I wonder if there is any underlying economic priniciples that give reasons why everyone in the world can’t be rich or at least midde class. I know there are probably ecological reasons why this can’t happen but what about economic?
On a related topic, has the average wealth of an Earthling increased in the past 100 years. My guess is that it has but I’m not sure I know why. Is it an artificial wealth based on fossil fuels? If it is then we will surely all get poorer in the future. Right?
[QUOTE=solkoe]
I wonder if there is any underlying economic priniciples that give reasons why everyone in the world can’t be rich or at least midde class. I know there are probably ecological reasons why this can’t happen but what about economic?
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Well, everyone can’t be above average in wealth, that’s for sure. 
I don’t think there is any fundamental economic reason that some people have to be poor, though.
Your first question is a bit hard to answer, and I don’t think you asked what you wanted to ask. To find the average wealth, you’d divide the total amount of wealth by the total number of people. You probably are wondering about the median (50% point), not the average. I suspect that the mean has increased in the last 100 years, but I don’t know if anyone has actually done the math.
Why would wealth based on fossil fuels be “artificial”? Presumably humans can develop other fuel soruces to take the place of fossil fuels when and if they run out. If we converted to a society based on solar energy, would that also be artificial?
Change “mean” to “median” in my post, above. My bad.
What makes you think this isn’t the case already in the U.S.?
Even the poor have food, access to clean water, medical care (emergency rooms if there is no other way), 12 or more years of education and much more. Most have “luxury items” like TV, transportation, and some type of transporation.
Throughout most of history and still in most of the world, a person that has all that would be considered quite “rich”.
The problem is that the scales start to move when you look at it internally. Rich becomes those who have a lot more than I do mayve expressed at some percentile level (95th percentille for example). In that case, no, not everyone can be rich because it is all relative.
[QUOTE=Shagnasty]
What makes you think this isn’t the case already in the U.S.?
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The OP asks about “the world”, not just the US. There are plenty of people in the world who would be considered desperately poor no matter how you define the word.
[QUOTE=solkoe]
I wonder if there is any underlying economic priniciples that give reasons why everyone in the world can’t be rich or at least midde class. I know there are probably ecological reasons why this can’t happen but what about economic?
On a related topic, has the average wealth of an Earthling increased in the past 100 years. My guess is that it has but I’m not sure I know why. Is it an artificial wealth based on fossil fuels? If it is then we will surely all get poorer in the future. Right?
[/QUOTE]
Everyone could be middle class someday as technology and manufacturing become better. There is even speculation that nanotechnology will someday make manufacturing dirt cheap. The only real limitation would be natural resources like iron and nickel and maintaining a supply of them. of course many metal objects could be replaced with plastics, and plastic is not really a resource that we are going to run short on anytime soon.
According to Jeffrey Sachs right now the world is divided into 4 classes
desperately poor - 1/6 of world
poor - 1/3 of world
developing world middle class - 1/3 of world
developed world - 1/6 of world
People in the developing world middle class arguably lead better lives than the people in the developed world of 100 years ago. The same should apply 100 years from now.
Fossil fuels will be replaced with renewables. I know it is always said that ‘solar is only 10 years away’ but between 1990-2005 the price of solar power dropped from $7.50 watthour to $4 watthour. Vivian Alberts from South Africa recently invented solar panels that only cost about $1.50 watthour and they are set to go into production in Germany in 2007. This site claims wind power has dropped from 25 cents kwh in 1892 to about 5 cents kwh today. How Wind Energy Works | Union of Concerned Scientists
Meltdown proof nuclear reactors have been invented using pebble beds, fuel cell technology gets better each year, etc. So the loss of fossil fuels isn’t going to hurt the economy unless the world’s economy is totally dependent on fossil fuels and they suddenly disappear. But as long as we transition slowly over the next 50 years it shouldn’t be a problem. Right now for example the US has enough coal for around 200 years or more.
[QUOTE=John Mace]
The OP asks about “the world”, not just the US. There are plenty of people in the world who would be considered desperately poor no matter how you define the word.
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That’s fine. However, you still have to come up with some workable definition of “rich”. It will likey need to describe actual living conditions rather than just income because that varies greatly by area.
I have thought about this question myself before from a world standpoint. Let’s define rich as something like a middle-middle class American lifestyle. What would happen if just the Chinese and the Indians moved up to that level over, say a decade. I don’t think it could be done simply from a natural resource and labor standpoint. The U.S. consumes something like 25% of the world’s energy with only about 5% of its population. If every nation became rich by this new definition, that would mean a several hundred percent increase in world energy. That , in turn would drive the cost of energy through the roof so that few could afford it and we would be in really bad shape.
We also depend on people in the Third World to make cheap products for us. I don’t think that is a bad thing because there always seems to be a poor area in need of such an industry but, if there are no more poor people, there is no one to make cheap products and the price soars. Again, this tends to pull everyone lower than if this simple economic fact weren’t there.
There is the other issue of undesirable jobs. Does even a well-paid sewer worker consider himself rich when he sees an executive dining with clients? Someone has to do the work and our current definitions of rich don;t include people in certain jobs even if they make a very good living (e.g. plumbers).
[QUOTE=Shagnasty]
That’s fine. However, you still have to come up with some workable definition of “rich”. It will likey need to describe actual living conditions rather than just income because that varies greatly by area.
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Yes, and I tried to address that in my original post. “Rich” is generally not used as an absolute descrpition. Instead, it’s usually reserved to mean “well above average in wealth”. As we know, eveyone can’t be above average. OTOH, many middle class people today would have been considered rich 100 years ago.
Yep. We’d need a much better source of energy for everyone to lead a middle class American lifestyle. But the OP is asking a question about fundamental economics, in which case we needn’t constrain ourselves to current levels of technology.
A principle of economics, and the OP may already understand this, is that economics is not a zero-sum game. That is, there is no part of economic theory that insists that if one person gains a dollar, someone else has to lose it. The whole underlying principle of economic growth is that if you have pencils and I have paper, then we trade, we have enriched the economy because now we can both produce something useful. So at the microscopic level, there is no technical reason that all people in the same local economy cannot achieve the same level of wealth.
However, in a free-market economy, your wealth is determined by opportunity, ability, and will. If we both have the will but only you have the opportunity and the ability (say you’re a smart guy from a rich family who owns a big company and your dad sends you to Harvard then you take over the company, and I’m a hardworking guy of average intelligence with a widowed mother and two small siblings and I forgo college because I have to work to support my family), then I will never achieve the same wealth as you. So at the microscopic level, there is no realistic possibilty that all people in the same local economy can achieve the same level of wealth.
In even broader terms, the US economy works differently than the Saudi Arabian economy, for example. Can I ever be as wealthy as the Sultan of Brunei? No effing way. Can an illiterate worker making mud bricks in Egypt ever be as wealthy as an auto worker in the US? No effing way. The interactions at the international scale are complex and have many more variables than they do within a given economy. So at the macroscopic level, there is no realistic possibility that all people can become equally wealthy.
I am certainly no expert, but until someone more knowledgeable comes along, I believe the great John von Neumann proved that continuing real economic growth is (mathematically) possible. Hence, that growth, if distributed among a population should be able to make everyone rich (or at least richer as time goes on - which, to me means, given a long enough time, that everyone can be rich).
Here is one of a zillion sites which alludes to von Neumann’s economic theories. And here is another.
I’ve been thinking the same question as the OP, but was waiting until after finals to ask it.* This may end up in Great Debates, since a factual answer is going to be difficult.** So I only have more opinion than fact right now.
[QUOTE=Shagnasty]
… However, you still have to come up with some workable definition of “rich”. It will likey need to describe actual living conditions rather than just income because that varies greatly by area.
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This is the first point that does need to be addressed. My main problem with the current phase of globalization and development is the too-tight focus on economic development. Healthcare, social and educational development have become secondary to economic progress. UNESCO and WHO should be as influential as the WTO and the IMF. The definition of “rich” has been skewed to mean solely financial riches.
[QUOTE=Shagnasty]
Let’s define rich as something like a middle-middle class American lifestyle. What would happen if just the Chinese and the Indians moved up to that level over, say a decade. I don’t think it could be done simply from a natural resource and labor standpoint. The U.S. consumes something like 25% of the world’s energy with only about 5% of its population. If every nation became rich by this new definition, that would mean a several hundred percent increase in world energy. That , in turn would drive the cost of energy through the roof so that few could afford it and we would be in really bad shape.
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And this is the heart of the problem. We do not have the physical resources for every Earthling to have the standard of living you describe. But quality of life and one’s true wealth as being a person who has the freedom to enjoy life as they wish requires very little physical resources. I would agree that the abundance of resources in North America helped create the success of the American experiment, but the values enshrined by the Constitution hold true regardless of that resource wealth.
For myself, one of the major changes that needs to occur is the end of the rampant consumption of material products. It may sound trite, but I consider a person with a dozen friends and no car to be wealthier than a person with a dozen cars and no friends, but the first person does not show up in the GDP stats, the second does. Material possessions need to be greatly devalued in contrast to cultural, artistic and social pursuits. And a new scorecard needs to be found besides the almighty dollar. It cannot put a price on social and cultural resources and wealth.
Fortunately, I think the rise in awareness for the necessity of sustainable economics and the rise of mass media and telecommunications, (which is the sharing of an experience, not a ‘thing’, and so has a much smaller ‘footprint’) will help this trend.
[QUOTE=Shagnasty]
There is the other issue of undesirable jobs. Does even a well-paid sewer worker consider himself rich when he sees an executive dining with clients? Someone has to do the work and our current definitions of rich don;t include people in certain jobs even if they make a very good living (e.g. plumbers).
[/QUOTE]
This is why this definition must be changed. I grew up in an American, middle-class family. But I am consideralby below that point now. But I also know that I have resources available to me as an American citizen, even at the worse standard of living I could get in this country, that are still a thousand times greater than most of the world. The difference between rich and poor in the industrialized world is a difference of degree, not kind. Both classes do have the same ‘stuff’ that differs only in non-tangible aspects, such as quality, availability, security, which can be important, but it is not the same as lacking them altogether. That is the one of the greatest frauds being perpetuated today. That if you are poor in America, you are the same as someone in the Third World. If you have no access to any healthcare, housing, food, clothing, etc., you may be right. I have not been anyplace where those things were not available. (Whether they are used by those that need them is another topic.)
The other great fraud is your example of the plumber. Tradesman and the blue-collar middle-class are very rich, even in comparison to many of their white-collar associates. I have known quite a few who could not care less about the executive and what foo-foo cuisine they have on their plate since they are out fishing in their brand new boat, or kickin’ back at the game with their season tickets.
(If had to do it all over again, I’d become an electrician.) I think they will always be enough people with the right temperment to become sewer workers and the like. Some people prefer dirt over silk.
*(Damn you, solkoe, I’m supposed to be studying.) (Damn you, Agnostic Pagan, you know you have to avoid the 'Dope for the next two weeks. I know the real reason why this place is called the Dope. 
Is there a 12-step program I can join?)
** I’m ignoring KarlGauss and his links for the moment. They weren’t there when I started all this.
I have long thought that slavery ended due to the increased use of alternative power, such as water & steam, So I do think there is some relation to fossil fuel use and a higher standard of living - but I don’t consider that artificial. Funny that we are now looking at a guest worker program now that the cost of fuel is getting higher, almost like we are going back to slavery.
Also in capitalism we have the ‘I want’ force that drives the economic engine. So not everyone can be ‘equal’ in wealth, there has to be a reason to strive for more, that more being steak instead of chicken or a SUV over a sedan. If everyone had everything they needed then there would be no need to strive for anything. OTOH we have the principals of communism, where you get what you need, and you do what you are able - this has not made a society ‘rich’ as far as I know, and far more likely to make them poor.
So if one day we had hyperintelligent (maybe even sentient) robots to do every type of job out there, and we had found a free, unlimited energy source for them to do it with, could the various governments then pay their citizens a decent income (say average weekly earnings, not unemployment benefits) to sit about and be idle?
[QUOTE=TheLoadedDog]
So if one day we had hyperintelligent (maybe even sentient) robots to do every type of job out there, and we had found a free, unlimited energy source for them to do it with, could the various governments then pay their citizens a decent income (say average weekly earnings, not unemployment benefits) to sit about and be idle?
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Not if human nature remains as it is. People crave status and power, so there will always be people trying to obtain those things. Governments can pay people all they want, but people aren’t going to sit about and be idle. And that will start the cycle all over again. Humans aren’t equal in ability, and you can’t achieve equality of outcome unless you force it on them (us).
[QUOTE=John Mace]
Why would wealth based on fossil fuels be “artificial”? Presumably humans can develop other fuel soruces to take the place of fossil fuels when and if they run out. If we converted to a society based on solar energy, would that also be artificial?
[/QUOTE]
By my reasoning, wealth based on fossil fuels is artificial because a) an industrialized society could not exist without it b) it is not a resource like gold that stays around after you mine it, it gets burned. Gold can be passed down from one king to another. On of the reasons there is conflict in the middle east is that the younger generation is seeing their future wealth go up in smoke.
[QUOTE=kanicbird]
I have long thought that slavery ended due to the increased use of alternative power, such as water & steam, So I do think there is some relation to fossil fuel use and a higher standard of living - but I don’t consider that artificial. Funny that we are now looking at a guest worker program now that the cost of fuel is getting higher, almost like we are going back to slavery.
Also in capitalism we have the ‘I want’ force that drives the economic engine. So not everyone can be ‘equal’ in wealth, there has to be a reason to strive for more, that more being steak instead of chicken or a SUV over a sedan. If everyone had everything they needed then there would be no need to strive for anything. OTOH we have the principals of communism, where you get what you need, and you do what you are able - this has not made a society ‘rich’ as far as I know, and far more likely to make them poor.
[/QUOTE]
Granted, you can’t have equal wealth. But you can have the global median be western middle class. But in a society like that with Ethiopians owning 2000 sq ft homes and having 2 cars those of us in western civilization would probably live in 7000 sq ft homes and own 5 cars. The book luxury fever talks about the bad side of this, with more and more people spending more time commuting and getting less vacation time so they can own bigger homes.
I have heard the same thing about slavery, that it was abolished to a large extent because it wasn’t necessary anymore. Animal rights probably became popular around the same time that we started using tractors instead of horses. Once we learn how to create animal flesh in a lab animal rights will probably take off. But fossil fuels will eventually be replaced, they have to be. In under 20 years we’ve managed to decrease the cost of wind power by about 80% per kwh and solar by about 75% per kwh. We’ve also created meltdown proof nuclear reactors. Plus fossil fuels can be obtained from a variety of organic matter nowadays, not just oil in the ground. So the idea that we’ll still be dependent on fossil fuels in 2060 the same way we are now doesn’t strike me as realistic.
[QUOTE=solkoe]
By my reasoning, wealth based on fossil fuels is artificial because a) an industrialized society could not exist without it b) it is not a resource like gold that stays around after you mine it, it gets burned. Gold can be passed down from one king to another. On of the reasons there is conflict in the middle east is that the younger generation is seeing their future wealth go up in smoke.
[/QUOTE]
That is like saying wealth based on slavery is artificial. Slavery led to wealth that didn’t require slavery is what I’m implying. If it weren’t for the wealth slavery invented perhaps we wouldn’t have invented the machinery that replaced slavery. The same can be said for fossil fuels. If not for the wealth they provided we wouldn’t be at the point now where we can create clean energy for the same price.
There are endless things industrialized society couldn’t exist without. Computers, language, energy, virtually every branch of science, etc. Remove any of them and things go to shit fast.
Let me define “rich” as “what would be considered upper-middle class in America in the 60s-70s, or solid middle-class today.” By that definition, no, not everyone in the world can be rich, but the majority can. There are some facets of human nature that cannot be surmounted, but I believe these impediments are, in theory, surmountable:
A) War,
B) Anti-democracy.
If long-lasting peace and democratic regimes can be brought to those portions of the developing world which do not have it, the economic inefficiencies brought about by dictatorship and war can be focused into building infrastructure and ensuring fair opportunities to achieve a reasonable amount of wealth. (Not everyone would be able to acheive this, though, even with a fairly redistributive tax system: for instance many would spend the subsidy on booze drugs or Everquest 
) I see no reason why, barring ecological barriers, given the expanded manufacturing capacity and peace and stability I posited, that everyone cannot enjoy the same standard of living as many do now in the US.
OTOH, at first it would hurt the US as we would no longer be able to count on them for cheap labor and commodities, but it would lead to much cheaper high-quality products than today since everyone would be competing to produce the best.
[QUOTE=solkoe]
On a related topic, has the average wealth of an Earthling increased in the past 100 years. My guess is that it has but I’m not sure I know why. Is it an artificial wealth based on fossil fuels? If it is then we will surely all get poorer in the future. Right?
[/QUOTE]
Wealth has increased from productivity gains for the most part. A farmer can grow, harvest, and sell more today than he could 100 years back. Ditto for manufacturing and information work. A lot of this comes from industrialization - although some of it is just increased knowledge (like medicine helping people live longer and stronger).
If you’re in the US, there’s an added boost from not having had a major war in a while to damage infrastructure.
[QUOTE=solkoe]
I wonder if there is any underlying economic priniciples that give reasons why everyone in the world can’t be rich or at least midde class. I know there are probably ecological reasons why this can’t happen but what about economic?
[/QUOTE]
If somebody invented a magic box that would produce anything anybody wanted, there wouldn’t be enough space to absorb the stuff or the inevitable population explosion. We’d soon fill the planet with ourselves, our buildings, our waste. I’d expect a future of unending territorial wars until everyone died or all the magic boxes were destroyed. So yes, I think is a limit to the size of the stable above-substistence-level population of earth.