That model just falls flat on its face when corporations and/or individuals acquire such wealth and influence as to be able to tilt the playing field massively in their favour.
In my view, one of the primary jobs of governments should be to watch out for such game-breaking abuses and manipulate and put a stop to it as soon as it looks like any person or entity is trying to do anything like that.
That's why anti-monopoly and anti-trust laws were written for.
The problem is that those laws only apply to companies, and are increasingly dated and irrelevant as companies evolve to acquire the power and influence of monopolies and act as monopolies without making any of the well documented moves that would trigger an anti-trust investigation.
When you start having individuals who are worth more than most countries' GDPs, you really need laws to regulate how those people behave in the market, since the normal market rules at best just doesn't really apply to people with so much wealth and power, or at worst, can be easily manipulated and co-opted to do their bidding.
Just as there is a clear and fundamental wall between religion and government, I think there should also be a similar wall between wealth and political power.
Wealth, if earned, can be an approximate indication of ability (or dumb luck), but if inherited, it is only a measuring of blind chance. Any system where you can acquire great power from inherited wealth even if you are woefully unqualified is a system asking for trouble.
The Americans should change that system quickly, on their own terms, rather than have that changed forced upon them by calamity.
