Tuesday, November 22, 2011

It's time for us to take a lesson from history

It's time for us to take a lesson from history
- Darus Trutna/For the Times-Standard

In our times of economic difficulty, the Occupy movement, in Humboldt and across the world, has brought focus on the distribution of wealth and characterized it as a sign of immorality and unfairness. Whether this is valid or not, the Occupy movement may be a new rotation in a historical cycle of economic inequality, uprising and resolution. This article will look back on the history of economic inequality and focus on the knowledge and judgment of the historian and philosopher Will Durant. We'll attempt to look through his lens of history as we uncover the two paths that are highlighted when confronting economic inequality.

Durant explains the cause and recurring nature of inequality in “The Story of Civilization”: “Since practical ability differs from person to person, the majority of such abilities, in nearly all societies, is gathered in a minority of men. The concentration of wealth is a natural result of this concentration of ability and regularly recurs in history. The rate of concentration varies (other factors being equal) with the economic freedom permitted by morals and the laws.

”Despotism may for a time retard the concentration; democracy, allowing the most liberty, accelerates it. ... In progressive societies, the concentration may reach a point where the strength in number of the many poor rivals the strength of ability in the few rich; then the unstable equilibrium generates a critical situation, which history has diversely met by legislation redistributing wealth or revolution redistributing poverty.”

As Durant explains, when this sense of inequality manifests in society, it can become a trigger for rebellion. Regardless of political leanings, it's probable there is a shared concern for the most dangerous force we know: an angry man with nothing to lose. It may be prudent to take a lesson from history when the stability of a society is threatened by increasing numbers of citizens who have lost hope, empathy, and respect for the law. In “The Lessons of History,” Durant provides an account of two societies and how they reacted to inequality.

Durant writes, “In the Athens of 594 B.C., according to Plutarch, 'The disparity of fortune between the rich and the poor had reached its height, so that the city seemed to be in a dangerous condition, and no other means for freeing it from disturbances ... seemed possible but despotic power.' The poor, finding their status worsened with each year -- the government in the hands of their masters, and the corrupt courts deciding every issue against them -- began to talk of violent revolt. The rich, angry at the challenge to their property, prepared to defend themselves by force.

”Good sense prevailed; moderate elements secured the election of Solon, a businessman of aristocratic lineage, to the supreme archonship. He devalued the currency, thereby easing the burden of all debtors (though he himself was a creditor); he reduced all personal debts, and ended imprisonment for debt; he canceled arrears for taxes and mortgage interest; he established a graduated income tax that made the rich pay at a rate twelve times that required of the poor; he reorganized the courts on a more popular basis; and he arranged that the sons of those who had died in war for Athens should be brought up and educated at the government's expense. The rich protested that his measures were outright confiscation; the radicals complained that he had not re-divided the land; but within a generation, almost all agreed that his reforms had saved Athens from revolution.”

In contrast, “The Roman Senate, so famous for its wisdom, adopted an uncompromising course when the concentration of wealth approached an explosive point in Italy; the result was a hundred years of class and civil war.” A series of rulers attempted to stop the violence through government action. Tiberious Gracchus attempted to redistribute the land, but it was rejected by the Senators as confiscatory. He was slain in 133 B.C.

The impoverished masses had other leaders strive to redistribute the wealth, but, as Durant describes, the forces of the wealthy killed all, including Julius Caesar in 44 B.C. Not until Octavius established the “Principate” in 30 B.C. was peace maintained. This period would begin to end in A.D. 180 when only 4 percent of Romans were middle class, and the wealthy raised taxes to bolster their own living standards. This led to a rebellion and, after a series of poor leaders, the fall of the Roman Empire.

Durant proposes that pure capitalism eventually collapses because of inequality and revolution, while pure socialism eventually fails because it does not produce adequate wealth to sustain itself. He used East Germany and the communist Soviet Union as examples to show that few people will work without a profit motive. Long-term peace and prosperity seems to be a balance between capitalism to effectively create wealth and socialism to provide equal distribution. “Talent, intelligence, self-discipline, and an appetite for risk” must be rewarded for economies to grow, but societies must maintain a reasonable opportunity for all to succeed in life.

Right or wrong, if the Occupy Movement does lead to shifts in government policy, the tax code and/or the influence of corporations on government, there would be, for a time, an equalization of wealth. But as Durant concludes, “the concentration of wealth is natural and inevitable and is periodically alleviated by violent or peaceable partial redistribution. In this view, all economic history is the slow heartbeat of the social organism, a vast systole and diastole of concentrating wealth and compulsive redistribution.”

In many respects, we have made incredible progress in the last 6,000 years. As a species, we have a fantastic track record of facing down incredible challenges, enduring torturous heartaches and surviving to savor life's joys.

Is it possible to calm this heartbeat of economic inequality without violence? I believe so.


Darus Trutna is the broker for Forge Property Management. He is also a member of the Humboldt National Association of Realtors and the National Association of Residential Property Managers. You can send him an email at Darus@RentFPM.com with any thoughts.