Economies were born from the beneficial, and often necessary, exchanges of goods and services. For the powerful, economic development allowed them to amass power in the form of spendable wealth and enrich their lives with superfluous luxuries. Over the course of time, through widespread prosperity and work that relied on specialized skills, more and more people were able to amass financial security as well as enjoy the power to purchase goods and services instead of devoting their time to every sort of menial task. Economic developed has allowed individuals and humanity to thrive when economies function in line with the needs of people.
In theory, economies exist to distribute global, national, and local resources in the most efficient means possible in order to maximize the benefit of those resources and the life of the available supply. For the sake of social stability, this ideally means an economy will provide for, at least, the basic needs of all people within the economy. Public policies, which govern an economy, should, therefore, foster economic mechanisms that distribute wealth in such a way the needs of most people can be met and innovative individuals have access to the resources needed to improve the function of the economy and human life.
Economies are not, however, necessarily designed to serve the interests of most people in practice. A robust used-car market, for example, is needed to provide for the transportation needs of less affluent Americans. It must provide durable, serviceable, and reliable vehicles at a cost-effective price for those who cannot afford to buy a new vehicle. Unfortunately, the needs of these individuals and those who cannot regularly afford to buy a new car, matter very little to car manufacturers. Outside of a vehicle’s resell value, manufacturers are solely concerned about the ability to sell new cars.
While the reliability and durability of a vehicle can influence consumer choice, long vehicle lifespans hurt the profitability of manufactures, thus there is actually an incentive to ignore the need for a used-car market. In broader economic terms, it is important to recognize that it is often more profitable to focus on the needs and wants of those who can afford more profitable goods and services, i.e. consumers belonging to the middle and upper classes. Ignoring the economic interests of 85% to 99% of the population can actually allow businesses to achieve similar or higher profits with less risk and effort as compared to profits realized from servicing an entire population.
A farmer, for example, might cut his herd in half, thereby halving his feed costs and workload, yet continue to earn the same amount of profit, if not more. The same result might be seen in the health and health insurance industries. The reason is that the cost of operating a business grows disproportionate to the size of the operation. If it takes a dollar to make two dollars, it might take two dollars to make three dollars. To sustain a bigger operation, businesses must also continually seek a growing stream of new opportunities, which is why many businesses struggle to grow and/or succumb to competition from growing competitors.
Because it is often not profitable enough to service the economic interests of those with incomes and the ability to consume below a certain threshold, businesses, industries, and economies can learn to neglect the needs and wants of non-affluent majorities. As the economy grows and the cost of profit rises, that threshold also rises. The obvious answer is to suppress costs and seek growth elsewhere, i.e. trade and new product development. The problem with this approach is that there are caps to market growth and a limited number of markets to expand into while product development is expensive. This means businesses, industries, economies eventually become too unprofitable to be sustained.
In essence, untrained market forces allow economies to evolve beyond human need, which is problematic for the humans of economies whose survival and prosperity depend on the ability to derive benefits from the economy. When economies are allowed to succumb to pure Darwinism, they steadily weed out the human element. It starts with the poor majority, but the exclusion spreads. Those at the top may free immune, yet they are no “masters of the universe” or economy. They may benefit from an economy that services their whims, but a ravenous beast serves no one as it simply consumes whatever feed becomes most readily available until it collapses under its own weight.
An elitist economy, which concentrates wealthy in the hands of a few and starves a majority of people, creates social instability and civil unrest. Technology may help the affluent escape the consequences of damning the less fortunate, yet they too will suffer from an economy designed to serve no one. In an age where corporations are considered people, automation is rapidly eliminating jobs, and artificial intelligence is set to surpass human intellect, even the affluent will succumb to the beast. Social welfare spending has stemmed the suffering of a growing poor, but the situations is not sustainable or expandable. The mechanisms of the economy must be reengineered to serve the interests of the majority of people through sound public policies.
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