When we come across a dragon in a story, we assume (often correctly) that it will have amassed a hoard of gold and other precious objects by plundering the surrounding area and killing all who stand in its way. The classic western dragon lives alone and sleeps on a bed of its wealth, not even bothering to display the great pieces that it has accumulated. It does not care about the beauty of the items it has, but it cares deeply about owning them and can account for each object. Should a thief take even one piece, the dragon will rampage, as Bilbo Baggins discovered. Dragons are such an obvious metaphor for the extremely wealthy among us that coming up with a list of comparisons is child’s play.
Most of the current economic systems in operation today are designed to reward dragons and to prevent the rest of us from developing other economic structures that would be better for all. Dragon economics not only limits wealth to a few, but rewards that few at the expense of everyone else. For example, the richest 0.00006 of Americans increased their wealth by $1 trillion dollars in the last four years. 80 percent of that increase went to fifty people.
The dragon wealth system has saddled us with extreme inequality worldwide. In his books Capital in the Twenty-first Century and Capital and Ideology, Thomas Piketty shows the history of wealth accumulation, particularly in Europe and the United States, pointing out that the relative equality of the post-World War II years was the unusual period. He also argues strongly for a tax on wealth as the most effective way to reduce inequality. Such a tax is a difficult proposition, as Piketty acknowledges, since much wealth can be moved from country to country and since the amount of political power held by the very wealthy makes it difficult to put in place a wealth tax in most countries.
The extreme wealth inequality and the economic system that encourages it is one of the most significant issues we face today, but it is not that aspect of wealth that I want to address here. Rather, I want to look at the way we, particularly in the United States (the system with which I’m most familiar) though also in other countries, have developed an economic system that requires everyone to build individual wealth to take care of all their needs. Those who do not find a way to build wealth will always be teetering on the edge of financial collapse. All too often, they fall off the cliff. And they, not the system, are blamed for their fall.
The message is trumpeted on a daily basis. Save! Get a 401k or an IRA. Buy stocks. Buy a house—not the one where you really want to live, but the one that will appreciate in value when you sell it. You must build wealth. Leave it to your children so they can build more wealth. And however much you accumulate, it might not be enough. The right college keeps going up in price. The cost of care for those in their last years of life gets more astronomical each year. The only way to protect yourself is to acquire more wealth.
This is no way to live.
First of all, many, if not most, people will never be able to build enough wealth. One obvious reason for this problem is systemic racism. Michelle Singletary, who has been writing on personal finance for The Washington Post for many years, did a recent essay on how financial redlining and other forms of racial discrimination mean that her home in an African American neighborhood in Prince Georges County, Maryland, is worth about half of a similar home in a white neighborhood in the metropolitan Washington, DC, metro area.
As Singletary points out:
“The key to the net worth of most Americans isn’t a stock portfolio but the equity accumulated in their homes. It’s this equity that has created generational wealth for many White Americans. This wealth can fund college educations or finance small businesses. But homeownership, which is so central to the American Dream, has been and far too often remains an unequal and financially frustrating experience for Black families.”
For a detailed look at legal systemic racism in housing in the United States, read Richard Rothstein’s The Color of Law. The depth of the problem, which includes federal laws that mandated racial discrimination, shocked even me, and I used to work in housing.
But it is not only systemic racism that prevents people from building enough individual wealth. The years of over-heated real estate markets in many of our major cities (and stagnant ones in other places) have made it harder than ever for people to get that lucky piece of real estate that might make it all work out. Add to that the fact that 401k plans and IRAs are complicated and that few individuals are skilled enough to invest wisely in the stock market or even to find a good financial advisor, and you have a system that fails everyone but those making a living out of the businesses of real estate, retirement funds, and investing.
Instead of trying to play the wealth game that is stacked against most of us, we need to be building wealth together with our neighbors and our communities. During the last week in October 2020, I went to a series of webinars labeled “Radical Real Estate Week” put on by the Sustainable Economies Law Center (SELC), an Oakland, California, nonprofit law firm that has just begun a radical real estate law program to train new attorneys to change the way real estate works. (Note that in California one can become a lawyer by studying in a law firm instead of going to law school.) This article on the Next City website presents some of the concepts explored during those webinars.
One key element of the work SELC is doing is to create ways to take housing permanently out of the speculative market. The East Bay Permanent Real Estate Cooperative (EB PREC), also in Oakland, is a project where people are trying to do just that. Property acquired by the EB PREC will never be sold again on the speculative market. Residents control the way the property is operated, and will get a small return on their investment should they move, keeping the property affordable for the next owner.
This builds community wealth, and in a city like Oakland where a majority of people rent rather than own, it gives people secure housing. It does not, of course, build much in the way of individual wealth. If we are going to move toward this form of housing, we need to develop many other systems of shared wealth for such things as education, health care, retirement, and eldercare. Right now, most people must pay for these things on their own.
The U.S. Social Security system provides some income that is not tied to wealth for the retired, though it is tied to the amount they earned when working. Medicare provides those over 65 with some health care benefits, though recipients must pay for some of the services. These services as they currently exist are not enough to overcome the gaps in wealth. For younger people, student loan debt makes it difficult to build wealth as well.
If we approached our economy from the point of view set out by Kate Raworth in her book Doughnut Economics, we could build a society that both meets the needs of people and balances the environmental and social issues that we face together. The Doughnut Economics Action Lab sets out some projects that Raworth and her colleagues are developing to put these programs in place.
The United States can easily develop a system that makes it possible to give everyone in the country a decent life regardless of whether they are in a position to develop wealth. Even in these complicated times, the United States remains a wealthy place with abundant resources and it has a sovereign currency of great strength. Applying the principles of Modern Monetary Theory (as set out by Stephanie Kelton in her recent book The Deficit Myth), the U.S. can spend sufficient funds to give everyone education, health care, housing, and income. Income can be in the form of guaranteed jobs or guaranteed income (or both).
These ideas are radical, and they will be fought by the dragons and all those who have hope of becoming dragons. But dragon wealth does little for most of us, and a greater understanding of how economics actually works gives us the tools to do something very different. Breaking up the wealth held by the dragons is important, but building systems that work for everyone is essential.