March 20, 2012

  • A New Aristocracy

    Aristocracy - Etymology Online

    Definition - Answers.com

    (ăr'ĭ-stŏk'rə-sē) pronunciation
    n., pl., -cies.

    1. A hereditary ruling class; nobility.
      1. Government by a ruling class.
      2. A state or country having this form of government.
      1. Government by the citizens deemed to be best qualified to lead.
      2. A state having such a government.
    4. A group or class considered superior to others.

    [Late Latin aristocratia, government by the best, from Greek aristokratiā : aristos, best + -kratiā, -cracy..]

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    I think it's always useful to look back at how words are built to understand the underpinnings of the concept.  So often, in modern speech, we forget origins of the word, and thus may not note the development of what the word describes.  Aristocracy, in a sense, describes what very naturally happens everywhere.  We select leaders because they seem better than "the rest of us", whether they were taller, smarter, stronger, more beautiful, more long lived or what have you.  Heritence being what it is, it generally follows that the children of impressive people should have good genes - as well as the nepotism that's inherent in this thinking.  Aristocracy then, typically evolves from the strong or best taking rule, and handing rule to their children under the auspices that the best have the best children, so to speak.

    And as long as your "best" stay "best", that's not a bad thing... except they get distracted, selfish, aloof, unmotivated, and forgetful of what leaders are supposed to do... which is to serve the people they are leading.

    So that's the ethos of aristocracy, but what of the substance?  In most cultures, aristocrats primary power was the ownership of land and territory.  In medieval europe, for instance, landowners got grants of land derived from monarchic power that allowed them to make money from use of the land, worked by serfs in a subsistence living arrangements.  With serfs working the land, able to live, but unable to amass capital, there is semi-stability.

    So what is the New Aristocracy?

    It's not new really.  With the growing clout of the merchant class post agrarian society, amassing capital apart from land and military rights became, for the first time, possible. When the amounts of capital were small to moderate, they already had clout.  As time has gone on, it has become possible to amass gargantuan amounts of capital - and with the development of diverse and sophisticated investment vehicles, I'm arguing that investment capitalists are the new landowners - which is to say, the current equivalent of the aristocrat landowner.

    By investing capital into businesses, the middle class now works on behalf of capital to make a living, which may be significant gains for an individual, but not nearly enough to deplete capital... in fact, it isn't far removed from landowning rent-seeking behavior... now we have rent-seeking capital behavior.

    While death taxes are supposed to level the playing field a bit generation to generation, the creation of trust funds and circuitous transfers of ownership allows for preservation of capital across generations.

    Is it wrong?  

    Not inherently.  But one should ask is that what we want from a governmental philosophy that espouses equality before God?  As in the French Republican "LIberte, Egalite, Fraternite"

    None of this is, in fact, shocking...  but just like one had indolent, dilettantish nobility plaguing the latter days of the medieval age, and through the enlightenment, we have that now (I'm not naming names).  It is in society's interest that capital is efficiently invested... and when capital is controlled by a disinterested, or even wasteful owner, it's a loss for society.

    Social contract asks the ruler to be accountable.  In a sense, we now have a shadow ruling class that is not legally accountable via democratic checks and balances (this is true around the world with land owners, and capital owners).  To me that's a broken feedback loop.

    In the long term, I would argue that having a large, vital, middle class helps development.  Where they spend their assets tends to affect more people positively than when capital and conspicuous consumption is concentrated in the hands of the few.  

    How do you fix this?  As much as I want to help my theoretical kids, I think that there needs to be a death tax with teeth.  And... I think we should have small govt... so that a big govt isn't present to waste that tax receipt...