How To Build Systems Where The Rich Don’t Get Richer

Honestly speaking, who would not wish to build systems where the rich don’t get richer? Well, the answer to that question is pretty simple: the rich who ARE currently getting richer! But most of us don’t belong to this category. That is exactly why the discussion in this essay makes perfect sense for a more balanced world.

In my essay on why the rich get richer and the poor get poorer, I covered the role of mathematics and variance in this issue with our current socio-economic systems. Check it out if you’re interested in the technical side of things.

In this essay, I will be discussing how we could go about designing and building systems where the rich DON’T get richer. We shall start by observing and studying systems that already have this property (yes, they do really exist). Let us begin.

This essay is supported by Generatebg

Power Struggles and Diversity in Nature

The Green Giants

Believe it or not, the issue of the “rich getting richer” is a natural phenomenon. You might be surprised to learn this fact, but it will become clearer to you after this section. Let us mentally picture a dense forest in some place near the Earth’s poles (like Canada or Norway, for example).

A vivid image of lots of coniferous trees typically comes to mind (like the above image). The thing to note here is that nutrient-rich soil and natural resources are available abundantly to these trees. But notice something peculiar: the trees are like one big happy family. There are not many other kinds of plants or trees.

In other words, even though there is an abundance of resources like sunlight, water, and soil, diversity is lacking. Why? The reason is that this tree family represents the “rich getting richer”. This species was the fastest to absorb the nutrients, and consequently, grow the fastest.

By growing fast and tall, these trees hoard the majority of the sunlight for themselves, whereas the slower developing species are not given an equal chance to develop any more. Interesting dynamic, right? Now, let us turn our attention to an entirely different ecosystem.

The Yellow Dwarfs

Let us now picture the Australian outback in our mind. If you have difficulties doing so or don’t have knowledge of the Australian outback, help yourself with the image below. This place is harsh; its soil is not known to be the most nutrient-rich and rainfall can be scarce.

So, it is safe to say that there is a significant lack of abundance in resources for flora in this ecosystem as compared to the coniferous forests near the poles. But there is a peculiar point hidden here as well: notice the shrubs!

This outback is known to feature multiple times the number of plant species that ecosystems with abundant natural resources do. Why is this? Well, due to the lack of resources, any species that develops fast hits a glass ceiling and stops there. There is no infinite pool to draw resources from.

Therefore, you don’t see one species of a very tall shrub hoarding sunlight and driving away the smaller ones in the process. Long story short, in a hidden plot twist, the lack of resources fosters more diversity and drives away the “rich get richer” effect. At this point, you might be thinking along these lines:

“All this nature talk is fine. But what does this have to do with human beings?!”

I hear you. Let’s get to that part next.

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Systems Where the Rich Get Richer

Similar to the coniferous giants and the diverse shrubs, we have different locations on Earth where this effect plays out in human populations as well. In most of the western world, where capital resources are abundant, we see huge conglomerates and corporations accumulating monstrous wealth.

As they do so, they also gain political influence, which they use to lobby and sustain their respective positions. But the key point to note is that these conglomerates and corporations are controlled by a minority of highly influential and rich individuals; these are the rich getting richer!

So, in these environments, the overwhelming majority gets poorer and poorer whereas a micro-minority gets richer and richer. As we all know and are experiencing, the entire world is moving towards this model.

Systems Where The Rich Don’t Get Richer

But there do exist places on the globe where this is not the case. Consider some of the so-called “developing” and the “underdeveloped” nations (in Africa and Asia, for instance). Because of the lack of abundant capitalistic resources in these nations, there exists a lot of diversity in terms of business offerings and value creation.

In these environments, diverse businesses offer diverse services. There exist rich and poor, but the proportions and ratios are much more comparable to the sizes of the various shrubs in the Australian outback as compared to the coniferous forests and moss on the ground near the poles. At this point, you might be thinking:

“So, you want developed nations to become “underdeveloped” to solve this issue?”

That is not what I am saying. All I am trying to do here is to observe and learn from these systems. Now, let us get to the part where actually start designing desired systems.

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How To Build Systems Where The Rich Don’t Get Richer

Firstly, it is clear to me that the entire world is getting unified under the current socio-economic system, where the natural drive is for the tall trees to hoard all the resources for themselves. And technology lies at the heart of this unification.

Think about it; due to social media, local fashion trends are getting replaced by global fashion trends; local products are getting replaced by global brands. Due to a huge connected network of flights, potentially local epidemics are spreading far and wide as global pandemics.

So, what is my point based on all these observations? Well, we are losing the “island effect”. Biologists and complexity theorists would immediately understand the term “island effect”.

It refers to a situation where the more disconnected a system is (like an island (also note that Australia is an island)), the more diverse it is and the more robust it is to systemic shocks.

As a corollary, the more interconnected a system is (the current global economy is), the less diverse it is and the more sensitive it is to systemic shocks.

This is one of the reasons why one highly levered bank is capable of taking the entire global economy down with it as it goes down. So, what is the solution, then?

The answer lies in rebuilding “islands” and capping resource flow. We need to be building bottom-up socio-economic systems that cap the growth of corporations and conglomerates such that they are not incentivised to hoard all resources and push out weaker businesses.

Furthermore, each of these islands needs to incentivise local consumption and trends as opposed to globally inter-connected consumption and trend-following. This is a key requirement for an “island” to remain an “island”.

Further Challenges and Closing Comments

As to global lending/borrowing/banking, we need more nuanced solutions than what we currently have or what I can currently think of.

But hey, I did not promise to solve ALL of our issues in one essay. All I am doing is starting the discussion on how we could build systems where the rich don’t get richer.

If you have any thoughtful inputs to contribute on this topic, feel free to share them in the comments section.

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Reference: Henry Reich.

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Further reading that might interest you:

• How To Really Understand Pascal’s Wager?
• How To Really Understand Zero-Knowledge Proof?
• How To Benefit From Computer Science In Real Life?

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