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Solving the Economic Problem: How to Make America New Again

In 1930, John Maynard Keynes wrote a short, seven-page essay titled Economic Possibilities for our Grandchildren. In it, he predicted that eventually, we would solve the essential “economic problem” of there being enough for everyone.

His words were prescient:

“I would predict that the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is today.”

A 2013 article from Ezra Klein in the Washington Post examined Keynes’ predictions, noting how accurate he was in the rise of individual wealth (on a per-capita basis, when adjusted for inflation) but how he was so very wrong in how that wealth would manifest in our society.

When I recently spoke with Kurt Andersen on the Success Story Podcast, author of Evil Geniuses: The Unmaking of America: A Recent History we discussed the crossroads that is facing the United States, as we approach 100 years from Keynes’ writing.

Enough for everyone

If there is an argument to be made about distributing wealth equally among everyone but I’m not here to make it. My work celebrates capitalistic ventures and is meant to inform people on how to pursue entrepreneurism to create a better life for themselves and their families.

But it is important to understand just how wide the gap has become.

In early 2022, the net wealth of the bottom 50% of America was just 3.2% of the total. That number is actually at a 20-year high, but still incredibly disproportionate.

Imagining the equal distribution — $150 trillion divided among all 330 million people — moves everyone in the upper-middle class. The economic problem then, the one that Keynes suggested nearly 100 years ago, should be solved.

There is enough for everyone, or at least there should be enough opportunities for everyone to build a successful life.

But as Klein states in his 2013 piece, instead of settling for enough, we have continued to chase the people who have more. We spend our lives trying to make up the difference, and by nature, that means the economic problem — as we have shifted it — can maybe never be solved.

Reaching a crossroads

That takes us to the crossroads that Andersen spoke about in our chat. As we continue on a path of digital transformation, employing software as a service, artificial intelligence optimization, and machine learning, we are moving through another workforce revolution.

Processes are being made more and more efficient, leading to the need for fewer workers, and reducing the number of jobs available in certain industries. Even if we can produce enough for everyone, the question will become how people can afford those necessities.

The rise of digital feudalism

Soaring inequality and the concentration of wealth in the hands of a few have given rise to a new form of feudalism, one based on digital assets.

In the past, feudalism was primarily based on the ownership of land. The lord owned the land and granted use of it to tenants, who in turn had to work it and give a portion of their crops to the lord as rent. This system created a hierarchy in which those with more land had more power.

Today, feudalism is being reinvented with digital assets as the new land. The new lords are the tech giants and wealthy investors who own the major platforms and control the flow of information and capital. They make the rules and reap the rewards while everyone else is left to compete for scraps.

If this is to be slowed, it would need to come at a political level.

Looking back for answers

It is naive to think that society hasn’t always included some sort of wealth gap. But as Andersen points out, in decades past there was a much more national consensus over things like corporate power and economic distribution.

There were a lot of terrible things happening in the political conversation in years past, but there were also some lessons that we can consider as we move forward.

‘Fairness’ is a difficult word to discuss without sounding the alarm of ignorance. Too often, conversations about it today devolve into talking points of capitalism vs socialism and how hard work should trump everything.

But at some point, we as a society will have to make sure that gap doesn’t widen further, and that the average person isn’t left behind.

Don’t be fooled

One of the points that Andersen brought up was how silently things had been changed. The minimum wage, for instance, wasn’t ever lowered, but it was just capped. That let inflation do the work for the people who wanted to keep it low, to maximize margins at the expense of salary.

A small SEC change that let companies invest in their publicly-traded stock, or any other number of insignificant tweaks led to a drastic shift in economic policy.

To stop it from happening again and start turning the tables, we will have to be ever-vigilant and proactive. We can’t allow ourselves to be fooled by evil geniuses, as Andersen dubs them.

Sustainability buzzwords

We will have to watch out for the “buzzwords” that are becoming attached to the sustainable investing movement. Words like “climate-friendly,” “socially responsible” and “impactful” are being thrown around a lot, and it’s important to remember that not all of these terms have the same meaning.

When we talk about sustainable investing, we are talking about making investment choices that consider both financial return and environmental or social good.

The term “socially responsible investing” (SRI) is often used interchangeably with sustainable investing, but SRI generally refers to investments that avoid companies involved in activities considered harmful, such as tobacco products or weapons manufacturing.

The issue is that some of these terms are starting to be used very loosely, and companies are starting to greenwash their products by attaching sustainable buzzwords to them without actually changing anything about the way they operate.

Final thoughts

This isn’t a surface-level topic. All of us will need to contemplate what we believe is a “fair” system, and whether or not the changes that have been made over the last several decades even contradict our own beliefs.

But as we approach 100 years since Keynes discussed his economic problem, remember his conclusion. That it is not permanent. It can be solved.

If you’d like to hear more from Andersen, check out our full chat on the Success Story YouTube page. I’ll be back next week with another fantastic guest.

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Thank you for reading,

-Scott

Kurt Andersen | Solving the Economic Problem: How to Make America New Again